The Complexity of Strategy (Image created by Midjourney)
Distillations in this newsletter: Core Values one year on; Overcoming the complexity of strategy; Strategy on a Page; Subtraction as a Strategy.
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 …
- Core Values one year on
- Overcoming the complexity of strategy
- Strategy snippets you might have missed: From Neil Perkin: ‘Strategy on a Page’ and ‘Subtraction as a Strategy’
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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Core Values one year on
“Essential reading for any organisation that’s reviewing its vision statement.”
It’s a new year and exactly one year since Core Values was published so we are celebrating by giving away five copies of the book and a further five copies of the Strategy Manual. I’ll send them off to the first subscribers to send me their postal address and say whether you’d like both books or just the one. Email me at mike@goalatlas.com.
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Overcoming the complexity of strategy
A good strategy, of course, is strikingly simple. It gives a simple imperative that can readily be seen to make sense and to be adopted as a guiding principle for decision-making and action across the organisation. This simplicity, however, is hard-won. As I will explain in a moment, strategy exists in a world of complexity and ultimately must triumph over that complexity. Good processes for both developing strategy and securing its adoption are, therefore, ‘complexity modulators’. They provide ways firstly to reduce complexity and secondly to navigate the remaining complexity.
Let’s begin with a refresher on this thing we’re calling complexity. A complex system is one with many component parts and many interdependencies between those parts. These interdependencies may be non-linear, contain feedback loops and adapt over time, resulting in complex systems giving different outputs from the same inputs. This makes unpredictability a defining feature of complex systems. By contrast a merely complicated system, while intricate and perhaps difficult to understand at first, behaves in a predictable manner. Once its components and their interactions are fully understood, the system’s outcomes follow a consistent pattern, making them predictable and more readily managed.
A mechanical clock, for example, is a good example of a complicated system. It is a precision instrument with gears, springs, and a pendulum, all working in a predictable, fixed pattern. Each part has a specific, unchanging role, and the clock’s functionality, based on mechanical principles, remains constant over time. By contrast, a modern smart watch is a dynamic, adaptive system. It integrates sensors, software, and connectivity to interact with a broader technological ecosystem. It ‘learns’ from user behaviour, adapts to new information (like health data from the user or data downloaded into an app), and evolves over time with software updates. This adaptability, interconnectivity and capacity for continuous change make it a complex system.
There are four key reasons why strategy is complex:
- Strategy is about ‘orchestrating change’. It sets out to bring about a transformational outcome by means of a multitude of interacting actions by different people and teams. Getting alignment in pursuit of strategy requires navigating the complexity of organisational cultures, structures and politics, as well as differing (sometimes opposed) stakeholder interests.
- As strategy runs its course, markets evolve, technologies advance, and political and economic climates change, often in unforeseen ways. Dynamic changes in the external environment around the organisation are a significant contributor to strategic complexity.
- Strategic decisions are frequently made under conditions of uncertainty and ambiguity. We may not know precisely where we are at the start of the strategy and we may not be able to accurately define our strategic destination. We may not know which actions will be most impactful and we probably won’t fully appreciate how success or failure in one aspect of strategy will influence progress in another part.
- Strategy’s complexity is magnified by the challenge of forecasting and preparing for a distant future. Long-term planning must contend with unpredictable shifts and the need for adaptability over time, making the strategic pursuit of future goals a complex endeavour.
For many in senior leadership roles, explanations of the complexity of strategy, like this, can be overwhelming. Here, then, are three ways a good strategist will reduce this level of complexity, followed by three ways of navigating the remaining complexity.
