Friends,
As alluded to in the previous installment of this newsletter, my intention was to dig deeper into the concept of coherence today. However, I recently got a data update from Substack which made me put that topic on hold. As it turns out, though I do not know why or really how, Strategy in Praxis has grown at a pace far beyond my expectations. While still a humble field mouse in comparison to the giants out there, our little community is indisputably becoming larger by the week.
Thus, I wanted to take this newsletter to thank you all, from the bottom of my heart, for subscribing. Whether free signups or paid, you are what makes this contrarian stream of thoughts worth, well, anything. And you are, quite literally, making a real impact in my life. I promise to do my very best to return the favor.
As there has been an influx of new readers, there has also been an increase in questions. For good reasons (I would argue), not everyone is up to speed on my various incoherent takes about the state of practical strategy. Consequently, I have put together a Q&A of sorts based on some of the most frequent posers I have received over the last few months. Normal services will be resumed next week.
What is wrong with strategic planning?
In the right context, nothing. The problem is that most every context is considered right. In a context-specific world, there is no such thing as context-general solutions. Or strategic approaches.
But plans lead to focus. How is that bad?
What many strategists miss is that focus is not the same thing as direction; some companies need focus, all need direction. The problem with focus is that it easily goes from grand vision to tunnel vision, although that is apparently a very controversial point.
In short, a narrow focus creates what is called robustness, which can be defined as the ability to take a hit. The more focused you are on any one thing, the bigger attack on that one thing you can take and remain standing. It is akin to making a single and therefore big bet, then repeating that bet over time irrespective of contextual change.
But the approach is guaranteed to fail due to the mathematics of the static (one-off bets) and the dynamic (repeated bets) being fundamentally different. Surprises will inevitably come along that hit so hard that they challenge the strategy at its very core and threaten the collapse of the organization - indeed, it is not a question of if but a matter of when. So one does not need just robustness, one also needs resilience, that is, the ability to stand up when you have fallen down. An overly narrow focus eliminates that capability.
So what is the alternative?
People occasionally take the previous point to mean that one should not do any form of planning or go “all-in” on agile. That would be nonsensical. For most companies, there is no need to be reactive and fast-moving all the time. But they do need the capability to move fast when required. Unfortunately, traditional strategic planning often turns into playing the average instead of deliberately building the capacity to move fast for when one inevitably has to, and the requisite resilience that comes from exploration near the proverbial edges.
Zooming in on the one thing one thinks is the key causal factor in a company’s path to success is, to use a possibly crude term, a stillborn premise. Companies act in complex adaptive systems that inherently lack linear causality. In other words, it is inherently impossible to know what the one thing to focus on is. The only thing we do know for sure is that we cannot know everything. Thus, it makes sense to be prepared for surprises and consider what to draw on to adapt when real-life situations fail to fit the plan or even pre-planned contingency. After all, the very definition of the unexpected can be said to be that which fails to match one’s model of the world or what has been working up until that point.
The key lies in finding a contextually suitable balance between the short and the long, the efficient and the effective, the stable and the fluid, the proactive and the reactive. As strategists, it is ultimately our job to get the organization to move in a certain direction, improve the odds of a favorable outcome and manage risks. Even if we cannot entirely control, we have to at least create some form of what one might sloppily call controlled emergence.
The solution that I have created, which builds on a number of scientific fields applied to strategic management, is the ABCDE framework. A large part of this newsletter is to build toward its official introduction.
What about goals? Without plans, there is none.
While that is not strictly true, I am not recommending anyone to “do away” with plans entirely. What I am suggesting is that, at least on a business strategic level, we move from explicit goals as objectives for strategy to measurement against direction; cadence, velocity, trends and vectors.
There are two reasons why.
Firstly, all companies act in a time continuum between inception and demise - what we view as endpoints never truly are. Thus, heading in the right direction at the right pace makes more strategic sense than ensuring we make stops that we identified in one context, even though said context would have ceased to exist the same moment we agreed upon the goals in question.
Secondly, any explicitly demanded (finite) results will be gamed. Mark Friedman, the man who literally wrote the book on results-based accountability, admitted that the most important outcomes are uncontrollable - but then added that “we should not allow that as an excuse because then there would be no performance measures at all”. This amounts to little else than “life is a lottery, be lucky”, in a corporate setting often with the addendum “and if you are not, we will replace you with someone else who might be”.
When one asks people to be accountable for things they cannot control, they will learn to manage what they can control. As Toby Lowe (among many others) has noted, this usually involves the creation of data. The organization thereby goes from reality, to representations of reality (the models that we use), to gamed representations (proxies) of the representations (models) of the reality. In turn, this leads to massive inefficiencies. Or, to put it differently, what explicit goals are supposed to eliminate.
But is this all needed? Traditional planning works.
Based on available evidence, traditional strategic approaches do not work to the wide extent most seem to believe. In the right context, planning can absolutely, demonstrably work. But it can also create the illusion of working.
In technical terms, the phenomenon is explained by Woods’ fluency law: a well-adapted activity hides the difficulties handled and the difficulties resolved. In simpler terms, what it means is that expertise hides effort. While a good strategic plan can fail because of poor execution, a poor strategic plan can succeed because of good execution. Just as how many organizations make it not because of their competencies but despite their incompetencies, many companies make it not because of good strategic plans but despite bad strategic plans.
But more importantly, traditional strategic doctrine has yet to be updated with recent discoveries in complexity science. And that, by and large, is what I am attempting to do.
As I am certain you have seen, it is very much a work in progress. Yet I remain convinced it is a worthy endeavor. Based on your kindly provided comments, feedback and thoughts, it is clear that there is a genuine interest in collectively improving as strategists. And that, at the end of the day, is all that matters.
So thank you again and keep the reflections coming. Together, we are creating.
Until next week, have a lovely weekend.
Onwards and upwards,
JP