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Today marks a milestone: my 250th Playing to Win/Practitioner Insights series post. Back on October 5, 2020, when I published the first piece in this strategy series, “The Role of Management Systems in Strategy,” I was simply responding to a client’s question and trying to provide practical advice on the often-ignored fifth box of the Strategy Choice Cascade. I had no idea that first post would be the launch of a series that reaches 263,000 people (at last count) on a weekly basis. It feels fitting for this 250th post to return to the original topic in Revisiting Management Systems: The Nervous System of Strategy. And as always, you can find all the previous Playing to Win/Practitioner Insights here. Im delighted to be joined in coauthoring this post by Steve Goldbach and Geoff Tuff. Both are former colleagues I mentored at Monitor Group and are now senior partners at Deloitte. They are the coauthors of three books, and their latest, Hone: How Purposeful Leaders Defy Drift, is dedicated entirely to the power of enabling management systems (EMS) as a leadership tool. This represents the combined view of the three of us. That original piece noted that many treat EMS as a lesser choicea mere implementation detail tacked on at the end. It argued the opposite: that your strategy is not truly complete until you have specified the distinctive management systems (processes, structures, rules, and protocols) that will build, maintain, and reinforce the must-have capabilities that make your where to play/how to win (WTP/HTW) choice a reality. The emphasis in that first piece was distinctiveness, noting that generic management systems that simply replicate so-called best practices are a route to mediocrity. {"blockType":"mv-promo-block","data":{"imageDesktopUrl":"https:\/\/images.fastcompany.com\/image\/upload\/f_webp,q_auto,c_fit\/wp-cms-2\/2025\/09\/martin.jpg","imageMobileUrl":"https:\/\/images.fastcompany.com\/image\/upload\/f_webp,q_auto,c_fit\/wp-cms-2\/2025\/09\/Untitled-design-1.png","eyebrow":"","headline":"Subscribe to Roger Martin\u0027s newsletter","dek":"Want to read more from Roger Martin? See his Substack at rogerlmartin.substack.com.","subhed":"","description":"","ctaText":"Sign Up","ctaUrl":"https:\/\/rogerlmartin.substack.com","theme":{"bg":"#00b3f0","text":"#000000","eyebrow":"#9aa2aa","subhed":"#ffffff","buttonBg":"#000000","buttonHoverBg":"#3b3f46","buttonText":"#ffffff"},"imageDesktopId":91412496,"imageMobileId":91412493,"shareable":false,"slug":""}} Hone offers a critical and complementary observation. While it is vital to have distinctive management systems to enable a distinctive strategy, all management systemswhether they are distinctive or notmotivate human behavior. Marshaling the right kind of human motivation is the critical underpinning of any successful strategy. Management systems frame what good looks like from a behavioral perspective in the organization. We believe nearly everyone shows up to work wanting to be successful; your systems should tell them how. In this way, if the WTP/HTW choice is the heart of strategy, then MHC are the muscles and EMS its nervous systemthe network of signals, incentives, and feedback loops that translate strategic intent into coherent, day-to-day action. In biology, the nervous system is the bodys command center, regulating essential functions, processing inputs, and sending signals to muscles, allowing the body to react and control its functions. This is precisely what management systems do for an organization. They are the intricate web of formal rules and cultural norms that shape how people work together inside organizations. Formal systems might include how performance is evaluated, how financial targets are set, or promotion and hiring criteria. Cultural norms are the subtle cues and “unwritten rules” that dictate behavior, such as decision rightswho gets to make what choice, or even who is asked for an opinion. When all the management systems inside an organization are combined, they can either powerfully reinforce behavior consistent with what is necessary to support the strategy choices, or, all too often, hinder it entirely. The Barnacle Problem: Drift Erodes Distinctiveness A very common problem, particularly in large organizations, is that management systems tend to accumulate over time like barnacles on the hull of a ship. Barnacles create drag and can cause a ship to gradually drift off course. Layers of competing management systems have the same effect on organizations. The accumulation of management systems can happen for at least two core reasons: Many designers, narrow designs. Management systems are rarely designed as a setthey usually crop