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Strategy focuses our attention and energy towards a defined purpose. Our strategies both filter out activities we should not be doing as well as constrain us to things we should be doing.<\/p>\n
Most business leaders would agree to the value of strategy. \u00a0Yet\u00a0strategic planning can be a challenge in a changing and uncertain environment. Where does planning fit when it feels like\u00a0the context is shifting under the feet of the organisation? \u00a0And\u00a0when\u00a0planning does happen, are there approaches to planning that are more effective than others?<\/p>\n
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In his book Corpus RIOS: The how and why of business strategy<\/a>, author Christopher Tipler takes issue with the way strategy is developed in his prescription for a revised\u00a0strategic planning process:<\/p>\n What the CEO says, goes. This approach assumes the answers reside in the singular leader of the organisation. The strategy is enabled, and limited, by the knowledge, experience and vision of the CEO. This may work in some situations, but the CEO will eventually encounter situations he or she is not familiar with or make the wrong call. With a tenure of Australian CEOs at just over 4 years<\/a>, basing strategy on the opinion of one individual is a risky proposition.<\/p>\n Similar to Method 1, the consensus approach relies on either the general agreement of the leadership team or the most popular opinion within the team. While this has the benefit of many voices, the strategic direction can be biased based on the functional composition and history of those in the team. The strategy may have an expansion focus if the dominant voice is from marketing or the focus may be on product development if the experience of the main players is more technical.<\/p>\n Often referred to as a \u201cfast follower\u201d approach, this method is driven by the \u2018how\u2019 rather than the \u2018what\u2019. Tipler notes that a copying strategy is based on an ability to execute rather than an ability to innovate. There does need to be a balance, however. A 2012 HBR article<\/a> cites research that only 7% of innovators captured their market over time. The article notes the opportunity to become a learning organisation, asking not \u201cShould I go first?\u201d but rather \u201cHow do I accelerate the path to a breakthrough idea?\u201d<\/p>\n The opportunistic method is an easy-out in a rapidly changing environment. Tipler shares the idiom of \u201cfire your arrow, and where it lands, call that the target\u201d. Put plainly, a big move presents itself, you convince yourself it is central to your strategy, and after the event your organisational culture moves to rationalise and internalise the decision. This is the stuff of perfect hindsight case studies and management books for when it works, and chaos and ambiguity when it doesn\u2019t.<\/p>\n Similar to method 3 above, there needs to be a balance with strategic planning and taking advantage of opportunities as they arise. An HBR interview with Don Sull<\/a>, a teacher of strategy at MIT and London Business school, highlights challenges of businesses to remain competitive in a changing market. Sull proposes that \u201cthe key success in today\u2019s volatile markets is strategic opportunism\u201d.<\/p>\n I have been on both sides<\/a> as an internal organisational leader developing strategy as well as an external management consultant assisting leaders to develop strategy. Based on both experiences I firmly agree with Tipler\u2019s sentiment that outsourcing the definition of your strategy to an external agent is wholly inappropriate. Bringing in an external facilitator can be essential to drawing out the wisdom in the room, but abdicating leadership to a third-party will rarely end well.<\/p>\n Which brings us to the final and only recommended way Tipler sees strategy being develop, and that is through a planning framework.<\/p>\n The market knows the value of planning. \u00a0Do a Google\u00a0image search for strategic\u00a0panning process and you will get enough flow charts and diagrams to last you a lifetime. \u00a0There are a range of approaches to strategic planning that involve:<\/p>\n Roger L. Martin<\/a>, who co-authored with Procter & Gamble\u00a0\u00a0CEO\u00a0Playing to Win: How Strategy Really Works<\/a>,\u00a0sharedthree comfort traps that contribute to what he says is\u00a0the Big Lie of Strategic Planning<\/a>:<\/p>\n These challenges do not mean that leaders\u00a0shouldn’t plan. \u00a0Rather,\u00a0both Martin and Tipler prescribe an approach to planning that avoids these common\u00a0planning\u00a0traps. \u00a0Their\u00a0recommendations focus on defining what winning looks like and how to realise that winning state. \u00a0This shares the\u00a0basic premise of an\u00a0appreciative inquiry framework<\/a>.<\/p>\n The outline below compares the approach of\u00a0Martin’s Playing to Win approach and Tipler’s Corpus RIOS against the Appreciative Inquiry framework.The size of each stage is not indicative of the focus in the conversation, but simply an attempt to align where similar conversations happen in\u00a0each process:<\/p>\n Strategy does not happen in isolation of facts. \u00a0There is typically an understanding of the context in which the organisation is working and what the organisation brings to the table. Facts can, however, overwhelm the planning process.