Strategy. It’s a loaded term in the business world. Everyone has their own definition of it. At its core, strategy is a framework to address a situation, typically employed when facing a challenging scenario or competitive threat. The question to answer is if your strategy is based on sound principles or is it simply focused on end goals without a clear path to achieve them?
A recent feature from McKinsey provides an excellent example of how a company misunderstood how to build a strategy and they ended up losing market share because they were focused on financial performance goals instead of finding solutions to their actual challenges.
A survey conducted by McKinsey, “found that 70 percent of executives surveyed did not like their company’s strategy process and 70 percent of board members didn’t trust the results of that process.”
Many executives believe that their strategies are simply not implemented properly. That viewpoint misses on whether or not the strategy is sound, to begin with. What is decided in the boardroom is not able to account for what is faced in the day-to-day real world. As boxer, Mike Tyson once said, “Everyone has a plan until they get punched in the mouth.”
According to the article, “so-called strategy exercises do not produce strategies—because they are designed to do something else. In commercial settings, they are often attempting to predict and control financial outcomes, nothing more than a form of budgeting. The process may glance at broader issues, but it quickly centers on financial targets and then budget allocations. In nonprofits and government agencies, the strategy activity often develops a list of ambitions that passes as “strategy.” What is missing are the elements giving strategy its bite: a realistic assessment of the obstacles blocking or slowing forward progress and a mix of policies and actions designed to focus organizational energy on surmounting these obstacles.”
If anyone thinks strategy development is easy or simple, they could not be more wrong. Developing a sound strategy is complex and very difficult to design and execute well. If the solutions were easy to identify, they would not need a strategy to address, there would be a series of tasks to implement and that would be that.
In reality, these situations have multiple issues, many of which are not immediately visible, and must take into account the myriad of implications of each potential decision. How does it affect other aspects of the organization, what does it mean for customers, what are the long-term effects, is there an industry impact, etc…. Each element of a strategy should focus on the underlying issues that have created the situation. Making sure you understand the underlying issues is not an enjoyable conversation. It will focus on your shortfalls, weaknesses, leadership issues, and missed opportunities to name just a few reasons you find yourself in this position. However, without an honest assessment, you will continue to fall behind.
Bringing in trusted third-party experts during the strategy development process can be a good way to include an objective perspective. If it is just the executive team in the room, you all have a vested interest in the company and likely a big blind spot. CEOs are also trying to serve a variety of interests, “they are faced with a bundle of conflicting ambitions—a group of desires, goals, intents, values, and fears—that cannot all be satisfied simultaneously. Forging a sense of purpose from this bundle is part of the gnarly problem. Making matters most complex is the fact that the connection between potential actions and actual outcomes is unclear.”
As the article states, gnarly challenges are not quickly solved with a best practice approach. The only way to find a solution is through a process of understanding the underlying issues and working (and reworking) multiple solution options until your insight and judgment find the soundest path forward.
It is important to reiterate, that the path will not be clear initially. It’s only through hard work and debate that you’ll begin to understand the path forward, “at the least, problems must be deeply analyzed before an insightful solution can be achieved.”
Kees Dorst, an industrial design specialist, wrote, “Experienced designers can be seen to engage with a novel problem situation by searching for the central paradox, asking themselves what it is that makes the problem so hard to solve. They only start working toward a solution once the nature of the core paradox has been established to their satisfaction.”
Creating a sound strategy does not take place in a vacuum, outside factors will impact your approach and you’ll need to respond quickly. Thus, you must think of your strategy as an ongoing process. The article mentions three skills that can help you define your path forward and requires a focused, coherent approach:
- Judgment of which issues are truly important and which are secondary
- Assessment of the difficulties associated with different issues
- Ability to focus so as not to spread resources too thin or boil the ocean
As the article notes, “Strategic focus means bringing sources of power to bear on a selected target. If the power is weak, nothing happens. If it is strong but scattered and diffused across targets, nothing good happens. If power is focused on the wrong target, nothing good happens. But when power is focused on the right target, breakthroughs occur.”
Developing a sound strategy is not simply making a series of decisions, following your vision, or using performance goals to incentivize people. As the author writes, you are creating a strategy and it will often involve the following:
- Embrace the full complex and confusing force of the challenges and opportunities being faced
- Develop a sense for the crux of the problem—the place where a commitment to action will have the best chance of surmounting the most critical obstacles
- Be persistent and avoid the temptation to grab the first glimmer of a pathway through the thicket of issues
- Balance a host of issues with its bundle of accompanying ambitions—the purposes, values, and beliefs that stakeholders wish to support
- Keep actions and policies coherent and aligned, instead of nullifying efforts by pursuing too many different initiatives or conflicting purposes
A sound strategy requires that you first understand the underlying issues. Don’t worry about the goals initially, instead focus on the challenges you are facing and honestly assess how you can overcome them. For more detail and excellent examples (featuring Elon Musk, President Roosevelt, McGraw Hill, and Marvel), that illustrate strategic success and failure, we recommend reading the full article.
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