Distillations in this newsletter: Separating Strategy from Strategic Planning; Risk & innovation; Does your strategy travel?; Minecraft’s values.
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 …
- Separating Strategy from Strategic Planning
- Snippets on strategy you may have missed: How risky is innovation in your organisation?; How well does your strategy travel?; Minecraft’s values have bite.
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Separating Strategy from Strategic Planning
I’ve been toying with the idea for some time now that there are only a handful of foundational ideas in strategy. A foundational idea is one which underpins other strategic thinking – a strategic idea upon which other strategic ideas build. It is also foundational in the sense of solidifying or making more robust – a strategic idea that makes other strategic thinking more powerful and more impactful. In both my thinking about strategy and my hands-on, practical strategy work with clients I have concluded that one of the most foundational ideas in strategy is the separation of strategy from strategic planning.
Here’s the idea in a nutshell:
- Strategy and strategic planning serve different purposes within organisations. They require very different approaches, processes and tools and they produce different outputs.
- Strategy designs a preferred vision of the future for the organisation and sets out the types of change needed to bring this vision about. A strategic plan operationalises these changes over a defined planning period. It is all about people, priorities, resources, deadlines and targets.
- Strategy is designed to remain unchanged over several years. It remains the North Star guiding and informing the important direction-setting decisions for everyone across the organisation. The strategic plan changes annually (or even quarterly) and enables the organisation to remain agile in how it seeks to navigate changing circumstances to reach the destination defined by the strategy.
Failing to separate strategy from strategic planning can be damaging for your organisation in several different ways:
- If you put too much operational detail in a strategy, that detail soon goes out of date, potentially de-railing the whole strategy.
- If you change or refresh strategy too frequently, you don’t give enough time for big changes to embed within your organisation.
- If you fail to connect strategic planning rigorously enough to strategy, then change happens, just not the change defined by the strategy.
To explore this in more depth, check out my Separation Model of Strategy or watch Roger Martin’s recent 10-minute video called ‘A Plan is not a Strategy‘, containing these key insights:
- Strategy does not equal planning;
- Most of what is called strategic planning has nothing to do with strategy;
- Strategic planning is usually a list of things the organisation intends to do;
- A strategy is “an integrative set of choices that positions you on a playing field of your choice in a way that you win”;
- Strategy is a theory – here is why this playing field is better than any other and here is how, on that playing field, we will be better at serving customers than our competitors;
- To be a great strategy, it needs to be both coherent and do-able;
- Strategy is a lot more risky and harder to manage than planning, which is why managers tend to gravitate towards planning and avoid genuine strategic thinking.
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Snippets on strategy you may have missed
How risky is innovation in your organisation?
Mark Cuban is one of the world’s most successful entrepreneurs with a self-made fortune estimated to be $4.7B. Yet, even for someone with his track record of success, innovation is clearly very risky. He has been a judge on the US television series ‘Shark Tank’ for 111 episodes. As of 2019, the show receives 35,000 to 40,000 applications to appear on the show, of which the producers end up selecting 158 to film with the ‘shark’ judges (0.4% of applicants make it through to filming). Cuban has invested in 19% of the pitches that appeared on the show, committing a total of $20M in the process. Earlier this month, he admitted to CNBC that, so far, he had lost money on those investments. To put this into perspective, a highly experienced investor has lost money investing in innovation, when the investment rate was 1 in every 125,000 ideas proposed (whittled down first by the producers and then by Cuban himself). So, when you are finalising your next strategy, pause to think about how many ideas you have considered before picking the innovation(s) included in your strategy. How diligent have you been in trying to define the risks to be overcome in making this innovation successful? And is it clear how progress on this innovation is going to be monitored and reviewed to make sure it remains on track?
How well does your strategy travel?
The world of learning and development has a concept of near- and far-transfer, which, I’ve realised, could be very useful for strategists. Imagine a trainer delivering a training session. By the end of it, the trainees will, hopefully, be able to do what you’ve been training them to do. If, for example, the session was on personal responsibilities for cyber-security, you hope that they commit to changing their passwords periodically. If they do, you have achieved near-transfer of knowledge and skills. If they also start thinking about aspects of their work that you didn’t cover in the training, then you have also achieved far-transfer of knowledge and skills. They might, for example, check that the new CRM system they’ve recently started using encrypts all customer data that it stores.
So, how does this concept of near- and far-transfer apply to strategy? There are two senses of transfer distance that I think might be useful. Firstly, it could apply in organisational terms. A strategy that achieves only near-transfer affects the thinking and action of the executive team; one that achieves far-transfer drives change across the organisation. Secondly, it could apply to domains of application. A strategy might, for example, seek to increase income by expanding the audience reached by marketing materials. If income did indeed increase because of audience expansion, the strategy would have achieved near-transfer. If the strategy also made marketers think of other domains of application for the same strategic principle (e.g. segmenting the audience and investing disproportionately in segments with higher purchase-propensity) the strategy would have achieved far-transfer.
The practical lesson here is to use transfer distance as a way of validating your strategy in the late stages of its development. For each of the main strategic initiatives, think how you might be able to change how the initiative is described to increase the chance of it achieving far-transfer, without diminishing its likelihood of near-transfer.
For more on the details of near- and far-transfer, as it applies to learning and development, see Hempenstall K, 2019. Near and far transfer in cognitive training. National Institute for Direct Training.
Minecraft’s values have bite
A non-fungible token (NFT) is a unique, non-editable, digital token stored on a blockchain and often purchased with cryptocurrencies like Bitcoin. NFTs are commonly used to designate ownership of digital media, such as images or videos and these assets are increasingly being used in online games. Minecraft, one of the biggest selling games of all time, recently decided to exclude NFTs because they ‘don’t align with Minecraft values’. Here is an excerpt from their announcement:
“[Using] NFTs and other blockchain technologies creates digital ownership based on scarcity and exclusion, which does not align with Minecraft values of creative inclusion and playing together. NFTs are not inclusive of all our community and create a scenario of the haves and the have-nots. The speculative pricing and investment mentality around NFTs takes the focus away from playing the game and encourages profiteering, which we think is inconsistent with the long-term joy and success of our players.”
This is a great example of values being used to guide strategic action. So different from having values as ‘wishful thinking’ or values as ‘wallpaper’, as seems to be the case in so many organisations. Ideally every articulation or organisational values should be accompanied by a statement of how these values translate into action – they either encourage one type of action or discourage another. If, when you publish your values, you don’t have real-life examples of where these values have, in the past, changed the actions of individuals in the organisation, at least work through some hypothetical examples of where they could have impact. These don’t need to be published but at least they will challenge you to check that the values you are about to publish are the most impactful ones you could choose.
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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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