up to address a specific problem. A well-intentioned functional leader in finance creates a new budgeting process. HR adds a new performance metric. IT implements a new security protocol. Each system feels like a “good idea” in isolation, but they accumulate and often unintentionally conflict, sending mixed signals throughout the organization. Layering over, not uninstalling. Even when a company launches a “new strategy,” leaders rarely go back and remove or reshape the old systems. They just layer new ones on top while the old systems are still busiy motivating the old behaviors. This accumulation erodes distinctiveness. Your carefully chosen, distinctive EMS are drowned out by the cacophony of the other systems, all pulling people in various directions. Drift is often imperceptible in the moment, and each subsequent deviation is similarly hard to see from the new direction of travel. It is only when a company is way off course that alarm bells start to soundand by that time, subtle course correction is ineffective. A classic example of legacy management systems holding a company back happened at Sears decades ago. In the 1990s and early 2000s, leadership correctly identified e-commerce as a strategic imperative. They even had a massive advantage: a world-class catalog and fulfillment business. But the companys formal management systems were barnacles. Its P&L structure and incentive plans were built entirely around the profitability of individual brick-and-mortar stores. When Sears.com was set up as a separate, competing P&L (the conventional wisdom at that time), store managers were inadvertently punished for behaviors that supported the new strategy. For example, if a customer wanted to return an online purchase to a local store (which was considerably easier at that time relative to today), the return would show up on the stores P&L, reducing its profitability. This motivated store managers to resist taking online returns, something that might have presumably given Sears a leg up in the new online world. Drift tends to end badly. Organizations wake up and discover they are miles away from where they need to be to achieve their goals. They have no choice but to engage in so-called transformationmassive change at a rapid pace. These transformations are costly in terms of dollars, time, and human energy, and have very high failure rates. We are not anti-transformation per se; we just believe that with a bit more attention to day-to-day steering of the ship, much of that waste could be avoided. The Antidote to Drift: Honing Hone uses the metaphor of a chefs knife. Good chefs don’t wait for their knives to become uselessly dull before fixing them. A dull knife is dangerous, so chefs hone it every single day before use. Honing is not sharpening. Sharpening grinds away metal to create a new edgea transformative, costly act. Honing is a gentle, daily maintenance that realigns the existing edge, keeping it fit for purpose. Honing, as one chef described, is a meditation and a maintenance both keeping the knife serviceable and an act that reminds the chef of whats needed in the forthcoming service. This is the antidote to drift. The external landscape any organization faces is constantly in motion: Customer preferences shift, competitors take new actions, technology advances, and regulation varies constantly. Leaders must respond by honing their organization with small changes to their EMS to steer behaviors consistent with the external shifts. Ideally this can happen by making small changes to existing management systems. But sometimes it might require creating a new distinctive system or uninstalling management systems that are no longer needed. The Four Seasons example from the first PTW/PI post impeccably illustrates honing. The “glitch reporting system”where any employee, at any level, is empowered and rewarded for identifying and reporting a service “glitch”is an EMS. But it’s not a static one. By its very design, it is a honing system, a feedback loop designed to identify and correct for small drifts (a slow room service order, a dirty light fixture, a slippery floor) in real time, long before they accumulate into a “bad service” barnacle. The Role: The CEO as Chief System Designer This leads to a final, critical point. If EMS are the nervous system of strategy, who is the brain? We have consistently argued that an organizations leadership must own its strategy, not outsource it. On this front, we believe that CEOs must own the overall design of their collection of EMS. The CEO must be the chief system designer because the CEO is the only person in the organization with both the authority and visibility to ensure coherence and congruence across all the organizational