Strategy is about choice. It’s about making tradeoffs. It’s about choosing your not’s.
“What products will we not offer? What customers will we choose not to serve?” explains strategy consultant Rich Horwath in his book Strategic.
Strategy, he stresses, is not aspiration. Too often a vision or goal masquerades as strategy, but strategy is a deliberate plan for the future – how you intend to reach your goal.
Strategy is not best practices, which he says just brings you into convergence with the competition while strategy differentiates your offerings and your company from the competition by presenting superior value to customers.
Strategy is also not cautious – last year’s leftover ideas, rewarmed. It opens you to risks because properly done it is “as much the art of exclusion as it is the art of inclusion,” Meg Whitman, former chief executive officer of eBay and Hewlett Packard, has aptly put it.
A key element is resource allocation: How your organization will use its time, talent and budget to achieve your goal. “You may have a strategy written down in a PowerPoint deck, but observe how your people are spending their time, talent and budget every day and you’ll see your true strategy,” Mr. Horwath notes.
That means you can’t stop with developing the PowerPoint deck or written strategy. You must act on it to channel resources properly, which involves communicating the proposed strategy to the troops so they act in accordance with it. “Good leaders don’t leave strategy to chance,” he warns.
They start with themselves rather than organizational budgets, ensuring the executive suite is devoting its time, talent and budget to implementing the strategy. They track their time for a week and discuss where adjustments are needed.
But they also look at the larger picture – the system that is the organization. He recommends drawing a map of your organizational resources on a giant swath of butcher paper with the areas of resource allocation as islands. Those islands should be in scale relative to the resources they have. Then list the types and number of resources, such as full-time equivalent staff and dollars. Now at the top of the butcher paper write out the organization’s top three to five goals and discuss how to shift resources to meet those goals more effectively.
“To reach any new outcome we seek, we need to change how and where we invest our resources. Simple in concept, more challenging to do,” he writes.
Unfortunately, he adds, most companies don’t do that. The reallocation of people is the most common resource not addressed. It involves shifts in priorities of what people do, but also killing initiatives and even businesses that no longer fit. The status quo is easier than choosing and acting on your not’s.
He distinguishes between strategic thinking, which involves playing with ideas and generating new insights, and strategic planning, which builds the framework for the future. Michael Watkins, a professor at the IMD Business School, says recent developments in technology, globalization and political and economic instability have only heightened the need for strategic thinking as business models are being disrupted and new opportunities arising. “Businesses that aren’t led by strategic thinkers get outmanoeuvred by those that are – either they are acquired or they wither and die,” he writes in The Six Disciplines of Strategic Thinking.
Those disciplines are:
- Pattern recognition: It’s important to understand the patterns in the world around us that will affect the organization. Select areas to immerse yourself in and look for trends. The best strategic thinkers are skeptical about their intuitions and challenge everyone’s convictions.
- System analysis: You need to be adept at breaking complex phenomena into component elements, understanding how those elements interact and use that information to build good representations of the most important cause-effect relations affecting your organization.
- Mental agility: This is the capacity to continually rethink the best ways to move your organization forward amid ever-increasing complexity, uncertainty and ambiguity. He stresses being able to shift your focus so you can see the forest and the trees – high-level analysis but also understanding into the details. You also need to focus on the “games” your business must play, anticipating the actions of other intelligent “players” and factoring them into your strategy.
- Structured problem solving: Those three disciplines help you to recognize and prioritize, but you also must mobilize for action. That starts with systematically thinking through problems and developing potential solutions. Today’s problems tend to be more challenging and intractable. You must delineate mutually exclusive options, apply evaluative criteria and make tradeoffs.
- Visioning: You need the ability to imagine potential futures that are ambitious and achievable and then organize to achieve those goals, communicating and energizing people around the vision. A vision should be descriptive and specific. It should include how people will act when the vision is fulfilled.
- Political savvy: You need to understand the underlying power dynamics, the motivations and interests of different stakeholders, and the potential implications of various courses of action. That allows you to navigate and manage the political environments to achieve your goal.
All of us differ in our abilities in these six areas. Mr. Watkins says the key is to focus on how to get better, gaining experience and exercising your brain.
Cannonballs
- Former Rotman School of Management Dean Roger Martin warns against superstition in management, which works against bold strategic choices. People shy away from an option because it has been tried before, without an analysis of why it didn’t work or whether the new approach might be different. “Typically, the executives involved were so traumatized by the bad thing happening that they don’t ever want to go anywhere in the general territory of the thing – even anything that looks vaguely like it,” he writes on his weekly blog.
- Climate change protection will become a new employee benefit in coming years, according to Gartner researchers, as companies offer employees subsidies for short-term housing, relocation assistance, disaster-related leave or specialized safety equipment.
- Every human decision is a gut decision says Basecamp software founder Jason Fried: “Data may inform, but as long as a human is making the decision, it’s ultimately a judgment call. If you’re just going by the data, then you’re confirming, not deciding. Machines are better at that than you’ll ever be.”
Harvey Schachter is a Kingston-based writer specializing in management issues. He, along with Sheelagh Whittaker, former CEO of both EDS Canada and Cancom, are the authors of When Harvey Didn’t Meet Sheelagh: Emails on Leadership.
Harvey Schachter