There are many ingredients required to develop and execute a successful strategy; none more important than discipline. Disruptive innovations that reshape an industry are rare. Most innovation is incremental, and successful execution is a function of hard work, time and patience.

Jeff Bezos’s insight about selling books online (which resulted in the formation of Amazon) was conceived while he worked as an analyst at an investment bank. His conversion of strategy into tactics will go down in history, as Amazon took on all the best in retailing, seemingly overnight.

Bezos remains hungry and focused. Amazon’s top 5 managers meet every Tuesday for four hours to review and rebake strategy. Not once a year, not once a quarter – every Tuesday. Twice a year his team has a two day off-site to think about “big ideas” that may require 2-3 years to implement.

Alan Kay once said, “Perspective is worth 80 IQ points.”  Where the rubber meets the road in strategy is maintaining the right perspective – the intersection of strategic thinking and tactical execution.  Business owners can easily lose perspective when they spend too much time muddled in solving day to day operational problems.

To maintain strategic discipline:

Create a strategy committee, task force or executive management team (EMT).

Each member should have a role in strategy formation and implementation and be accountable for key initiatives of the company. Meet with the EMT monthly to review progress versus goals.

Engage mid-management in strategy formation and execution

Mid-managers are often insightful in identifying latent needs as they are often closer to the customer than their senior counterparts.  Many entrepreneurial companies lack management depth. They are well served to include mid-managers in executing strategy.  Provide learning opportunities for junior managers by delegating tasks for them to complete.

Hold your teams accountable

Results oriented organizations are built from the ground up to support execution, rigorously using scorecards that drill down to individual performance. Best-in-class organizations orchestrate goal setting for individuals that align with the broader goals of the organizations.

Include outside variables in your dashboard

While most successful companies measure internal activities, few score external variables. Seek out external metrics that may be predictive of future demand. Leverage the data to plan capacity, labor, facility expansion, procurement of equipment, etc.

Bezos said, “We are willing to plant seeds and wait a long time for them to turn into trees. Every new business we’ve ever engaged in has initially been seen as a distraction by people externally and sometimes even internally.”

Great strategies convert into initiatives that become the unifying vision of the strategically successful organization. Ideas that lack resources, energy and concentration are just a distraction.

In Outliers, Malcolm Gladwell asserts that one needs to invest 10,000 hours in an activity in order to become an expert. I take solace in knowing that I am evidently both an expert in Strategic Planning, and overcoming the drama induced by teenage daughters.

The rapid escalation of global competition has brought about a new round of hyper-specialization.  The concept of specialization is nothing new; the division of labor has been a key tenant of economics since the birth of capitalism. Yet sites such as Guru or eLance, have propelled specialization to a new art form, where one can access dozens of specialists from around the world in any conceivable competency in a matter of minutes.

Specialties that do not require any special education (other than what is readily available on the internet) such as graphic arts have quickly commoditized. You can hire a graphic artist online for $15 an hour.  In cases where greater technical aptitude is required, specialists still out-earn generalists. The median Internist in the U.S. earns $176K per year, while Cardiologists earn a median of $403K (some make $800K or more). [i] If you had a heart attack, which would you see?

Perhaps the most common strategic blunder I observe within entrepreneurial companies is a penchant for addressing overly broad targets. Marketers, seeking the largest audience cast too wide a net. In their need to satisfy the largest number of prospects, they become de facto generalists. That is, instead of addressing a niche market with specific solutions, they try to satisfy a larger audience with a multitude of products and services. At some point, the value they can provide suffers from diminishing returns.

The more crowded a space, the more difficult it is to differentiate, and the greater the need for expertise. Before its bankruptcy filing, GM attempted to sell within every segment, from sub-compact to Hummer. GM experienced what is often referred to as the peanut butter effect; the wider you spread something, the thinner it gets. GM’s branding was diluted and ability to control quality constrained.