systems. While CEOs can (and should) delegate the detailed design of a sales incentive plan or a supply chain metric, they must own the theory of how all those systems interact to collectively motivate the desired behavior. Bel Groupe (maker of brands such as BabyBel, GoGo squeeZ, and the Laughing Cow) is a terrific example of its CEO, Cécile Béliot-Zind, acting as the chief systems designer. Bels ownership and management team believe they can create competitive advantage by promoting a more sustainable food system. Béliot-Zind is fond of saying that sustainability without profitability has no impact and profitability without sustainability has no future. Bel helps support farmers with whom it works to implement in necessary regenerative practices while enabling a better living. As a result, the company has access to a more resilient, long-term supply chain. To reinforce this commitment, Bel became a mission-led company by law (société mission) in France, formalizing this commitment in its company by-laws: a very strong management system creating consistency and a long-term commitment to this strategy. Béliot-Zind also knew there were other systems that needed to change to reduce the typical profit versus purpose friction that occurs in many organizations. Her solution was to redesign her finance department to fuse responsibility for both profit and societal impact into a single function. She created a chief impact officer role responsible simultaneously for profit and for societal impact, ensuring both are managed with the same rigor as a traditional P&L. That CEOs must be chief system designers doesn’t mean non-CEOs are powerless. On the contrary, all leaders can and should act as a chief system designer for their own team, honing the management systems within their control. And, just as important, they have a responsibility to identify and elevate the inconsistencies they see, making the case for why a particular system is causing drift. Practitioner Insights Here are four things you can do to put this into practice: Audit your management systems. At the start of every strategy process, we suggest uncovering your strategy-in-use, including identifying the key management systems that drive behavior today (whether they are distinctive or not). An easy way to find these is to ask why people behave the way they do inside the organization. Then ask: Do these systems, in their current form, support or conflict with our new WTP/HTW? Connect honing to your What Would Have to Be True (WWHTBT). Use the WWHTBT tool to assess your management systems. We are all fond of saying that strategy doesn’t come with an expiration date. It is good until one of its WWHTBTs is no longer true. This is your signal to hone. When a WWHTBT fails, or is being strained, identify the new behavior you need and then determine which management system must be adjusted (or created, or uninstalled) to motivate it. Stop Blaming Culture. Culture isnt some immutable bogeyman. As has been pointed out in this series, you can hone it to support your strategy through changes to leadership behavior and careful modification of management systems. Find the specific management systems that are rewarding the behavior that creates cultural defects and change them. Culture is, in the end, a strategy choice. Be aware of your “tells.” Leaders at all levels: Recognize that you are a powerful informal management system. Your attention, your questions, and your emotional reactions in meetings send the clearest signals of all about “what good looks like.” Make sure your personal cues are in alignment with your stated goals. A full 249 PTW/PI later, the core message remains consistent. EMS is a critical element of strategyits nervous system. Leverage it and hone it, and you will be generously rewarded. {"blockType":"mv-promo-block","data":{"imageDesktopUrl":"https:\/\/images.fastcompany.com\/image\/upload\/f_webp,q_auto,c_fit\/wp-cms-2\/2025\/09\/martin.jpg","imageMobileUrl":"https:\/\/images.fastcompany.com\/image\/upload\/f_webp,q_auto,c_fit\/wp-cms-2\/2025\/09\/Untitled-design-1.png","eyebrow":"","headline":"Subscribe to Roger Martin\u0027s newsletter","dek":"Want to read more from Roger Martin? See his Substack at rogerlmartin.substack.com.","subhed":"","description":"","ctaText":"Sign Up","ctaUrl":"https:\/\/rogerlmartin.substack.com","theme":{"bg":"#00b3f0","text":"#000000","eyebrow":"#9aa2aa","subhed":"#ffffff","buttonBg":"#000000","buttonHoverBg":"#3b3f46","buttonText":"#ffffff"},"imageDesktopId":91412496,"imageMobileId":91412493,"shareable":false,"slug":""}}
Category:
E-Commerce