<\/p>\n This can be addressed as\u00a0Tipler recommends by\u00a0asking “So what?” (SOWWOT). \u00a0He highlights a\u00a0challenge with traditional SWOT analysis producing a thousand interesting facts, of which only a few are insightful, and a smaller number that can be translated into powerful ideas meaningful to the business strategy. Martin shares this concern about an overwhelming amount of data in his proposal for a strategy logic flow to connect with what it means to win.\u00a0Cooperrider raises concern about starting a process looking at the challenges, preferring to emphasis on strengths, opportunities, aspirations, and results (SOAR). The analysis needs to be relevant and build on the positive outcome, and is often revisited through the process to confirm and refine the inputs.<\/p>\n There is also the aspect\u00a0of guidelines that support\u00a0the decision-making process. \u00a0Tipler prefers the concept of principles over values, highlighting that values are not part of the strategy conversation. \u00a0Principles\u00a0are\u00a0the high-level rules that guide the behaviour of the organisation, whereas values can be considered the evidence of principled behaviour.<\/p>\n The approaches to strategy planning start with a confirmation of why the team is in the room. \u00a0The purpose is the reason why the organisation, group or team exists, their reason for being. Tipler refers to the three-part test that asks\u00a0who the customer will be, what customer needs will be met, and how these needs will be met. Martin starts the conversation\u00a0with\u00a0a future state by asking here what winning looks like as an aspiration. \u00a0The conversation sets up the rest of the planning process to both empower and constrain available directions.<\/p>\n Appreciative Inquiry starts with a precursor step to Define the scope of the conversation, followed by a Discover conversation\u00a0which can incorporate\u00a0purpose as an outcome\u00a0as the team explores their “positive core”.<\/p>\n It is best to identify and address early whether the purpose is not compelling to those in the room or if there are those who are not aligned with the purpose. To bring out the purpose, it can help to have a conversation about what the organisation is known for, what inspires the team about the organisation and their personal connection with the organisation. A well-developed purpose will motivate action and inspire creativity.<\/p>\n Strategic planning can be considered from either\u00a0pushing the organisation off from the current situation or pulling the organisation from the perspective of a positive future state. \u00a0All the approaches\u00a0mentioned propose the latter option.<\/p>\n A facilitated process called backcasting can help the team with the activity. Backcasting<\/a> is a process where you take yourself to a point in the future and describe what you see, as compared to forecasting from where you sit in the present situation. When we forecast, we often do so firmly grounded in the constraints and challenges of the current situation. This can limit our thinking and inhibit innovation. Backcasting provides a means to think about a future without constraints, reflection on what could be.<\/p>\n The team also needs to determine how far to set the planning horizon, or how far in the future they look. There are lifecycles for products, technologies, organisations, markets and industries that can dramatically increase uncertainty when the horizon is set to far out. An\u00a0operational team may focus on one to two years, whereas a board often starts at around five years.<\/p>\n Once the team knows what\u00a0the future could look like, the conversation moves to general\u00a0ways in which they can get there. This is often achieved\u00a0through a an\u00a0approach where the team expands their thinking through brainstorming ways they can achieve the winning state\u00a0and then consolidating the ideas into categories. \u00a0These then\u00a0become the\u00a0arenas or fields in which the team will play to win. \u00a0As Tipler notes, these are the areas in which the organisation or team must excel at in order to win. \u00a0This starts to serve the purpose of strategy, which is to\u00a0focus attention towards a desired outcome.<\/p>\n The next step is to determine what each category means. \u00a0In describing the stage as recitals, Tipler notes that\u00a0\u201cA recital is an invitation; it invites you to act a certain way or in a certain direction and is therefore an immediate motivator.<\/em>\u201d For each arena, the recital describes what it means to excel at the arena. Martin speaks about identifying how to win in the areas where you will play. \u00a0This is encompassed in the Appreciative Inquiry phase of Design, as the elements of the future state are expanded.<\/p>\n This stage brings life to the strategic areas, creating compelling reasons for each of\u00a0the strategic categories. Anyone in the organisation should be able to connect to the meaning of the strategic area\u00a0if they are working on an action out of the strategic plan.