Strategy models & frameworks

The Pyramid Model of Strategy Adaptation

and Strategic Risk Adaptation Plan

What is it?

The Pyramid Model of Strategy Adaptation is a graphical depiction of the three on-going activities needed for strategy adaptation (sense-making, decision-making and change-making) as well as the three underlying capabilities needed to make these activities effective (surveillance capability, commitment capability and responsiveness capability). These form the basis of the Strategic Risk Adaptation Plan, a template for analysing and documenting response to strategic risk.

The Pyramid Model of Strategy Adaptation and Strategic Risk Adaptation Plan feature in Mike’s book ‘The Strategy Manual: A step-by-step guide to the transformational change of anything‘ and is also covered in our Strategy Master Workshops.

How do I use it?

The Pyramid Model of Strategy Adaptation can be used as a systematic framework for both thinking about strategic agility and resilience, and building agile/resilient capabilities around strategic risk. It is the basis for the Strategic Risk Adaptation Plan, a template that can be used as a way of analysing and describing how you can adapt to the uncertainties posed by strategic risks.*

Explanation:

Strategic risks arise out of uncertainty. Adapting to these risks requires a combination of agility and resilience. Strategy adaptation needs to identify risks, understand the underlying uncertainty, and decide how to mitigate any harm or exploit any opportunity arising from that uncertainty.

Adapting to risk requires three key activities:

1. Sense-making – seeking out relevant information on what’s happening (or likely to happen) and giving it meaning;
2. Decision-making – recognising what’s important; evaluating potential solutions; committing to action;
3. Change-making – accepting the need for change; planning change effectively; executing change efficiently.

Sense-making informs decision-making. Decision-making commits to change-making. Having made some changes, you need to revisit sense-making again. Iterating round the loop is the continuous process of strategy adaptation to risk.

These three adaptive activities can be depicted as the faces of a pyramid, each built on a robust base of capability, giving you the Pyramid Model of Strategy Adaptation.

Sense-making needs to be underpinned with a surveillance capability that enables effective sense to be made of the world. This includes:

• awareness of what needs to be sensed;
• the means of acquiring data on the key indicators and determinants of risk;
• operating systems and processes to monitor these data streams and recognise significant changes in risk status;
• having meaningful alert thresholds to trigger decision-making.

Decision-making needs to be underpinned by a commitment capability. This includes:

• a proficiency at assimilating information and insights;
• the information processing skill of being able to discern the best course of action from many options;
• the social skill to secure commitment by key decision-makers to a preferred course of action.

Change-making is underpinned by a responsiveness capability. This includes:

• a readiness and willingness to take action quickly;
• the flexibility to change priorities and commitments to make room for that action;
• the skill to undertake action effectively and efficiently, so it has the desired impact.

Of course, all these capabilities need to work thoroughly, efficiently and at speed. The Strategic Risk Adaptation Plan, based on the Pyramid Model of Strategy Adaptation, is a template for analysing high-priority risks and the capabilities required to adapt to those risks.

*The Strategic Risk Model illustrates how to recognise the risks standing in the way of strategy success. The Prioritising Risk for Strategy Model (PRiSM) can be used to identify which of those are high-priority risks. These can be used as the basis for your Strategic Risk Adaptation Plan.

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