Strategy Work is Mostly Messy in Our Organizations
Imagine you have the opportunity to serve as the proverbial fly-on-the-wall for various organizations across different sectors to observe the process of strategy creation.
When asked to share what you observed, I’m confident you will highlight a confusing morass of discussions, political debates, arguments over resources, glorified attempts at operational planning, and the gross abuse of something called S.W.O.T. I’m equally confident you won’t have a better understanding of the actual work of defining strategy as a result of your adventure.
The External Environment Demands Different Views
While we live and work in interesting times where traditional elongated planning processes no longer fit, leaders still have the responsibility to define a coherent strategy. After all, organizations must determine how and where to apply resources to serve stakeholders, beat competitors, and navigate the unexpected twists and turns of shifting business models and accelerating change. An organization’s leaders must develop competence as strategists.
Inevitably, defining strategy revolves around discussion driven by the use of various tools and frameworks. These tools provide different views to the organization’s situation, and in theory, help teams identify possible strategies. Yet, a confusing array of options makes selecting the right tools for strategy work a perilous process. In this article, I share guidance on cultivating your skill with strategy through selection and practice with the right tools and frameworks.
The Importance of Selecting the Right Strategy Tool for the Situation
As a child, I marveled at the variety of my father’s tools for fixing and building things around our home. He patiently answered my questions about the different tools and their uses and would always conclude our discussions with the statement, “There’s no substitute for the right tool at the moment.”
He’s right, of course, on matching the tool to the situation. If you need finesse, it doesn’t pay to bring a tool that delivers force. And, if you need force, using the wrong tool is an exercise in futility.
And while I’m sure Dad isn’t the originator of this oft-repeated saying, he sure burned it into my brain from a young age: “If the only tool you have is a hammer, every problem looks like a nail.”
Yet, the most important thing I learned from observing him was that a good tool is only valuable in the hands of a well-practiced craftsperson who cares deeply about the work. The same goes for strategists.
Making Sense Out of the Noise
Working as a strategist is a commitment to learning to make sense out of the noise in the environment. From shifting industry dynamics to the macro forces creating seemingly chaotic, relentless change in our world, the work of strategy is more complicated than ever. We need the right tools to help us find coherence out of the cacophony.
Run a search on business strategy at your favorite online bookseller, and you’ll be swimming in blue and red oceans, playing to win, painting with a palette, crossing chasms, battling market forces, building platforms, and growing hungry as strategy eats culture for lunch.
It’s confusing! What’s a leader to do? Especially when the board wants to review the strategy refresh at next quarter’s meeting.
Learn to Use Strategy Tools that Help You Create Clarity Out of Complexity
Here’s why I highlighted the tools topic earlier. Strategists need help in making sense of our complex company, industry, and evolving market forces. This work requires the application of the right tools for the situation. While every practitioner has their favorites, I find three different toolsets to be head and shoulders above the rest for offering different views to complex situations and helping groups navigate the confusion surrounding working on strategy. I use these tools both independently and interdependently to help assess a situation and form a strategy.
Find the Kernel of Your Strategy
Richard Rumelt’s “Kernel of a Strategy” described in his fabulous book, Good Strategy/Bad Strategy is the best tool I’ve uncovered for getting teams on the same page about strategy.
The Kernel of a Strategy, as Rumelt describes it, includes the diagnosis, a guiding policy, and key actions. Teams work until they cultivate a clear assessment of the situation—the diagnosis. The guiding policy follows the diagnosis and clearly articulates what the firm must do given its situation.
Expect to spend a good deal of time cultivating an accurate diagnosis and even more time working on the guiding policy. (See the toolsets described below for help with this important work.) Effectively, when finished, you will have identified the firm’s base strategy given the circumstances. The key actions are the steps and investments essential for bringing the strategy to life.
Learn to H.O.P.
In another foundational book, Escape Velocity, Geoffrey Moore describes a framework of frameworks with his Hierarchy of Powers (H.O.P.). This toolset challenges teams to think of their business in a series of cascading layers starting at the top with category choice and proceeding through the company, segment, offer, and execution layers.
The challenge for the management team is to assess their situation vis-à-vis each layer and identify unique areas to compete, innovate, serve, and win. While Moore, the author of several outstanding strategy books, offers many more tools, the H.O.P. is excellent for helping teams view their situation and opportunities through different lenses. I adapt Moore’s H.O.P. as one toolset to help me create my diagnosis and guiding policy.
Paint with a Palette
In Your Strategy Needs a Strategy by Martin Reeves, Knut Haanaes, and Janmejaya Sinha, this team from Boston Consulting Group suggests the proper analysis of your external environment and market segments is along the dimensions of predictability, malleability, and harshness. Depending upon your market’s or segment’s characterization, there’s a palette of five core strategy approaches and distinct actions that guide your choices. This toolset is extremely helpful in suggesting guiding policy and jump-starting defining coherent actions.
Three Views, Yet the Synthesis is Up to You and Your Colleagues
No magical machine or silver bullet framework automatically spits out the correct answer for your strategy and the same goes for these frameworks and tools. Strategy formation is a process of exploration, assessment, and ultimately soul-searching decision-making for an organization’s leaders.
The three strategy toolsets I’ve described above, The Kernel, The H.O.P., and The Strategy Palette, are invaluable aids in helping you reduce the noise and find signal clarity in market and company conditions. Use them independently and, ideally, use them interdependently as you strive to build a shared view of your firm’s situation and options with your team members.
The Bottom Line for Now:
There are countless traps in the work of creating or refining an organization’s strategy. My counsel is to find the tools that help you create clarity and that promote a common language. Choose your tools carefully, practice with them diligently, and remember that they are only as good as the hands wielding them.
A version of this article appeared originally at SmartBrief on Leadership.