Red and Yellow Strategies: Flip Your Strategic Thinking and Overcome Short-termism
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About this ebook
Sharpen your strategic thinking with this mini book packed with groundbreaking ideas from a seasoned professional in strategy and management. Written clearly, concisely, and engagingly, these ideas are accessible to everyone.
The goal of business is not to make a profit. The purpose of business is to build a great company by managing six Value Waves, creating value for six groups of stakeholders. Learn what strategy really means from this mini book.
This isn't a strategy textbook or a step-by-step guide. It's a collection of groundbreaking insights from a person with 30 years of experience, aimed at sharpening your strategic thinking.
Svyatoslav Biryulin has spent his entire career in management. He served as a CEO for over 12 years. He has been serving as a board member for more than 10 years and as an independent strategy consultant for over 8 years. His experience is reflected in this book.
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Red and Yellow Strategies - Svyatoslav Biryulin
Red and Yellow Strategy: Flip Your Strategic Thinking and Overcome Short-termism
Svyatoslav Biryulin
Copyright 2024 Svyatoslav Biryulin
All rights reserved
Self-published.
Digital edition.
No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior permission of Svyatoslav Biryulin.
Ljubljana, Slovenia
Kataložni zapis o publikaciji (CIP) pripravili v Narodni in univerzitetni knjižnici v Ljubljani
COBISS.SI-ID 199100419
ISBN 978-961-07-2177-2 (ePUB)
2024
Table of Contents
Chapter 1. Strategic Thinker – A Many-Eyed Giant Argus or an Oracle?
Strategic thinking biases
Strategic Thinker – a prophet, an oracle, a warlock, or a wizard? Or all of the above?
Contemplation Questions
Chapter 2. Life is a marketplace of values
Marketplace of values
Group exchange – organizations
Why are some companies more successful than others?
Contemplation Questions
Chapter 3. Value Ecosystems and Value Waves
Value Ecosystems
Value Ecosystem Management
Value Waves
Quibi and Value Ecosystems
Contemplation Questions
Chapter 4. What Is Business?
Strategic mindset
Three coaches
Building a business that will outlive its founders
Contemplation Questions
Chapter 5. Fallacies in Strategic Goal Setting
Flaw #1
Flaw #2
Flaw #3
Flaw #4
Contemplation Questions
Chapter 6. The dark side of strategic goals
Dark sides of big goals
Do we need goals?
Contemplation questions
Chapter 7. Strategy and Trees
Business as relationships
Strategy and trees
Strategy as creating conditions
Contemplation Questions
Chapter 8. What is strategy?
Strategy as a mission
What does strategy mean?
Strategy and goals
Strategy as constitution
The definition of strategy
Beware of the person who sells you a book with only one page.
Contemplating Questions:
Chapter 9. Red and Yellow strategies
Bricks and computer programs
Strategy as a half-baked plan
Red strategy
Yellow strategy – strong strategy loosely held
Yellow Bricks and Yellow Strategy: Inevitably Choosing the Yellow Strategy
Strategy as continuous hypotheses testing
Red and yellow strategies
Contemplation questions:
Chapter 10. What is NOT a strategy?
Overlooked ideas
Strategy and design thinking
Strategy Isn't a Google Maps Route
Customer-free strategy
What is NOT a strategy
Contemplation questions
Chapter 11. Blue Ocean Fallacy
Where to play
Circus and business strategy
The market is not an ocean
First – there are no ‘red oceans’
Second – ‘blue oceans’ are here
Contemplation questions
Chapter 12. Sixteen Basic Human Needs And Business Strategy
Why do you want what you want? Human needs
Sixteen basic needs
Customer needs and customer value
Picturephone (1964) vs Skype (2003)
Value Ecosystem
Conclusion
Chapter 13. Key takeaways
Ecosystems
Stakeholders and Value Waves
Purpose, goals, and success
Central principles
Red and yellow strategies
Market, customer needs, and customer value
Stakeholder value
Chapter 14. Appendix 1
Chapter 15. Appendix 2
Red strategy: 25 questions
Yellow strategy: Crucial questions
Chapter 1. Strategic Thinker – A Many-Eyed Giant Argus or an Oracle?
Thinking about thinking is the most important kind of thinking.
Category Pirates
In 2011, Wells Fargo bank earned $2.6 million in fees thanks to its new strategy, Eight Is Great.
In 2016, it paid $185 million in fines for how it did it.
In 2011, most customers used only one or two bank products. The top executives firmly decided to increase this number to eight.
But workers struggled to meet demanding quotas. They began to cut corners, opened 1.5 million unauthorized deposit accounts, and made 500,000 unauthorized credit card applications for Wells customers – without their knowledge.
In 2016, the regulator punished the bank for what, initially, was a good intention.
…
In September 2005, eBay triumphantly announced buying Skype for $2.6 billion. It had hoped the VoIP service would help users communicate better. But four years later, eBay sold Skype for $1.9 billion.
For most eBay users, email was enough.
…
In early 2023, US automotive industry executives beamed with enthusiasm about the future of EVs. They had invested billions in new production facilities.
But the market received a cold shower when the market growth sharply slowed down in the second half of 2023.
Ford has pulled back on EV investment and could delay some vehicle launches while increasing production of hybrids…It lost a staggering $4.7 billion last year on its battery-powered car business,
The Wall Street Journal reported.
Mary Barra, the CEO of General Motors, said the company wouldn’t meet a self-imposed goal of producing 400,000 EVs over a two-year period through mid-2024.
…
When we think of the future, it seems so linear and logical, but reality usually turns out to be rather messy and complicated.
These three cases are very different. Yet, they have a lot in common. I blame strategic thinking biases for these mistakes – and many others.
Strategic thinking biases
Our thinking device – the brain – evolved about 500,000 years ago.
It developed (and still develops) at a snail’s pace. In the past 100,000 years, its size has only increased by 10%.
Homo sapiens originated in Africa roughly 300,000 years ago. And the brains of these ancient humans were ideally suited to their lifestyle.
They lived in small groups of about 150 people.
They weren’t keeping track of the stock prices.
They didn’t worry about product-market fit.
They didn’t run organizations so large that their leaders might never meet most of the employees face to face.
Their life wasn’t easy, but their strategic tasks were pretty simple – securing enough food for their families, raising children, and surviving.
But look at the CEOs of modern businesses.
They must think multi-dimensionally.
They have to balance the conflicting interests of various groups of people.
They need to foster team creativity and enforce rigorous execution discipline.
They should lay the foundation for long-term success and ensure day-to-day outcomes.
They are like race car drivers who must simultaneously win today’s race and upgrade their cars for future ones. To make it worse, they do not know what these future races will be like.
At the same time, they still rely on pretty much the same computing devices in their heads as their distant mammoth-hunting ancestors. It’s like building AI on an old Windows XP computer.
Our brains are like ancient computers running on outdated software. We stick to patterns instead of thinking things through and let emotions run the show. Our short-term memory capacity is limited to three to five items.
We are physically incapable of keeping all business tasks in our heads. Like carnival jugglers, CEOs must keep multiple objects in the air at once. And these objects vary in size and weight.
No wonder their strategic thinking is biased. A few years ago, when I was a CEO myself, I suffered from the same problems.
Here are some examples:
With this book, I will try to help you focus on primary business principles, which will sharpen your strategic thinking.
I don’t claim to have a magic solution to all problems. Nor do I claim to have a magic wand to