Reducing the complexity around strategy:
- Start with strategy scoping. Strategy is one of those things that everybody thinks they know about. We all have strategies. A health strategy to make us run and go to the gym. A sleep strategy aims to ensure a good eight hours a night. A work-life balance strategy stops you answering your boss’s emails at 11pm. Yet strategy is a classic ‘knowledge illusion’; it is only when we get into the detail of how we should go about developing one or getting it adopted that we realise how little we really understand. Strategy scoping addresses this knowledge illusion head-on. It asks why we need a strategy. What will be different after the strategy has run its course, compared to right now? It explores practical questions like how long our strategy should last. One year or ten? What will it look like when it’s written? A twenty-page essay or a single side of A4? Ideally, strategy scoping should end up with a checklist of ‘good strategy criteria’ that you can use to check if your strategy, once written, is good enough. By scoping a strategy before its development starts, what was once boundless and different in everyone’s mind becomes bounded and agreed upon. That’s a great complexity reducer.
- Separate strategy from strategic planning. There is a conundrum at the heart of strategy that, if not addressed, can provoke many hours of debate and confusion amongst a great many people. How can strategy remain the constant guiding North Star it is meant to be, whilst adapting to changing circumstances? Surely it needs to be one or the other. Well, it can be both if we separate strategy from strategic planning. Strategy is designed to remain the same throughout the lifespan of the strategy and to provide a constant, long-term North Star, guiding the decisions and actions of everyone in the organisation. Strategy should be the handful of high-level changes the organisation intends to pursue, even in the face of radical changes in circumstances. Strategic plans, on the other hand, are designed to change from the moment they are written. They not only define how the higher-level strategic goals are to be pursued, they also enable strategic agility. They have, built into them, the ‘sense-decide-act’ cycle that steers the organisation on to new courses to follow. All such new courses, however, remain in dogged pursuit of the handful of goals set out in the strategy. Again, we have just made strategy a bit less complex.
- Separate strategy from business-as-usual. This may sound simple and obvious but turns out, in practice, to be a remarkably powerful complexity-reducer. Business-as-usual is what your organisation does now. It is your standard operating procedures and your established ways of working. It is shaped by your organisational structure, your management and governance processes and your culture. By contrast, strategy defines how this business-as-usual needs to change, and explains why. Strategy and business-as-usual are, therefore, very different things. Obviously, for strategy to succeed, it must be underpinned by a lot of business-as-usual that not only needs to keep working but also needs do so effectively and efficiently. But this is no reason to clutter strategy up with lots of things that are actually part of business-as-usual. So, a great discipline whilst writing a strategy is to ask whether what you’ve just written is actually part of business-as-usual. If the answer is yes, delete it from your strategy.
By this point we have reduced the complexity of strategy a lot. We have placed boundaries around it and ensured a common understanding of what our new strategy aims to achieve within our organisation. We have stripped strategy of business-as-usual and of strategic planning. Strategy now is a handful of high-level goals to introduce change to the organisation that will make it fitter for the future.
Despite reducing the complexity of strategy, this still leaves plenty more complexity remaining to be navigated. Here are three ways to do so:
Navigating the remaining complexity:
- Destination or Path? It has become commonplace for strategy to be referred to as the pursuit of a destination or path. What is less well understood is that this ‘destination or path’ issue is not just a manner of speech; it is a critical decision that needs to be taken during strategy development. To commit to a destination is to commit to a specified end-state. It articulates clearly what outcome the strategy will have brought about. A path, by contrast, is all about the route we will pursue. It leaves the destination unspecified. Another way of thinking about this is: i) strategy-as-imperative (an imperative is an authoritative command that deems something essential) or ii) strategy-as-hypothesis (a hypothesis is a proposed explanation made on the basis of limited evidence as a starting point for further investigation). In some circumstances, we can be confident and assertive about where we want our strategy to take us. We want to gain market leadership, we want to hit a particular sales target, profit threshold or return to shareholders. Here strategy-as-imperative is the way forward. In other circumstances, it might be best for us to concede humility and admit we don’t know where our strategy will end up although we know which direction to pursue. We may seek to be more innovative by diversifying our workforce. Or we may commit to embracing generative AI to boost the productivity of our content creators. In which case, strategy-as-hypothesis is the way forward. This destination or path decision can apply to the strategy overall (the overarching goal of the entire strategy may be described in terms of destination or path) or to elements of the strategy. Indeed, I would often argue that a good strategy has a mix of imperatives and hypotheses within it.