<\/p>\n The final\u00a0stage is the actions and measures of the strategic plan. \u00a0Tipler\u00a0describes\u00a0acts that\u00a0need to happen in order to satisfy the recitals for each arena, typically set at 180 days or 24 months. Martin speaks of systems and measures, and Appreciative Inquiry provides space for detailed action plans.<\/p>\n The detail will depend on the resources available\u00a0and the levels of leadership within the organisation. An executive leadership team of a large firm would like stay at high-level initiatives whereas an operational\u00a0board for a snall not-for-profit\u00a0may need to define specific action plans assigned to board members.<\/p>\n These are common frameworks for\u00a0strategic planning, but each situation has\u00a0a slightly different expression. All tap\u00a0into the best parts of the organisation, connect with a compelling purpose, describe what winning looks like, and co-design how to get to that state through broad areas\u00a0that are clearly understood and supported by practical action.\u00a0The outcome is both energising and practical, building positive momentum.<\/p>\n The environments organisations operate in are competitive, constrained\u00a0by scarce resources, and constantly changing. \u00a0The need for leadership focus is as critical as ever. Simply having a strategic plan does not ensure success, but not having a plan at all could be seen as contributing to failure. \u00a0Assuming the purpose of your organisation has value and the energy that is being invested into it is worthwhile, it would make sense to take some time to plan that investment.<\/p>\n I welcome your thoughts\u00a0in the comments below based on\u00a0your own experiences with planning for your team or organisation.\u00a0Do you plan? If you do, do you use a framework?\u00a0\u00a0I also invite you to share using the social links below\u00a0if there are others you feel could benefit from a\u00a0strategic planning\u00a0conversation.<\/p>\nStrategy development method 1: Strategy by Executive Fiat<\/strong><\/h3>\n
Strategy development method 2: Informal consensus<\/strong><\/h3>\n
Strategy development method 3: Copying others<\/strong><\/h3>\n
Strategy development method 4: Reacting opportunistically<\/strong><\/h3>\n
Strategy development method 5: Outsourcing<\/strong><\/h3>\n
Strategy development method 6: Planning<\/strong><\/h3>\n
The problem with planning<\/h2>\n
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\n<\/strong>A confirmation of the\u00a0vision,\u00a0purpose and\/or values of the organisation.<\/li>\n
\nOften in the form\u00a0of a SWOT\u00a0(which\u00a0looks\u00a0at an organisations strengths, weaknesses, opportunities and threats), and\/or\u00a0PESTLE analysis (which looks at the\u00a0political, economic, social, technological, legal and environmental impacts on the organisation).<\/li>\n
\nApply a strategic framework to the analysis, such as Porter’s generic strategies,<\/a>\u00a0the\u00a0Miles and Snow typology<\/a>,\u00a0the\u00a0Boston Consulting Group growth matrix<\/a>, and\/or the\u00a0General Electric\u2013McKinsey nine-box matrix<\/a> to determine where the organisation is positioned and where it should position itself.<\/li>\n
\nDefine\u00a0actions to support the strategies.<\/li>\n
\nDefined how progress is measured against the strategy, often\u00a0through key performance indicators (KPIs) and possible application of\u00a0a balanced scorecard<\/a> approach.<\/li>\n<\/ul>\n\n
\nPlanning itself is not strategy,\u00a0although you can have a\u00a0plan to execute your strategy. Planning is what happens between strategy\u00a0and getting things done, but should not be mistaken for either.<\/li>\n
\nRevenue and costs are important, but not at the exclusion of understanding what has value to the\u00a0customer. A\u00a0strategy that looks only at budget lines items can be like\u00a0the proverbial woodcutter who excels at chopping trees but ends up in the wrong forest.<\/li>\n
\nThe third trap is when strategy is defined exclusively\u00a0by opportunities as they arise or the current resources within the organisation. \u00a0Martin highlights a\u00a0misuse of insights\u00a0from popular\u00a0management writers over the past few decades. \u00a0One misuse is in using the concept of\u00a0emerging strategy<\/a>,\u00a0<\/em>popularised\u00a0by Henry Mintzberg in his 1996 book The Rise and Fall of Strategic Planning<\/a>,\u00a0<\/em>as an excuse to not have strategy but rather go in whatever direction “emerges”. The other issue is\u00a0not\u00a0seeing new ideas as a result of exclusively focusing on\u00a0the organisation’s core competencies based on a\u00a0resource-based view<\/a><\/em>,<\/em>\u00a0as outlined by\u00a0Birger Wernerfelt in his 1984 article\u00a0A Resource-based View of the Firm.<\/li>\n<\/ul>\nPlanning to win<\/h2>\n
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<\/a><\/p>\nSupporting aspects \u2013 Analysis and Guidelines<\/strong><\/h3>\n
Stage 1: Purpose and identity<\/strong><\/h3>\n
Stage 2: The positive future<\/strong><\/h3>\n
Stage 3:\u00a0Strategic areas<\/strong><\/h3>\n
Stage 4:\u00a0Meaning,\u00a0narrative, and how<\/strong><\/h3>\n
Stage 5:\u00a0Actions<\/strong><\/h3>\n
Strategic planning\u00a0as though your (organisation\u2019s) life depends on it<\/h2>\n
Image: (c) binoculars by Edith Soto <\/a><\/h6>\n","protected":false},"excerpt":{"rendered":"