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Distillations in this newsletter: Five decisions you need to make about strategy BEFORE you start strategy development; New Book – Deep Design Thinking; Strategy Distilled – The Archive (2021-2024)
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 …
- Five decisions you need to make about strategy BEFORE you start strategy development
- Deep Design Thinking: my new book is now available as a paperback and eBook. Free paperback copies to give away to subscribers.
- Strategy Distilled – The Archive (2021 – 2024): free to all subscribers – a themed compilation of articles from the first three years of ‘Strategy Distilled’.
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Five decisions you need to make about strategy BEFORE you start strategy development
A formative decision is one you make to shape or form your subsequent thinking about a topic. As an everyday example, I need to think about what kind of holiday I’d like before I start researching different destinations (or, more challenging, what type of holiday would we all enjoy, before exploring family holiday options).
This applies in a big way to strategy. Strategy comes in many shapes and can be assumed to mean subtly different things by different people. So much so that failure to make good formative strategy decisions can make strategy development more complex and the resulting strategy much less readily adopted.
Here, then, are the five formative decisions you need to make about strategy:
- What is the intended reach of your new strategy (who is it for)?
- How big are the changes in your new strategy going to be?
- What is the intended lifespan of your new strategy?
- How rigorous do you need your new strategy to be?
- How strictly do you intend to separate strategy from strategic planning?
Let’s explore each of these questions in turn and then explore how best to tackle them in your organisation.
1. What is the intended reach of your new strategy (who is it for)?
The most straightforward answer to this question is either i) everyone – it is an organisational strategy and applies to everyone across the organisation or ii) some people but not others – it is a sub-strategy or a functional strategy. A sub-strategy typically drills down into, or expands upon, an element of the broader organisational strategy. Whilst an organisational strategy might commit to greater levels of innovation, a service development strategy might drill down into how we plan to increase the rate at which new services will be launched. Whilst its success will be of benefit to the whole organisation, it may only involve the engineering, marketing and sales staff with responsibility for service development.
It is also important to recognise that some strategies have an intended reach beyond the organisation. Your corporate social responsibility strategy, for example, might be as much for your customers, partners and investors as it is for your staff.
2. How big are the changes in your new strategy going to be?
Big hairy audacious goals or incremental changes in priority and focus? What for one organisation might be a radical strategy could, for another, be modest and undemanding. There is no right answer – just answers that are more or less right for your own organisation.
Here’s an approach many organisations have found useful to make sense of this question. In trying to devise how innovative Google employees ought to be, Sergey Brin, Google’s co-founder came up with a rule of thumb that 70% of time and effort should be spent supporting Google’s core business: the activities that keep the wheels turning and the lights on. Then 20% of time and effort should be spent on improving and refining that core business. This leaves 10% of time to be spent devising Google’s core business for the future. So, what would your ‘70-20-10’ rule be for your organisation? What proportion of your organisation’s time should be spent on business-as-usual, including improving and refining that core business? And how much time ought to be left for strategy, exploring and devising your business-as-usual-of-the-future? Figure 1, below show the results of a follow-up study in Harvard Business Review to find out how Google’s 70-20-10 rule varied within different types of company.
Figure 1. Variants on Google’s 70-20-10 rule
An alternative, and, for some organisations, simpler approach, is to decide how much money you can afford to spend on strategic change: is it 10% of your turnover, or 1% or 25%?
3. What is the intended lifespan of your new strategy?
18 months or ten years? This is largely determined by how fast your organisation, or its operating environment, is changing. A well-established company in a mature market may need to change its ways of working slowly and in small amounts. It may, therefore, be well suited to a strategy with a long lifespan. By contrast, an organisation operating in a rapidly evolving technological environment (e.g. in artificial intelligence) or an organisation that is recently established (e.g. a tech start-up) may be better suited to a strategy with a much shorter lifespan. This decision can be reached by exploring the ‘cadence of change’ of your organisation. In music or sport, the word cadence means rhythm or pattern. For strategy, working out the cadence of change means identifying how frequently you launch new products or services; how often you transform your ways of working or adopt new technology; how recently you have had to adapt to a new competitor. If the answer to these questions is every few months, you probably want a strategy with a two- or three-year lifespan. If the answer is every few years, you can probably opt for a five-to-ten-year strategy.
4. How rigorous do you need your new strategy to be?
Rigour is the ‘the quality of being extremely thorough and careful’ according to the Oxford English Dictionary. No strategist would ever claim they don’t want to be rigorous, but the key question we need to resolve here is just how much rigour is the right amount? The more rigour you seek to apply, the more work will need to be undertaken and more the drawn-out strategy development will become. There are two dimensions of rigour that are important for strategy: analytic rigour and logical rigour.
