Lessons & Learnings
A recap
Friends,
As you all know, the past few months have been dedicated to a number of popular concepts that in some way or another relate to an organization’s strategic aspiration (the A in the ABCDE framework). Today, we are going to summarize our conclusions to see what, if anything, we can learn when we take a step back and look at them collectively.
But before we do, let us first set the proverbial scene.
The current exercise originally began with a question that I have received many times myself and asked others many times more: ‘what is strategy?’.
Although most have their pet definitions and, evidently, often assume everyone else shares them, the word strategy can mean and be used in a number of different ways. As Mintzberg notes in Of strategies, deliberate and emergent, it is most commonly used as either
a plan, a "how," a means of getting from here to there,
a pattern in actions taken over time,
a position that reflects decisions to offer certain products or services in certain markets, or
a perspective, i.e., a vision and direction.
But as you have probably already realized, an undeniable problem is that these uses are not merely different, but so different as to almost be each other’s counterparts. A plan is the result of direct control and deliberateness before the event, whereas a revealed pattern is the outcome of indirect control and emergence after the fact. Similarly, a position is where one is, while a direction is indicative of where one wants to be (and therefore per definition cannot be).
Given that strategy in practice tends to involve all of the uses to varying degrees, it is thus inevitable that contradictions and tensions appear over time:
A plan relies on foresight that is easy enough to define in the order of theory, but an altogether different matter in the complexity of practice,
a pattern will inevitably emerge in actions taken, but something must also induce the behavior in the first place,
a position can be defined in relation to a context frozen in time on paper, but that context will always be fluid in reality, and
a set direction can only ever provide value if one is also able to move in it.
Consequently, I would argue that - at its most basic - a strategy should be thought of as a means with which to improve the (metaphorical) odds of a desired outcome. That is it. That is the starting point. In order to know what outcome is desired, one has to define what the shared understanding of success looks like. This, in turn, is the aspiration.
On our journey to establish what would play into said aspiration, we first looked at Stephen Bungay’s strategic intent.
Strategy, in Bungay’s mind, started with a series of questions: where are you now, where do you want to be and how will you get there? This was, of course, a rather traditional approach. Where you are now is a diagnosis, where you want to be is an idealized future state and how you will get there provides the plan and programming. The strategic intent provides the underlying (non-Sinekian) why.
The problem with Bungay’s approach was not so much the intent, but the advice on execution that followed. Although designed to allow for contextual adaptation, it relied on limited concepts such as alignment and SMART goals that made the framework a lot less flexible than originally claimed.
Richard Rumelt’s guiding policy originated from a similar notion of intent. Rather than attempt to provide details about future actions, it acted as guardrails of a highway, directing and constraining action in a given direction.
Here, the issue was that although Rumelt intuited complexity, he did not (at least at the time of writing Good Strategy, Bad Strategy) know its full implications. This led to an unfortunate situation in which key aspects of his approach to strategy (e.g., strategy as a problem-solving mechanism based on some form of root cause analysis) were undermined to the point where the entire exercise was in danger of collapsing.
Roger Martin’s Where to Play/How to Win (WTP/HTW) framework proved better. Martin, in similar fashion to yours truly, began with a winning aspiration to broadly set the scope of the firm’s activities. From this followed the specific activities needed to achieve it, what the firm would do, where and how.
However, there were a few inconsistencies and contradictions in his reasoning. To take one example, he argued that a rule of thumb was to include the customer, not money, in the winning aspiration. Although such rules are not without exceptions, it was nonetheless weakened by the fact that the most important company for his overall narrative, Olay, defined its aspiration as ‘market share leadership in North America, $1 billion in sales, and a global share that put[s] the brand among the market leaders’. By comparison, the aspiration of another organization referenced – Starbucks’ ‘to inspire and nurture the human spirit – one person, one cup, and one neighborhood at a time’ – did include customers, but instead had nothing to do with winning.
Additionally, focusing too heavily on winning and considering it, to use Martin’s words, ‘the ultimate criterion’ has been shown to potentially lead to profitability issues (and the absurd conclusion that any strategy that fails to win also fails to be a strategy). To his credit, he did address some of these issues in a lengthy reply to my critique.
Henry Mintzberg’s strategic perspective followed. Contrary to competitive positioning which seeks to define the company relative to an external environment, it looked inside the organization and established its way of perceiving the world.
The conundrum here was how to do it. Although his conclusion that such perspectives would emerge is technically speaking correct (such emergence is a key phenomenon in complex adaptive systems such as markets and firms), it provides little guidance for any strategist looking to define one in practice. As I wrote at the time, to surmise that a company has a perspective based on its behavior in retrospect is a bit like drawing conclusions about a forest based on foliage observed from a distance; it is very helpful if you are an artist looking to paint a picture, but not particularly helpful if you happen to be a park ranger tasked with managing the ecosystem. If an organization can be defined as collective action in the pursuit of a common mission, as Mintzberg argues, then the question of how the mission is defined and shared has to be raised.
Alexander Osterwalder’s business model canvas took an almost opposite approach. Listing many of the various things that a company would do, it defined most of the what and much of the how. Its strategic use turned out to be limited, however, as it provided precious little information about why the organization should be doing anything in the first place.
Although updated versions such as that by Adrien Book proved better, they all fell into same trap of perceiving the firm as a machine in which every department, team or business function could be taken out, optimized, and put back in. We know this to be untrue.
Conversely, John Kay’s concept of obliquity attempted to provide the why, but not much about the how and even less about the what. Although the underlying premise – to define high-level objectives indirectly – was interesting, the underlying proof was flawed beyond saving.
We therefore concluded our inaugural seven with a return to basics. Using Bob de Wit’s Strategy Synthesis as a reference, we dug deep into missioning and visioning. At their respective cores and most basic, both proved capable of directing an organization in a wanted direction.
Alas, problems arose as organizations grew. Managers, often with the ‘help’ of consultants, were found to habitually turn once pragmatic mission and vision statements into lofty declarations of world saviorism, and the strategic value decreased as defined company values increased.
In summary, then, each of the seven strategic concepts had individual promise, yet none was perfect; they all had their strengths and weaknesses. However, collectively they allow us to draw an important conclusion: in order to define a company’s strategic aspiration - its shared understanding of success - one has to start with a declaration of direction that is pragmatic enough to be possible to measure (and deliver) against, yet ambitious enough to last beyond the next growth phase, whatever that may be. It has to be specific enough to guide decision-making, yet imprecise enough to allow for adaptation to context.
That is doubtlessly a tall order for the aspiration alone. From my experience, it is therefore best to err on the side of broad and timeless, and instead add a strategic filter of sorts that narrows the scope but may (≠ will) change over time. In turn, this forces us to think about how to set boundaries, that is, the B in ABCDE.
These will be our next big topic of conversation. But before we get to it, we are first going to address the elephant in the room - the famous strategic concepts that, somehow, failed to make my list. First up will be one from a certain Mr. Michael Porter.
Until then, have a lovely weekend.
Onwards and upwards,
JP