- Keeping strategy well-informed. A shortcut in deciding whether a system is complex or complicated is to determine whether it has any living systems within it. Living systems, being complex and adaptive by nature, turn the systems they belong to into complex systems. One of the key reasons organisations are complex is because they are full of human beings. These humans sense, learn and adapt. As a result of them playing different roles within their organisation, they have different perspectives on that organisation. What to one person is an unassailable challenge may be a routine task to another. What is a strategic change in one part of the organisation may be business-as-usual at the other end of the building. Navigating the complexity of strategy is, to a large part, a matter of navigating the complexity of the organisations they apply to. A key part of making this navigation successful is to involve people across the organisation in the development of strategy, the adoption of strategy and the adaptation of strategy to new and emerging circumstances. This should happen right from the start of strategy development. Listen to a wide range of views on the most pressing challenges we face. Discuss the range of possible changes we could make in response. Then draft the strategy and be open to suggestions on how it could be improved. All this will make individuals and teams better prepared to engage in discussions on how they can participate in getting the strategy adopted.
- Strategy mapping. For a strategy to have its intended impact, a great many actions need to be undertaken by many different individuals and teams across the organisation in an orchestrated way. To try to achieve this using paragraphs of text can be a struggle: the narrative flow of big chunks of text don’t readily translate into discrete actions richly interconnected together. A better approach is to produce a strategy map, made up of discrete statements of action (goals) connected together as sequences of purposes and methods (see Fig. 1 and more on strategy mapping).
Figure 1. Strategy Mapping
Here is a brief example (Fig 2.). I want to [hit the profit targets of the business] (high level goal) and so I need to [sell products to customers] (method of achieving high level goal) and to do this I need to [market products to prospects].
Figure 2. Strategy Mapping Example
Each goal is the purpose of the goal below it (the ‘why?’) and the method of achieving the goal above (the ‘how?’). Having these three goals connected not only explains our methods, it also clarifies that one purpose of our marketing is profitable sales. Now whilst this is a simplistic example, the technique of strategy mapping is a powerful and indisputably logical way to tease apart the component parts of strategy and make sure they align and combine in impactful ways.
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Strategy snippets you might have missed
Fellow consultant and colleague, Neil Perkin, has published two interesting short articles this month:
Strategy on a Page
Neil argues that reducing strategy to a one-page summary is “a very useful exercise to go through” because it forces leaders to articulate what their high-level strategy is, it helps communicate the strategy and it can help teams to own the strategy. He points to Salesforce’s V2MOM as one way to sharpen focus sufficiently to produce the one-pager: Vision: What do you want to achieve? Values: What’s important to you? Methods: How do you get it? Obstacles: What’s preventing you from being successful? Measures: How will you know you’ve been successful? He goes on to suggest that such a one-pager needs to be supported by a clearly articulated (preferably written) strategy which gives the necessary supporting detail. I’m not so sure about this, as I’ve argued here (The case for strategy being limited to a handful of high-level goals) and here (Separating Strategy from Strategic Planning) … but still an interesting read.
Subtraction as a Strategy
Neil opens this post by saying “In a culture of accumulation, the value of taking things away is often overlooked”. He goes on to add “Strategy is all about making deliberate choices about what you are going to do and what you are choosing not to do (as David Ogilvy once said ‘the essence of strategy is sacrifice’). And yet so many strategies are pretty vague in specifics, particularly about what the company or team is going to stop doing to make space for the work needed to go in a new direction. Or the new strategy simply adds layers of complexity on top of what already exists.” Couldn’t agree more, Neil! I wrote on a similar topic on LinkedIn a couple of years ago and cited a fascinating finding published in Nature that ‘given a wobbly Lego bridge with unequal length legs, most people add an extra brick to the short leg rather than remove a brick from the long leg’. Less is more.
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I help leaders and teams to overcome the complexity of strategy. Get in touch if you’d like me to help in your own organisation.
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If you enjoyed reading this newsletter, don’t forget to forward it to friends or colleagues who might also find it of interest.
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