Strategy. Simple Right?

A recent HBR article, “The (Surprisingly) Simple Rules of Strategy” (for some reason the magazine title is different than the online version), provides exactly what it states: a brilliantly simple view of the strategic planning process. The underlying theme is, strategy has become too reliant on models, and convergent thinking, at the expense of what strategy is tasked with accomplishing: generating new revenue, productivity gains and innovation. If one starts with a mechanical view to creative solutions, eg. models and case study approaches, the outcome will be a mechanical solution, de- void of insight or anything “new“.

There is a “sense that strategic planning does not produce novel strategies. Instead, it perpetuates the status quo.” However, it is important to understand that models, algorithms, case study methodologies do provide value. Without them, strategy can quickly float into the ether of impractical, vague and risky ideas. As one manager puts it:

“There’s a reason we keep those ideas outside of the box.”

The (HBR) article suggests “conventional strategic planning is not actually scientific.” It [strategic planning], requires a “re-boot“. In the views of the authors, A.G. Lafley, Roger Martin, Jan Rivkin & Nicolaj Siggelkow, strategy comprises three inter-related stages:

1, the formation of hypothesis (possibilities)

2, the q&a of “what would have to be true

3, the analysis (and decision) of the possibilities

The strategic planning world has neglected (1) and (2) for too long.

By first  (Step 1) focusing on choices, over issues, the strategic planning team focuses their attention on divergent thinking. This is where creative solutions are born. This is where strategy is anchored. This is where creative conflict thrives, and pushes organizations and society forward. And, this is where most executives and strategists retreat, to their, their people’s and the organization’s detriment.

Once choices are identified, a process within itself, an examination of the possibilities can occur (Step 2). Possibilities are grounded in a simple question: what could be? This stage is not, not, not about why something could not be. That stage will come. But innovation, and it’s cousin strategy, are based in starting with what could be and then analyzing the cost and benefits of getting there. Sadly, most strategic planning starts with constraints. This is the anti-thesis of creativity.

“… remind the group that ample time for skepticism will come later.”

Interestingly, the authors are quick to point out that the “status-qua” must be one of the possibilities to consider. It anchors and comforts the team that change not be part of everything we, as strategists, do. It also ensures there are, at least, two choices. And strategy, among many others things, requires choice and trade- off. Without so, it is not strategy.

Along with multiple choices, most strategic planning teams fail to recognize the need for diverse teams, backgrounds, and experiences. More of the same, will get strategic teams just that: the same. Include individuals who are not emotionally tied (read did not originate) the status-qua, but equally, include those who are. Include accountants, marketers, back-office processors, front- line staff, and those renegades who fit no model. All bring the necessary views to ensure divergent thinking is fully explored. And the most senior person should not lead the team. They are the boss, not the facilitator, and it will be hard to convince others, otherwise.

(Richard) Branson, who may know a thing or two about strategy and entrepreneurship, further supports the need for diverse teams, in a recent post on turning a personal weakness into strength. Specifically he states:

“As an entrepreneur, I learned that surrounding myself with people who were better than me at specific tasks put me at an advantage because I was free to focus on the things I was good at. We hired fantastic people throughout the Virgin Group to run our businesses, which provided me with the space to think creatively and strategically about new ventures and as I worked to grow Virgin’s business.”

This level of self confidence in one’s abilities and weaknesses is a rarity during the strategic planning process. It is also one of the most critically needed mindsets.

During this “creative” stage, framing the divergent creation of possibilities in one of three ways can be of great help. Inside- out thinking starts the possibility frame by asking, “what does the company do well now, and how can we do more of it better?” Outside-in asks, “what are the un-met needs of the market’s consumers, and how can we provide solutions? And finally, far-outside questioning asks, “what would it take be the Apple, google or Walmart of our market? The leader? The innovator? The revenue generator?“.

The strategic team will know they have generated a good list of possibilities if, (1) the status-quo is starting to look less attractive, and (2) the group is uncomfortable with, at least one, of the alternate possibilities.

From the list of possibilities, the team now moves into the “what would need to be true” phase (Step 3), whereby an exhaustive list of constraints are generated. The key here is, not to ask “why won’t this work?” Rather, asking what needs to be true, frames a solution architecture. One that provides a list of actions that can be objectively analysed. It is human nature to find fault in the possibilities we are not comfortable with, and this line of questioning mitigates this instinct.

Once no more “what needs to be true” suggestions can be made, as tested by another question, “given all this is true, would you support this possibility?” (if the answer is no, then all the “what needs to be true” variable have not been identified), the team can socialize their possibilities with other stakeholders, by asking the same questions. This step has the added bonus of transparency and collaboration during the planning process.

Yet another question happens at this stage, “which condition would you wish a guarantee on?“. The first answer, is the highest profile consideration. Keeping asking this question untill all the conditions have been ranked by order of profile.

From here, the team move into a more traditional approach to strategy, the design and testing of barrier conditions (Step 4). Whether the team now surveys, models, or crunches, it’s here the exhausted tools of the strategist come back into play. The key here is the most skeptical person(s) should lead the design and execution of the testing of the condition in question. Through this, the most fair and objective testing can be conducted, while also embedding engagement from all team members, should the condition pass.

There is, however, one distinct deviation from traditional strategic testing: sequential over simultaneous testing. At this point, the process moves to test design (Step 5). Testing is costly, in monetary, time and resource metrics. The process most strategic managers undertake is a parallel run, increasing the time, resources, and, accordingly, the cost. Additionally, parallel runs sacrifice depth of testing for breadth. The authors of the article suggest that a deep sequential testing model, while possibly more time-consuming, reduces costs and contagion risk to existing business.

Upon the completion, validation and socialization of the test results (Step 6), the pre- determined options can be chosen (Step 7).

So there you have. Strategic planning 1-oh-1. It’s simplicity is indication of it’s propensity to work. Simple is not “less valuable”. More probable is it’s increased value, in ease of execution, monitoring and engagement.

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