Distillations in this newsletter: NEW BOOK: ‘Core Values’; Spring cleaning ‘organisational debt’; Rumelt’s ‘The Crux’
STRATEGY DISTILLED:
A monthly concoction of insight, learning and things you might have missed for anyone who works on strategy, works with strategy or just loves strategy.
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This month …
- My new book: ‘Core Values’ is published!
- Spring cleaning your ‘organisational debt’
- I hope you haven’t missed: Richard Rumelt’s new-ish book, The Crux.
If you enjoy reading this newsletter, don’t forget to forward it to friends or colleagues who might also find it of interest.
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Discover the content of past issues of Strategy Distilled.
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NEW BOOK: ‘Core Values … and how they underpin strategy and organisational culture’
In last month’s Strategy Distilled I wrote about the book I was working on as my ‘minimus opus’ on the subject of ‘core values’. I proposed that I was hoping to have it published by the end of January… and the good news is that is exactly what I have done! As I said in my last newsletter, “resolving the core values of an organisation [is] a forcing function that helps to resolve your people strategy and hence starts the transition towards the culture your organisation seeks. And, of course, having the right organisational culture can make the difference between success and failure for any strategy.” My ‘Core Values’ book offers a framework for thinking about and making sense of core values followed by a workflow explaining what work needs to be done, in which order and according to what logic in order to produce amazing and impactful core values for an organisation.
The book is a short (just under 100 pages), highly accessible and practical guide for anyone interested in making core values impactful for an organisation. It sets out to enable you to:
- think more deeply & systematically about core values;
- discuss core values more meaningfully & perceptively;
- decide on core values for your organisation more rigorously;
- present & apply core values more impactfully.
‘Core Values’ is available to buy on Amazon – I look forward to hearing your views!
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‘Tis the season for spring cleaning … of all the organisational debt you’ve been accumulating
We all recognise that debt can be crippling for any organisation. When we think of debt, we usually have money in mind. Or, if you are an engineer, you may think of technical debt. Technical debt arises when software is released with insufficient testing, insufficient integration or poor technical architecture. As a result, bugs get reported and fixes need to get scheduled into workloads, until time is set aside to refactor the software and clear the technical debt. In 2015, Steve Blank, serial entrepreneur and author of The Startup Owner’s Manual, introduced a third type of debt into business thinking. “Organizational debt”, Steve proposed, “is all the people/culture compromises made to ‘just get it done’ in the early stages of a startup”. A year later, Aaron Dignan, founder of organisation design specialists, The Ready, suggested that Steve’s notion “was too narrow in its focus. Organizational Debt”, Aaron went on to suggest, “is so much bigger than just a startup phenomenon. In fact, I believe the concept of Organizational Debt will turn out to be one of the most important concepts in the future of work”. According to Aaron, organisational debt come in two forms:
- Obsolescence-based debt – when structures or policies become unfit amidst new market conditions;
- Accumulation-based debt – when structures or policies are repeatedly added but never removed.
He went on to suggest reducing or preventing organisational debt by:
- Not rushing into policy-making every time something goes wrong;
- Practice participatory governance across the organisation so everyone has a hand in editing how the organisation works.
Whilst these are good recommendations, the strategist in me wonders what happens if the organisational debt has already become crippling? What would a strategic response to organisational debt look like? Fortunately, Google has already provided one answer (as I mentioned in the August 2022 Strategy Distilled newsletter). They called it a Simplicity Sprint and CEO Sundar Pichai said it was designed to “create a culture that is more mission-focused, more focused on our products, more customer focused. We should think about how we can minimize distractions and really raise the bar on both product excellence and productivity.”
This type of discussion raises a pretty fundamental question about strategy: usually, strategy is thought of as separate from business-as-usual, yet Google’s simplicity sprint seems a blend of the two. It is all about improving business-as-usual but doing so in such a transformative way that it is also strategic.
So, here are some thoughts on strategy and organisational debt that I’ve found useful.
- A couple of newsletters ago I suggested a new definition of strategy that kept it separate from strategic plans: ‘Strategy is an evidence-based, persuasive and feasible narrative of your commitment to a desired future that is unattainable by just refining and optimising what you do currently.’
