From long experiencing working both sides of the strategy table (as an executive and now as a consultant), I know that no one size or no one framework works for all situations. Adding to the complexity of navigating strategy, there are a large number of strategy tools, all with their own benefits and limitations. However, there are two strategy tools that stand out from the rest. This article shares some practical perspectives on Rumelt’s “Kernel of a Strategy,” and a new entrant from the world of the Boston Consulting Group: The Strategy Palette.
Too Many Tools and Frameworks Chasing Clarity:
Unfortunately, too many leaders and managers working hard to steer their organizations don’t have the experience or time to choose between tools or approaches and they end up grabbing hold of a methodology that feels right, and then they shoehorn it to fit their situation. They also expect the tool or the framework to auto-generate the right answers. The results are most often subpar.
You can cross chasms, swim in blue and red oceans, harness forces, create platforms, S.W.O.T. at the issues, H.O.P. around strategy, debate value disciplines until the cows come home, and still not end up with the right answers for your business. The brilliant Geoffrey Moore, uber-strategy consultant in the tech space even published a book, Escape Velocity, that he described as a framework of frameworks for strategy.
The art in the art and science of strategy is to know what tool to apply in pursuit of gaining clarity and choosing a way forward. It’s also understanding the inherent limitations of the toolset. However, there are two that I find particularly useful.
Much Like Great Popcorn, It’s All in the Kernel:
I regularly mention Richard Rumelt’s concept of the Kernel of a Strategy, described in his fabulous book: Good Strategy/Bad Strategy as incredibly useful for leaders striving to sort through complexity in pursuit of a way forward for their firms.
The kernel consists of three components according to Rumelt:
- A diagnosis that explains: “What’s going on here?”
- A guiding approach that leverages the diagnoses and suggests what the firm should do.
- A set of coherent actions designed to bring the guiding philosophy to life.
The brilliance of this approach is in its’ focusing power.
Developing a diagnosis for a firm’s situation is no simple task, but it is a definable, actionable task demanding rigorous critical thinking and debate.
Much like the best medical professionals who look holistically at our bodies and don’t just focus on treating visible symptoms, we as managers must do the same for our organization.
Declining revenues and profits or falling market share are symptoms. Assessing the cause is essential for developing a treatment regimen. Once this is agreed upon, then and only then is it time to define the approach and specific actions.
Rumelt’s Kernel approach does not allow groups to short-change critical thinking and analysis. While it doesn’t guarantee they will get it right, in the hands of a capable guide/facilitator, it ensures scrutiny of the right issues at a significant level of depth.
Fair Warning—There are No Auto-Answer Generators in Strategy:
Often, a firm’s managers will treat the analytical work of strategy with a black-box approach. For example, they will input everything everyone can think of for a Strengths, Weaknesses, Opportunities, and Threats (S.W.O.T.) exercise and then define a series of actions that jump off that framework and call that strategy.
S.W.O.T. can be a useful tool as long as it understood that at its’ best, it simply offers one view of a complex situation.
Instead of misapplying this tool, use Rumelt’s Kernel to drive the right debate and idea development. Better yet, use it along with the Strategy Palette, outlined in another fabulous book: Your Strategy Needs a Strategy—How to Choose and Execute the Right Approach.
Paint Your Strategy with the Strategy Palette:
This was one of those books I downloaded to my e-reader and promptly lost track of it. Imagine my surprise when scouring the literature for current and well-reviewed strategy reads, I tripped across a reference, only to find it in my library.
I’m annoyed at myself for ignoring this work for so long. My once-through reading of this book suggests it may be one of the most useful additions to the strategy toolkit in a long time.
The thesis of this research-backed work from Boston Consulting Group is that management teams and leaders need help choosing the right approach to strategy.
No one approach is right for each firm or even each part of a diverse firm.
The core issue is over assessing what type of an environment you are dealing with before choosing the approach.
The authors suggest understanding three critical variables in the environment…
…is essential for choosing a way forward.
Determining what the variables are for your firm or business unit is analogous to working through Rumelt’s diagnosis.
From those three variables, they describe five approaches to strategy: classical, adapting, visionary, shaping, and renewal.
Assessing the degree of predictability and malleability (ability to shape) helps the strategist determines the right approach from the five.
Depending upon the approach, the firm’s response will vary amongst a variety of actions or responses.
Getting the right approach to a given situation is effectively the holy grail of strategy work.
I love the palette metaphor, because much like a color palette, you can easily blend the base colors to create unique shades.
Managers can use this one palette to address multiple different situations for their firms. What is true for one unit or market or geography is likely not true for others. The palette encourages you to mix and vary your approaches as needed.
I also appreciate that inherent in the palette is a direct connection to the execution phase. Characterizing your situation properly is critical, but determining what to do about it is priceless. The palette challenges and guides you to define the right actions for the situation.
Nothing is Perfect:
As the authors of Your Strategy Needs a Strategy are quick to point out, their framework doesn’t guarantee that managers will make the right choice. They describe their experience with management teams either mischaracterizing the environment as more predictable or more shapeable than in reality. They also describe ample experience with teams getting this diagnosis right, but then proposing the wrong actions for the situation.
There is no tool or framework that substitutes for bringing to bear the discipline and rigor necessary to assess the situation and define the way forward. While neither of these two approaches solves for the right answer or substitutes for human judgement, they are incredibly useful tools for helping you and your firm get there.
The Bottom-Line for Now:
Vow to quit flailing with the work of strategy. Don’t let S.W.O.T. be your only tool and don’t expect any of the approaches to do much more than attempt to help you paint a picture of reality and point to potential approaches. Nonetheless, the right tools in the right hands and minds dramatically improve your odds of success.