When discussing with clients the development needs of their rising generation of talent, one of the things that we often hear is that ‘we need them to be more strategic’. What do they mean by this?
I facilitated a joint board/executive team away day last week where the word ‘strategy’ was used incredibly frequently and often to point to something that was missing and much needed but the definition of which remained fuzzy. This is ‘strategy’ as a catchall word, a bucket for all our uncertainty. It seems that nearly every time I hear the word ‘strategy’ being used, I hear a yearning for “something” but little clarity about what strategy or ‘being strategic’ actually is.
Strategy, it seems, is stuck. It has fallen foul of overuse and misuse and we are rightly suspicious of words whose meaning seems lost. Yet at the same time organisations are desperate for ‘strategies’ that work.
For me strategy is simply a way to win, a roadmap to success. But all too often the process of creating and developing strategy is overtaken by the constraints of planning. I have seen countless so-called strategies that are little more than a rough collection of individual departmental plans and budget lines brought together in a single document. The well-known author Roger Martin observes ‘90% of strategic plans I have seen in my life are more accurately described as budgets with prose’. A budget isn’t a strategy.
I think there are several reasons why ‘strategy’ is stuck and why most organisations don’t actually have an intentional, coherent strategy. Let’s have a look at some of the top reasons in more detail.
Strategy is engagement with uncertainty
There isn’t a right answer. You can never test what you decided to do against alternatives in order to select the best approach. All too often we kill any attempt to create good strategy by requiring ‘proof’ that it will work. This is the primary reason our companies lack good strategy, because, as one CFO told me ‘we don’t fund “don’t know”’.
Strategy is explicit choice
Strategies define a particular course of action over an alternative. We don’t like making explicit choices because they might be the wrong ones. Instead we end up fudging with meaningless ‘strategies’ like ‘putting the customer at the heart of our business’ or ‘we will be the best value supplier in our marketplace’ . These are just meaningless statements of intention, not choice and therefore not strategy. A good test of the strategic value of these kinds of statements is to examine the opposites (‘we will be the worst value supplier in our marketplace…’).
The purpose of strategy has changed.
It used to be that strategy was focused on building competitive advantage through reducing transaction and informational costs (a la Coase and Porter). These days, however, organisational costs are more likely to exceed informational and transactional costs as technology continues to rampage through our old certainties. Nimble and lean become preconditions for successful strategy - and yet we are stuck in old thinking. Competitive advantage isn’t the sum of all efficiencies anymore.
Strategy is seen as something done by senior and/or super smart people.
The rest of us just wait to be told what the strategy is and what our targets are. Strategy as done remotely from the front line, by a monoculture made up of a tiny subset of the available organisational diversity, just won’t cut it anymore.
So how can we create, execute and continually adapt a successful organisational strategy?
I like Roger Martin’s approach to the problem, which is deceptively simple. His book ‘Playing to Win’ details his thinking. He suggests that in designing and executing strategy organisations need to make 5 important choices. These are:
- What is our winning aspiration?
- Where will we play?
- How will we win?
- What capabilities must we have?
- What systems do we need?
All 5 of these ‘choices’ are vital - and are critically interdependent on each other. This interdependence is one of the core reasons why strategy is tough, because it requires those involved to ‘roam the range’ between the decisions implied in answering these questions.
Roaming the range is, to my mind at least, a core capability of leaders who are able to design, execute and lead strategy. This capability avoids the binary polarisation I hear in so many ‘strategic’ conversations that pose ‘either/or’ questions. But much more importantly it also avoids the fuzziness of the ‘both/and’ choices that duck the crucial issue of actually making decisions.
Roaming the range is an integrative set of leadership skills and capabilities that connect parts together to create wholes, brings diverse views in, sees relationships and networks (rather than structures and processes) and builds this capacity in others.
The reason strategy is stuck isn’t that we don’t understand what strategy is, it is that we don’t want to play; we don’t want to make choices and take the associated risks of making those strategic calls, we don’t want to tell our bosses that we can’t guarantee that a strategy will work.
The reason why we find strategy so difficult to do is that it requires skills that are in short supply. Strategy presents an integrative challenge that connects an organisation together and simultaneously sees both wholes and parts, sees the inside and the outside of the organisation as the same thing and understands diversity as a strength not as a weakness in making tough choices. We don’t readily develop these capabilities in our workplaces, in our Universities or Management Schools.
In an age where our technological cycles are outpacing our planning cycles we have an even greater need for effective strategy, to understand how to play and how to win in highly dynamic competitive environments.