Soooo, do you Labubu? The furry creature went viral this year thanks to Dua Lipa, Blackpink’s Lisa, and Kim Kardashian all buying into the adorably bizarre, plushy monsters. The results were millions in sales, long lines, and frantic scrambles as people tried to get their hands on this latest trendy phenom. Labubus Chinese parent company, Pop Mart, reported global revenue for Q3 (July through September) jumped by about 250% compared to a year earlier, and sales in America were up by more than 1,200%. But it goes beyond Pop Mart, as brands from South Korea, Japan, and other Asian countries are finding more inroads into American culture. Just as American cultural influence has spread around the world via Levis, Coca-Cola, McDonalds, Apple, and more, now Asian brands are making it two-way traffic. Mixue, a Chinese ice cream and tea chain that recently overtook McDonalds as the largest fast-food chain in the world, opened its first U.S. store in New York City in September. Luckin, a Chinese coffee chain, is coming for Starbucks after opening a shop in NYC, too. Chinese automaker BYD surpassed Tesla in EV sales globally last year and is eyeing American expansion. Korean skincare brand CosRX drives 90% of its revenue from international sales, with major traction among Gen Z Americans. Taiwanese restaurant chain Din Tai Fungwith 21 U.S. locationsnow has the highest average per-location revenue of any American restaurant chain$27.4 million per store. [Photo: Freer/Adobe Stock] A new report from global ad agency network TBWA looks at some of the qualities that drove these companies’ overseas success. The report takes a deep dive into how exports like K-pop, matcha, anime, and Labubus have rebranded Asia for a new generation of consumersand explores what U.S. brands can learn from it. With the rise of K-beauty, J-beauty, and now in a world of Miniso and Pop Mart, we’re seeing brands from Asia really building emotional connection with consumers, says Jen Costello, TBWAs global chief strategy officer. Its not cheap, fast, low-cost, plastic crap, but it’s actually being supported by increasingly breakthrough products that have a real role in culture. [Photo: BYD] Found in translation The report outlines four underlying cultural valuesdeep mastery, unapologetic emotion, thoughtful friction, and social etiquettethat the new wave of Asian brands are particularly strong in. These obviously arent exclusive to Asian brands, just common threads among them. Deep Mastery Deep mastery revolves around the idea that as culture is increasingly saturated by AI-generated content and digital art, consumers are craving skill-based learning, time-honored craft, and enduring expertise. One brand example is Toku Saké and its focus solely on doing “one thing exceptionally well,” which is creating slow-brewed, small-batch sake. The idea is that specialization, rather than expansion, can be the new growth strategy for brands. View this post on Instagram Unapologetic Emotion Unapologetic emotion signifies a cultural pivot away from irony, sarcasm, and emotional detachment, where sincerity was often dismissed as “cringe.” The report says audiences are growing bored of performative nihilism, and find freedom in honest emotional expression. Here, Pop Mart’s Labubus are the brand example, rooted in the Japanese culture of kawaii (cuteness). Thoughtful Friction Thoughtful friction challenges the idea that speed and seamlessness equal freedom. Instead, the report contends, the promise of effortless everything leads to digital addiction, burnout, and waste. The report uses South Korea’s pay-as-you-throw food-waste system that requires residents to purchase special, volume-based bags, creating a daily constraint that incentivizes people to think twice before discarding waste and to buy only what they need. Costello says the concept of thoughtful friction surprised her the most. It’s unusual for brands to reject effortless experience in favor of creating intentional friction. It’s counterintuitive to the way that a lot of brands think, she says. Especially for Western brands, it’s always about making it seamless. It is always about reducing friction. It is always about making it easy. But there is value in making people think for just a moment and having that be rewarding. [Photo: 8th/Adobe Stock] Social Etiquette The report defines social etiquette as an outlook that counters the hyper-individualism encouraged by the main-character energy cultural narrative, which has led to widespread incivility. It functions as “soft infrastructure” to preserve social harmony. The report says marketers should recognize that after years of “casual everything,” clear codes of conduct feel “refreshingly helpful.” One example is how Singapore Airlines has built its relationship between crew and passengers with high mutual respect, and has even considered rewarding passengers