‘Strategy’ is a much-abused word. Goals are not strategy. All those analytical tools are not strategy.
Despite the boatloads of books and articles and ‘fill in the blanks’ PowerPoint presentations with heavenly vision and mission statements, the idea of strategy is missing in action. Like the black rhinoceros, the essence of strategic thinking is endangered.
Few companies, NGOs and organisations truly have a strategic plan. What they have is more a wishful “to do list” like operational plan. “Core work of strategy is always the same: discovering the critical factors in a situation, designing a way of coordinating and focusing actions to deal with those factors,” notes Richard Rumelt who McKinsey refers to as “a giant in field of strategy”.
Good strategy has what Rumelt calls the ‘kernel’ which has three parts:
Diagnosis - including a crunching of numbers and facts, analysis of internal and external environments, and looking what does the customer really want, and at the competition.
A guiding policy - which is the signposts, setting the direction based on the results of the interpretation and analysis of the diagnosis phase.
Coherent action - the “nitty gritty” details of what is to be done by who, and when – preparations for execution of the strategy – turning the strategy into action steps.
Define the problem
The diagnosis phase is the most critical, asking what the organisation's biggest problems are.
“A well-defined problem is 90 percent solved,” said Albert Einstein.
Narrow it down, try and get a Quaker meeting type of consensus - agreement. A long list of ambitions, a wish list might be therapeutic, but it is not strategy.
What are the, say, 3 main problems that have to be addressed for the company to thrive? It all starts with asking the right questions. For instance, how does the organisation create and capture value, both within, and for the customers?
“For the strategic mind to work creatively, it needs the stimulus of good insightful analysis. In order to conduct a good analysis, it takes a strategic and inquisitive mind to come up with the right questions and phrase them as solution-oriented issues.
Analysis done for the sake of vindicating one’s own preconceived notions does not lead to creative solutions. Intuition or gut feel does not alone ensure secure business plans.
It takes a good balance between the two to come up with a successful strategy,” wrote Kenichi Ohmae in The Mind Of The Strategist.
Should make you see differently
Strategy addresses a high stakes problem in the company and sets out ‘what are we going to do about it’.
Diagnosis begins with setting a hypothesis, a ‘best guess’ at what the problem is, then doing the hard number crunching, facts and figures research, to prove or disprove what one thinks is happening, all the time evolving, adapting.
Diagnosis addresses the question: Why is this problem so hard to solve? What are the constraints, roadblocks holding us back? Being both fun and engaging and thought provoking -- should define the strategy creation process. Quite simply: it should make you think differently about the problems faced.
Cut out all the fluff, the abstract high-sounding words that only demonstrate confused fuzzy thinking. When all is said and done, the strategy should be able to be reduced down to one page, clear and simple.
Likely asymmetric
In essence: a good strategy is usually asymmetric. Based on the limited resources, how are we going to leverage our assets, talents and knowledge? What do we possess that the competition does not have? We are we missing, what is right in front of our noses, yet it is being ignored?
If you were going to read only one or two books on the subject, Richard Rumelt’s Good Strategy, Bad Strategy has become a classic. His 2022 book, The Crux expands on the thinking, setting out his quite practical ‘strategy foundry’ approach.
It is often hard to predict what is going to happen at the end of the day, let alone five years into the future. Might be best to have a 3-year-strategic plan, and that is reviewed on an annual basis.
You can spot bad strategy based on the elaborate noisy rain dancing, the equivalent of management voodoo, producing a document that sits on the shelf gathering dust.