Many small businesses may employ generalists because of their lack of talent depth. To have one IT professional manage a network, build the company website, select an ERP package and fix all the desktops is an archaic paradigm worthy of recalculation.

The reason that specialists are worth more than generalists is that they have a deeper subject matter expertise that drives:[ii]

Quality-Processes replicated over time promote less deviation, less defects and fewer errors.  The specialist thinks deeply about an area of expertise in which they have experience and are less likely to make mistakes.

Speed- Specialists do not need to reinvent things. Cycle times on proposals and product delivery is faster. If a company offers 50 stock products instead of 500, they can manage less inventory and ship items quicker. For every new project outside the boundaries of a company’s expertise there is resource draining learning curve that costs time and money.

Relationships-As the specialist is highly respected, their opinions are sought after by the media and people who want to know them, hire them and refer them to others.

The realities of outsourcing and off-shoring are driven by these phenomena. It is inherently inefficient to participate in activities that are not within a firm’s core competency and do not directly contribute to the bottom line. Thus, the migration of labor (outsourcing) will rise at a fervent rate.

In fact, the entire concept of the corporation, with its multiple functional departments (such as accounting, sales and marketing, design, operations, engineering, manufacturing, etc.) is under some attack. Social norms around what constitutes a working environment are shifting quickly and enabling greater specialization. Collaboration tools make the world of work far more virtual, which will continue to feed the frenzy.

Think about how to specialize as to optimize your revenue, margin and profit.

I have been on a speaking tour which has included multiple stops within America’s heartland. A couple of weeks ago I was in Kansas City and was reminded of our nation’s remarkable regional differences.

Perhaps it was the young lady at the front desk of my hotel who was overly impressed with my first generation iPad, the barren retail centers, or my overindulgence of Kansas City barbecue that gave me pause.  It is a place where the only thing more important than burnt rib ends is college basketball. Very different than in Florida, where I once had the misfortune of wanting to watch a Stanley Cup finals game in a sports bar where they had 12 TVs, all showing the same Nascar race – silly me.

As a strategy practitioner, I am overly fascinated by market segmentation, as it often provides remarkable insight. Our clients often segment geographically to reflect the performance of salespeople and the like. Segmenting internationally provides magnification of varying local tastes, wants and customs. Yet similar regional differences are just as apparent and important in the land of Chevrolet and Apple Pie.

For example, people in the Northeast are far more likely to wear a suit than people in the South and business hours are later than they are on the West Coast. “Ocean Pricing” does not play well in the Midwest where the cost of living is lower.  There is an entirely different values set there; people are sensible and humble, and want straight forward solutions to their problems.

In executing marketing and sales tactics, we need to be aware of regional differences and adapt our way of doing business.  It is important to be aware of the local pulse and how your offer may play differently based on the micro-economy, or regional tastes. If you were in the Pacific Rim, you would be aware of protocol; when to give a gift, and when to bow.  It is no different in understanding that when in Wisconsin, there isn’t any sports team to discuss other than the Green Bay Packers.

We should celebrate these differences; it is one of the things that makes America great.  Not to mention the “New Oaaawlens” Jambalaya, Superior Whitefish, Maryland Crab and New York Pizza, the white kind of course.  Try to get that in Los Angeles.

The protesters marched on the highway, despondent about rapid inflation.  They shut down the thoroughfare for hours. 1000 miles away, protesters flocked the capital and drove the legislators to safe haven in neighboring territories.

These were fundamentalists in Tunisia or Libya; they were students in California and state workers in Wisconsin.

The impetus for civil unrest in the Middle East is that of the “lost generation” of unemployed misdirected youth.  In some regions of the world, unemployment is 40% or more.  In the U.S. , it is not just the young that face underemployment but generations of workers whose skills have become irrelevant.  The U.S. has the western world’s widest income distribution. The Top 10% make 6 times that of the bottom 10%, compared to 4.2 X for Great Britain and 2.8 X for Sweden[i].  The labor market has hollowed, as wages earned by shop floor workers have actually declined (when adjusted for inflation) over the last two decades.