who demonstrate good behavior on flights through its loyalty program. New export confidence Pop culture and our ability to share it has made the world a much smaller place. The report posits that these core values have played a significant role in Asian brands making inroads with Western audiences. It’s also supported by a boom in tourism. (Visits to Japan soared y 16% last year, and Japan, Thailand, and South Korea are among the top 10 destinations for Gen Z travelers, according to travel visa service Ztartvisa.) Emmanuel Sabbagh, TBWA\Asias chief strategy officer, says this overall cultural boost has given brands from Asia more confidence in talking to international audiences. For many, this is the very first time theyre seeing appeal from the West, says Sabbagh. They feel way more confident to be who they are and to express who they are to the rest of the world. Its a big shift. They say that this is their way to go bigger, stronger, not changed for the West. They want to be more themselves. Traditionally, Asian companies have been stronger on product than building brands, particularly ones that translate to the West. That challenge remains for many of them. Sabbagh says the brand culture in America is very mature, in terms of how the logo, experience, and story are all tied together. [Photo: Sundry Photography/Adobe Stock] Thats where brands from the East are not as strong as they should be, Sabbagh says. Even a brand as big as Uniqlo, think about how they can go bigger into what is the promise, what is the real brand platform, what people will look for in that specific brand.” Sabbagh adds that many Asian brands hyper focus on process and manufacturing, but that leaves incredible white space for them to grow on the brand side of things. “The brand is what they are missing as the vehicle to go to the other side of the world and to be stronger in their own market,” he says. The aim of the report isnt to get Western brands to mimic their Eastern counterparts, but rather to use their success to identify insights that work for their own audiences. The whole point is to make sure that you’re not just trying to hold up a mirror to these values, but find your version of it, find your truth in it, find what makes it real for you, says Costello. This isnt about going out and trying to replicate exactly what Pop Mart or Miniso have done.
Category:
E-Commerce
Two new data centers in Silicon Valley have been built but cant begin processing information: The equipment that would supply them with electricity isnt available. Its just one example of a crisis facing the U.S. power grid that cant be solved simply by building more power lines, approving new power generation, or changing out grid software. The equipment needed to keep the grid runningtransformers that regulate voltage, circuit breakers that protect against faults, high-voltage cables that carry power across regions, and steel poles that hold the network togetheris hard to make, and materials are limited. Supply-chain bottlenecks are taking years to clear, delaying projects, inflating costs, and threatening reliability. Meanwhile, U.S. electricity demand is surging from several sourceselectrification of home and business appliances and equipment, increased domestic manufacturing, and growth in AI data centers. Without the right equipment, these efforts may take years longer and cost vast sums more than planners expect. Not enough transformers to replace aging units Transformers are key to the electricity grid: They regulate voltage as power travels across the wires, increasing voltage for more efficient long-distance transmission, and decreasing it for medium-distance travel and again for delivery to buildings. The National Renewable Energy Laboratory estimates that the U.S. has about 60 million to 80 million high-voltage distribution transformers in service. More than half of them are 33-plus years oldapproaching or exceeding their expected lifespans. Replacing them has become costly and time-consuming, with utilities reporting that transformers cost four to six times what they cost before 2022, in addition to the multiyear wait times. To meet rising electricity demand, the country will need many more of themperhaps twice as many as already exist. The North American Electric Reliability Corp. says the lead time, the wait between placing an order and the product being delivered, hit roughly 120 weeks (more than two years) in 2024, with large power transformers taking as long as 210 weeks (up to four years). Even smaller transformers used to reduce voltage for distribution to homes and businesses are back-ordered as much as two years. Those delays have slowed both maintenance and new construction across much of the