Sunday, January 30, 2011

Rationalize Relentlessly ... or not.

Core to General Electric's strategy is the concept of being #1 or #2 in any business. If they aren't at the top or don't think they can be at the top, they prune the business. A more simple and straightforward strategy doesn't exist. It has also proven to be incredible effective. But the question becomes: can other organizations use this approach? Can they translate such relentless rationalization into a workable strategy?

Last week I was thrilled to be part of our institution's academic strategy planning session.  As I listened carefully throughout the day I wondered if a GE-like strategy could work.  After all, we are facing a constricting economic forecast. If you applied traditional market-driven logic, then a strategy of competitively focused changes could benefit the institution.

However, all strategies are about making choices and accepting the positive and negative consequences of those decisions. A competitive business strategy would certainly improve our future prospects in terms of market share development. Focusing on the academic programs that attract the most students would create growth. But we are a university. Pure grow comes at high cost in terms of our other commitments such as breadth of education and community support.

So is there value to be extracted from the GE strategy?  Can we apply lessons from corporate models to other types of organizations like universities or hospitals or governments?  Or is just not worth it - do we simply accept the fact that strategies cannot translate across different worlds.  I suggest we can learn, but we have to look at it from two different views.

One view is that maybe our currently strategy is actually wrong. Maybe the corporate strategy would make sense. Maybe we do have to rationalize programs to create better focus. Perhaps we should consider only offering degrees in programs where we are the #1 or #2 ranked school. To compete with privatization forces that have made University of Phoenix a success, we may be forced to consider this strategy in the long term.

Alternatively, maybe a literal translation isn't the lesson we should glean from GE.  If we look deeper into why the GE strategy was a success, we might find the intent of the strategy to be more important than the specific strategy statement.  For example, being #1 or #2 was a game changer for GE when it was first announced.  Subsequently it changed the way they managed their portfolio of business on a sustainable basis for decades.

For us, the real lesson might be the concept of treating our organization as a portfolio. To learn from GE we could consider thinking about our academic programs as a portfolio of educational offerings to students. The portfolio transcends the individual courses and becomes an integrated learning experience. With an integrated portfolio, courses from across disciplines can be offered in a seamless manner to help students learn in more innovative ways and to help researchers create in more innovative ways.

Maybe the key lesson is not to necessarily rationalize relentlessly, but to think differently about your product or program offerings. Visualize your organization as a portfolio of related initiatives, not splendidly isolated silos.  


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