The labor imbalance in the U.S. has far reaching implications, not only for the unemployed but for our economy as a whole.  The inability of low wage earners to consume is a strain on U.S. growth.

While there is plenty of banter about the need for jobs, there is no systematic solution in place for retraining American workers such as displaced auto and steel workers. President Obama has called on U.S. business leaders to: “generate ideas for creating jobs, sustaining the economic recovery and making America more competitive”[ii].

Of course the notion of “creating jobs” is a little too convenient. Jobs are created when there is a need for them, and Americans get the jobs when they offer the most value. The problem is not that there are not enough jobs; it is that the cost-benefit for the employer often tips towards off-shoring.  If our workers do not offer enough value in the form of specialized knowledge, ability to use technology, etc., jobs will continue to be shipped overseas.

This is not a protectionist rant, and my comments aren’t intended to incite a riot on free trade, or China manipulating currency, etc. I am focused on what we can control.  What our nation needs is a retraining effort. The money we are spending on unemployment and other services would be better spent invested in people so that they can acquire new skill sets that are relevant in an ever changing world.

The question is who will lead, and who will pick up the bill?  To prepare our workers for the future will require collaboration across business and government. Tax and other incentives need to be in place to encourage the retooling of America. So as GE Chairman Jeffery Immelt and the rest of the White House Council of Economic Affairs weighs in on jobs, I hope they emphasize that we need to create opportunities for workers, and provide them will the skill sets required to compete.

Otherwise, the marches may extend to Washington D.C. and a state capital near you.

[ii] Obama wants business world’s best ideas on jobs USA Today

When the Internet was first thrust upon us, we didn’t know what to make of it. Nor did we know which of the entrants of the budding new market would win the beauty contest.  Our intuition was that someone (such as AOL, Netscape, Microsoft, Google, and Yahoo) would, and that the technology would be a game changer.

There are times when a technology is bigger than the first-to-market entrant who introduces it to us.  A current case in point is Toyota, a company who has been vilified in light of their massive quality and public relations problems. Yet Toyota has my attention, as they are braced to create disruption.

I recently bought a Lexus hybrid. I didn’t really buy it for environmental reasons, although reducing my carbon footprint was certainly a bonus. I bought it because I wanted all the toys, Lexus service and quality and was intrigued by the concept of 35 miles to the gallon (in a volatile world where the price of oil is at risk).

At its core, strategy is about managing trade-offs, and this technology provides the potential for consumers to gain the most, and give up the least.  I believe hybrid technology will emerge as a breakthrough, cross-over technology adopted by the majority of drivers in the U.S. in the next 5-7 years.  Electric cars are novel, yet inconvenient.  Americans are not going to adapt to sitting at charging stations for 2 hours, nor will they settle for a lack of power.  U.S. oil producers will not support any material shift to hydrogen, or corn, or recycled Twinkies, or whatever.  While the Prius was perceived as small and sluggish, the Lexus (a Toyota brand) is neither, and proves that the underlying technology can appeal to the masses. Toyota is way ahead of the pack in hybrid technology and I believe the day will come when it will provide a significant competitive advantage.

Of course this post is not about hybrids at all, it is about identifying breakthrough technologies that can disrupt an industry. Often, fortunes are made by the purveyor of a technology, as well as others who create alliances or business that can feed off it.

There are entire cottage industries being built to support such technologies, including the myriad of developers creating apps for The App Exchange (SalesForce) and Apple App Store.

Will Apple beat Microsoft in business computing (the answer is already clear in consumer products)?  Will cloud computing completely alter the technology landscape in ways we can’t even comprehend? Which mobile technologies will change the way we work and live?

What changes in health care technologies will revolutionize the way we care for the sick?  What emerging technologies could reshape your industry? What new delivery systems will improve the way your customers do business (or consume products)?  The answer will come based on who can create the best balance of trade-offs and win the beauty contest.