Analytic rigour refers to how convincing the evidence base underpinning your strategic decisions needs to be. Setting this bar too high may lead to ‘analysis paralysis’, where decisions are delayed unnecessarily by the search for better supporting evidence.
Logical rigour refers to how well joined-up and how coherent you seek your strategy to be. Strategy can be well joined up in two ways: internally and externally:
- For a strategy to be well-joined-up internally means that the elements of the strategy are not in conflict with each other and, ideally that they lead to synergies. Strategic synergy is where the achievement of one element of strategy amplifies the impact of other elements of strategy. The best way to ensure good internal logic in your new strategy is to commit to the use of strategy mapping both as a development tool and as a strategy validation tool. As a development tool, strategy mapping systematically connects the strategic aspirations of senior leadership to the enabling actions of front-line teams. To validate the strategy, once written, strategy mapping can be used to ensure that the enabling actions you have identified are ‘sufficient and necessary’ to achieve your strategic goals, and that those strategic goals are ‘sufficient and necessary’ to justify taking those actions.
- For a strategy to be well joined up externally means it has good logical connections with other identity marks that define and distinguish an organisation. These include vision, mission and core values, but could also include brand, slogan and even logo. Crucially an externally joined-up strategy is a response to the opportunities and threats presented by the organisation’s operating environment. One way to ensure good external logic in your new strategy is to commit to the use of the House of Strategy framework. This enables you to highlight the connections (and potentially the disconnects) between your new strategy and what it ought to be connected to, externally.
5. How strictly do you intend to separate strategy from strategic planning?
Whilst this may sound like the most practical and operational of all these decisions, it is probably the one that will have the most profound impact on both the strategy itself and the way it is managed. Indeed, for the vast majority of organisations, it is not, in my opinion, really much of a decision. Strategy and strategic planning ought to be strictly separated. The only value in presenting it as a decision is that it is a new commitment to make for most organisations. For such organisations, keeping strategy and strategic planning as closely connected as possible is what they see as most important. Strategic planning is, after all, the means by which strategic success is achieved. To which my response is, yes, of course, strategy and strategic planning need to be well-aligned but this doesn’t prevent a clear dividing line keeping strategy entirely on one side of the line and strategic planning on the other side. I like the Separation Model of Strategy (Fig. 2) as a visual representation of this idea.
Figure 2. Separation Model of Strategy
How best to approach these decisions in your own organisation
These decisions are best thought of as part of strategy scoping – the process you go through before the start of strategy development, to agree the brief for your new strategy. This is a great way to get a shared understanding across your leadership team of what strategy means for your organisation.
It is also important to remember that some of these decisions are more final than others. So, for example, it is unlikely that you would subsequently change your mind once you have decided you are going to separate strategy from strategic planning. You may very well change your mind, however, on the best timespan for your strategy, once you have defined the changes the strategy seeks to bring about.
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Deep Design Thinking
by Mike Baxter and Seaton Baxter
In May’s Strategy Distilled I shared a preview of the chapter on ‘Deep Design Thinking for Strategy’ from the book I have co-authored with my Dad, Seaton Baxter, called ‘Deep Design Thinking‘. The book is now published and available on Amazon as a paperback and eBook. Having both been Professors of Design, and worked professionally in our different fields of design (Dad in ecological design, and me in product design and strategy design), we have spent many years together discussing the nature of design and the ideas and practicalities that lead to ‘deeper design thinking’. We wrote the book to encourage deeper thought about what we design as well as how and why we design. In it we argue that as design thinking deepens, its reach widens, making ‘Deep Design Thinking’ not just for designers but also for policymakers, government ministers, company CEOs and other ‘makers-of-big-decisions’… like strategists!
I have ten free paperback copies of the book to give away to subscribers – just send your name and postal address to mike@goalatlas.com. If you have enjoyed reading it, please leave us a review on Amazon.
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Strategy Distilled – The Archive (2021 – 2024)
Free pdf compilation
In June’s Strategy Distilled, I announced that I had created compilation of the first three years of my Strategy Distilled newsletter, organised around eight themes representing some of the key challenges facing the modern strategy professional:
- The Nature of Strategy & Strategic Thinking
- Strategy Leadership and Governance
- Innovation in Strategy
- Strategy Scoping & Development
- Engagement and Consultation
- Strategic Planning
- Values & Culture
- Strategy Measurement & KPIs
By grouping the content of my Strategy Distilled newsletters into these eight strategy themes, my hope is that it will find new readers and become more accessible to those who have come across it before. You can read an overview of the articles in each theme, or download the 187-page pdf, with links to all my source material, for free by subscribing to Strategy Distilled (we value your privacy – unsubscribe at any time). Enjoy!
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Goal Atlas works with leaders and teams on all aspects of strategy. Get in touch if you think we might be able to help.
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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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