In my regular MBA teaching session on strategy execution I offer 7 principles that underpin execution. Number 1 on the list: start with a compelling strategy. It might seem obvious, but can you, hand on heart, declare your strategy is ‘compelling’?
Is your argument – the underlying logic – compelling? Strategy is a hypothesis about future value creation and is therefore not provable. But that doesn’t’ excuse weak logic. And will it move people? Great strategy persuades and creates a ‘community of action’. Logic will only take you so far: you have to engage emotionally as well. This is about identity: who we are.
Fortune magazine once reported 82% of CEO’s believed their strategic planning was effective, but only 14% were happy with execution. Don’t believe that narrative. Remember, 80% of us think we’re better than average drivers. Perhaps if their strategies were better, the execution performance[1] would be much better? McKinsey data indicates that executives increasingly recognise their companies are creating sub-standard strategies.
So, if a compelling strategy is the foundation for great execution – which is an Achilles heel for most companies – and most companies fall short on this measure, what can we do?
Michael Porter favours a highly analytical approach, with strategies as particular configurations of the value chain which provide strategic positions that cannot be easily copied. By contrast, Mintzberg sees strategies as patterns in a stream of decision and actions, mostly based on managerial intuition and creativity.
If there were one way of creating great strategies, we would all do it, and then any advantage would be lost. The research suggests firms able to accumulate several modes of strategy making process capability appear to outperform other less process capable organisations.
Hamel argues that strategising isn’t a ‘thing, and neither is it a process:
“it must be a deeply embedded capability, a way of understanding what is really going on in your industry, turning it on its head, and then envisioning the new opportunities that fall out”
Hamel has always positioned himself as a revolutionary – famously penning a Harvard Business Review article ‘Strategy as Revolution’. Imagining your industry ‘turning on its head’ is a useful thought experiment, but don’t expect that to fall out of any workshop. And it isn’t necessarily your best option.
However, the notion of strategising as a capability is consistent with McKinsey’s thesis that strategy is the product of three processes: strategic thinking; formal strategic planning; and opportunistic decision making. Of these, they argue, the formal strategic planning process is the least important.
When the formal planning process is reduced to its common ritualistic process, I buy that. But there is much we can do in designing better ‘formal strategy processes’ that will contribute to building strategic capability. And strategic capability, like strategic advantage, is built cumulatively over time.
My personal bias is toward strategy as a conversation. To borrow from Theodore Zeldin: conversation doesn’t just reshuffle the cards, it creates new cards[2]. These conversations include, but extend well beyond, the formal strategy processes.
Here are three conversational processes you can embed into your strategic planning process. They offer a pragmatic, actionable pathway to building strategic capability, and on the way, building strategic insight.
1. Expose your team to multiple ‘strategy’ models through a well designed conversation process. Each model is both an approximation and a simplification of the real world. No single model is likely to generate game changing insight. Each offers a lens into the nature of the strategic challenges and opportunities facing your business. The insight comes from the synthesis. The skill is in knowing which of the myriad strategy models suits your specific context.
2. Be willing to invest in conversations that are more open, more exploratory. Embrace the uncertainty and not knowing. Premature elimination of uncertainty relieves us of the burden of not knowing, but it exposes us to strategic blindness. Rumelt suggests that uneasy sense of ambiguity you feel is real: it is the scent of opportunity.
3. Extend the strategic conversations beyond the formal strategy process. Ask yourself: how do we maintain the energy and feeling of a great strategy process as we seek to engage the rest of the organisation in the conversation and its translation from intent into outcomes. Senior managers consistently over-estimate the extent to which subordinates share their world view.
McKinsey suggest that the increasing scope and complexity of strategy demands organisations need to be thinking differently about what it means to develop great strategy. The former Chair of the Strategy Unit at Harvard Business School, Cynthia Montgomery offers this perspective:
“When you look at strategy as a frame of mind to be cultivated, rather than as a plan to be executed, you are far more likely to succeed over the long run”
If you would like to change up your strategy processes, or simply build out the strategic capability of your team, feel free to get in touch.
The Unfashionable Strategist
[1] If your strategy doesn’t align with the execution capacity of the organisation it is a failed strategy regardless of how good you think the strategic planning process
[2] Theodore Zeldin: When Minds Meet
