If you’ve ever dealt with a complex medical issue, you understand how difficult it sometimes is to identify the real problem. Yet, pinpointing this problem is essential to developing the best possible treatment regimen. The proper diagnosis is essential to determining the right course of action. It can be a matter of life or death. The same goes for your firm’s diagnosis. The diagnosis determines the course of action (strategy), and the life and health of your firm. Get it wrong and this management malpractice threatens the existence of the firm.
My oldest (adult) son suffers from an aggressive form of Crohn’s disease. He was first diagnosed as a young teen and placed on a minimal maintenance routine. We learned a few years later that his situation (location, severity, treatment) had been imprecisely diagnosed when the emergency room doctor informed us that he had summoned a helicopter to fly him to a hospital that was prepared to deal with his very life threatening complication. He navigated that—barely—and we invested a great deal of time working in the right places with experts who helped us pinpoint the type and location of the Crohn’s and develop the best possible treatment regimen and monitoring plan. The results have been great!
As I dug into learning more about Crohn’s and IBS diseases, I learned a great deal about the complexity of diagnosing the problems. I spoke with too many individuals who had lived through a variation of my son’s situation—the wrong generalized treatment for a specific problem that was never properly identified.
The analogous situation takes place in business all of the time. Instead of taking the time to properly understand and diagnose the situation, managers deploy a shotgun approach with all manner of tactics, hoping to get lucky and find a winner. They’re playing fast and loose with the business and the livelihood of the firm’s employees, and this is indeed management malpractice. Sadly, it’s epidemic in our firms and government.
In organizational settings, I’ve lost count of the number of times senior management team pronouncements of strategies have fallen on deaf or cynical ears from the broader employee population. While poor communication is a critical part of the problem in these situations, the root cause is that most people don’t understand the diagnosis because management failed to find and describe it. They don’t understand the analysis of the situation, the assumptions and therefore, they don’t understand the problem/opportunity with pinpoint precision. Management spouts the approach and the tactics and provides very little context for how they arrived at these ideas. People don’t understand the “Why?” and without this understanding, the “What” and “How” are out of context.
Rumelt’s concept of the “kernel” of a strategy (diagnosis, guiding philosophy, coherent actions) is the most powerful framework I’ve yet encountered in strategy work to help simplify complexity. The diagnosis portion is step one, and it’s the equivalent of answering: “What the heck is going on here?”
It should come as no surprise that at the beginning of a strategy refresh initiative, the participants have widely varying views of their firm’s situation. Most of those views are anchored in their silo or functional perspective and there’s no unifying diagnosis. People and teams quickly want to jump to action-plan development and bypass the heavy lifting of diagnosis. If you’ve ever been a part of a miserably facilitated strategy process, you know what I’m talking about. Let’s suspend reality and define a vision. Time for a S.W.O.T. Now, let’s describe why we can win, and then define some lofty goals and responsibilities.
This template work makes people feel like they’re making progress. However, it’s just busy work without the context of a carefully developed diagnosis. It’s malpractice if the tactics are put into play and the diagnosis remains vague or non-existent.
A more effective approach is to accept that success is defined at the front-end of the process and it starts with a proper diagnosis. Use these ideas to jump-start the work of finding the diagnosis:
- Start with the general, “What’s going on here?” and then painstakingly explore, from the macro-trends and disruptive threats to the very specific insights gleaned from speaking with AND observing customers.
- Understanding a competitor’s strategy is useful, mostly in deciding what not to do. Don’t assume they’ve done the due diligence on diagnosis—like you, most have not.
- Look across sectors and technologies for external trigger events and macro trends that may present opportunities and threats.
- Document assumptions about everything and work with experts (inside and outside) to challenge the assumptions.
- Gain help in looking objectively at your warts and blemishes.
- Gain help in identifying and articulating your true superpower as a firm. Sorry, you have one superpower only, not six. It’s not something general—it’s very specific.
- Agonize over a distillation of all of this work to assess the situation. Debate the perspectives fiercely and don’t look for consensus as much as emerging clarity. Let someone with a practiced ear and kevlar skin distill and drive debate around the diagnosis.
Rumelt serves up a great number of excellent historical examples in Good Strategy/Bad Strategy. One in particular, the development of a strategy for dealing with the Soviet Union after World War II is quite powerful. The essence of it, “The Russians look forward to a duel of infinite duration,” eliminated from the equation the possibility of a negotiated “peace” and set the stage for a policy of containment that can be reasonably connected to the eventual demise of that incarnation of their government. Alternatively, a diagnosis that suggested the Soviet leaders would eventually negotiate peace would have led to a different set of actions with a potentially very different outcome. Once the diagnosis is set, the general approach and supporting cascading set of actions are able to be intelligently developed.
The Bottom-Line for Now:
Don’t settle for poorly thought-out, cliché-riddled statements of strategy baked in boardrooms without the benefit of fierce diligence and debate around the diagnosis. As a family, we learned the hard way that a wrong diagnosis was potentially fatal. For a business, it most certainly is.
Read more in the Art of Managing Series.
Art Petty serves senior executives and management teams as a performance coach and strategy facilitator/adviser. Art is a popular keynote speaker focusing on helping professionals and organizations learn to survive and thrive in an era of change. Additionally, Art’s books are widely used in leadership development programs. To learn more or discuss a challenge, contact Art.