grid. Transformer production depends heavily on a handful of materials and suppliers. The cores of most U.S transformers use grain-oriented electrical steel, a special type of steel with particular magnetic properties, which is made domestically only by Cleveland-Cliffs at plants in Pennsylvania and Ohio. Imports have long filled the gap: Roughly 80% of large transformers have historically been imported from Mexico, China, and Thailand. But global demand has also surged, tightening access to steel, as well as copper, a soft metal that conducts electricity well and is crucial in wiring. In partial recognition of these shortages, in April 2024, the U.S. Department of Energy delayed the enforcement of new energy-efficiency rules for transformers, to avoid making the situation worse. Further slowing progress, these items cannot be mass-produced. They must be designed, tested, and certified individually. Even when units are built, getting them to where they are needed can be a feat. Large power transformers often weigh between 100 tons and 400 tons and require specialized transportsometimes needing one of only about 10 suitable super-heavy-load railcars in the country. Those logistics alone can add months to a replacement project, according to the Department of Energy. Enormous railcar like this one in Germany are often needed to transport high-voltage transformers from where theyre manufactured to where theyre used. [Photo: Raimond Spekking via Wikimedia Commons, CC BY-SA 4.0] Other key equipment Transformers are not the only grid machinery facing delays. A Duke University Nicholas Institute study, citing data from research and consulting firm Wood Mackenzie, shows that high-voltage circuit-breaker lead times reached about 151 weeks (nearly three years) by late 2023, roughly double pre-pandemic norms. Facing similar delays are a range of equipment types, such as transmission cables that can handle high voltages, switchgeara technical category that includes switches, circuit breakers, and fusesand insulators to keep electricity from going where it would be dangerous. For transmission projects, equipment delays can derail timelines. High-voltage direct-current cables now take more than 24 months to procure, and offshore wind projects are particularly strained: Orders for undersea cables can take more than a decade to fill. And fewer than 50 cable-laying vessels operate worldwide, limiting how quickly manufacturers can install them, even once they are manufactured. Supply-chain strains are hitting even the workhorse of the power grid: natural gas turbines. Manufacturers, including Siemens Energy and GE Vernova, have multiyear backlogs as new data centers, industrial electrification, and peaking-capacity projects flood the order books. Siemens recently reported a record $158 billion backlog, with some turbine frames sold out for as long as seven years. Alternate approaches As a result of these delays, utility companies are finding other ways to meet demand, such as battery storage, actively managing electricity demand, upgrading existing equipment to produce more power, or even reviving decommissioned generation sites. Some utilities are stockpiling materials for their own use or to sell to other companies, which can shrink delays from years to weeks. There have been various other efforts, too. In addition to delaying transformer efficiency requirements, the Biden administration awarded Cleveland-Cliffs $500 million to upgrade its electrical-steel plantsbut key elements of that grant were canceled by the Trump administration. Utilities and industry groups are exploring standardized designs and modular substations to cut lead timesbut acknowledge that those are medium-term fixes, not quick solutions. Large government incentives, including grants, loans, and guaranteed-purchase agreements, could help expand domestic production of these materials and supplies. But for now, the numbers remain stark: roughly 120 weeks for transformers, up to four years for large units, nearly three years for breakers, and more than two years for high-voltage cable manufacturing. Until the underlying supply-chain choke pointssteel, copper, insulation materials, and heavy transportexpand meaningfully, utilities are managing reliability not through construction but through choreography. Morgan Bazilian is a professor of public policy and director at the Payne Institute, Colorado School of Mines. Kyri Baker is an associate professor of civil, environmental, and architectural engineering at the University of Colorado Boulder. This article is republished from The Conversation under a Creative Commons license. Read the original article.
Category:
E-Commerce
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