- The second half of this definition suggests a separation between strategy and business-as-usual. On the one hand we have a future we reach by refining and optimising what we do currently, and on the other hand we have a future that is more transformative and cannot be attained by just refining and optimising what we do currently. It is this latter, more transformative future that is reached by means of strategy.
- In this light, refactoring organisational debt sounds like it is a matter of refining and optimizing what we currently do. In which case it isn’t strategic.
- This would seem okay if the organisational debt was only in marketing or in operations or in HR. But what if it was systemic across the organisation? What if we, as an organisation, had been introducing processes, policies or standards that do more harm than good to most teams across that organisation?
- Also, what if this organisational debt was crippling our long-term fitness as an organisation? Maybe we miss business opportunities because our response is too sluggish. Maybe we lose staff because of too many day-to-day frustrations in getting work done. Maybe we spend lots of money fixing things that should never have been broken in the first place.
- So, maybe our definition of strategy needs an additional qualifier: ‘Exceptionally, strategy can be about refining and optimising what you currently do if it fixes systemic issues across your organisation that would otherwise cripple your long-term fitness as an organisation’.
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I hope you haven’t missed …
Richard Rumelt’s new-ish book, The Crux
Published in May of last year, this is the long-awaited follow-up to his classic Good Strategy, Bad Strategy – one of my favourite strategy books of all time. Here are a few excerpts to give you a flavour. Firstly, from Rumelt’s website promoting the book:
‘A strategy is a mixture of policy and action designed to surmount a high-stakes challenge. It is not a goal or wished-for end state. It is a form of problem-solving—you cannot solve a problem you do not comprehend. Thus, challenge-based strategy begins with a broad description of the challenges—problems and opportunities—facing the organization.
In performing a diagnosis, the strategist seeks to understand why certain challenges have become salient, about the forces at work, and why the challenge seems difficult. In this work, we use the tools of analogy, reframing, comparison, and analysis in order to understand what is happening and what is critical.
As understanding deepens, the strategist seeks the crux—the one challenge that both is critical and appears to be solvable. This narrowing down is the source of much of the strategist’s power, as focus remains the cornerstone of strategy.’
And, from the book itself:
‘The crux denotes the outcome of a three-part strategic skill. The first part is judgment about which issues are truly important and which are secondary. The second part is judgment about the difficulties of dealing with these issues. And the third part is the ability to focus, to avoid spreading resources too thinly, not trying to do everything at once. The combination of these three parts lead to a focus on the crux—the most important part of a set of challenges that is addressable, having a good chance of being solved by coherent action.
The concept of a crux narrows attention to a critical issue. A strategy is a mix of policy and action designed to overcome a significant challenge. The art of strategy is in defining a crux that can be mastered and in seeing or designing a way through it.
For the strategist, focus is not just attention. It means bringing a source 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 happens. If power is focused on the wrong target, nothing happens. But when power is focused on the right target, breakthroughs occur.’
My overall verdict on the book is that it is excellent, although unlikely to have the impact that his first book had. I particularly like the fact that it ‘corrects’ one of Rumelt’s most challenging ideas in Good Strategy Bad Strategy. The ‘strategy kernel’ was a key idea in Good Strategy Bad Strategy. This kernel, which, as the name suggests lies at the heart of any strategy, is a three part process: diagnosis, guiding policy and coherent actions. I have taught the strategy kernel in training sessions with business professionals and teaching sessions with students and they all struggle with the notion of ‘guiding policy’. In my view it was always badly named and lacked a crisp explanation. Now, that problem is by-passed because we have a new strategy kernel comprising ‘diagnosis’, ‘resolving the crux’ and ‘coherent actions’. It still needs explanation, but is a much more powerful strategic tool.
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Goal Atlas gives you structured processes and tools to ensure strategy is adopted and impactful across your organisation. Get in touch if you think we might be able to help.
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If you enjoy reading this newsletter, don’t forget to forward it to friends or colleagues who might also find it of interest.
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Discover the content of past issues of Strategy Distilled.