Distillations in this newsletter: How strategy actually works: What is strategy? / Strategy vs business-as-usual / What do you move on to, after the strategy is written?; Participatory governance.
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 …
- How strategy actually works.
- Strategy snippets you might have missed: Participatory governance.
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How strategy actually works
I’ve read a lot of strategy books and papers. Hundreds of them. And I’ve done a lot of strategy consulting with dozens of clients. What I’ve become increasingly aware of, over the years, is the mismatch between what the books and articles say and what the clients struggle most with. So much so that I’m starting to think there is a piece missing in the strategy literature on how strategy actually works. The notes I’ve been making on this idea are already too extensive to be covered in a single newsletter but here is a sample of my thinking (maybe a new book in the making – let me know what you think).
1. What is strategy? What does strategy mean and what purpose is it intended to serve in your organisation? For some, strategy is a manifesto for survival, for others it is a vision of ultimate success. These will be very different strategies and the processes for creating and managing them will not be the same. When you talk of strategy, are you referring to a single strategy or many within your organisation? One of my clients was surprised to discover they had 13 separate strategies, none of which was particularly tightly integrated with any other. Are targets indicating strategic success included within the strategy itself or are they documented separately? I have had clients that say there is absolutely no scope for negotiation here – on both sides of the argument!
There are no definitive right and wrong answers here, but there are better and worse answers for different organisations in different circumstances. Having a clear position on what you, within your own organisation, take strategy to mean and what you want it to do for your organisation is, however, always a good idea. This benefits everyone across the organisation. For middle managers and front-line teams, it gives context for making sense of the strategy and for deciding how much they need to engage with and commit to its objectives. For executive decision-makers, it’s essential so that they all approach their decision-making in the same frame of mind and have a shared sense of what these decisions are ultimately intended to achieve.
2. Strategy vs Business-as-usual. In a way, this next point is part of the previous one, but it is such a fundamental decision about strategy that I feel it warrants its own heading. If you can reach where you want to get to merely with tactics, do you actually need a strategy? Where does business-as-usual end and strategy begin? This, of course assumes they are separate in the first place. Most organisations have the implicit assumption that they are, but few are explicit about why. Even fewer are clear about how strategy and business-as-usual will be managed differently.My starting point in this conversation is usually Sergey Brin’s (Google co-founder) 70, 20, 10 rule, which suggested that 70% of everyone’s efforts ought to be focused on Google’s core business, 20% ought to be focused on improving that core business and 10% ought to be “on wild bets”. My generalisation from Brin’s rule is that organisations ought to spend the majority of their efforts on their current business-as-usual and a minority of their efforts on devising the business-as-usual they will adopt in years to come. This bears a striking resemblance to Nassim Nicholas Taleb’s Barbell Strategy for investing (see Taleb’s book, Black Swan: The Impact of the Highly Improbable and a summary by David Kadavy): invest 85-90% of your money in “sure bets”, where both the returns are the risks involved are low (e.g. government bonds – assuming, in today’s uncertain times, that they are still sure bets! – or gold) and invest the remaining 10-15% in “wildcards” where the risks are higher but the potential gains are huge (investing in start-ups or crypto-currency). Strategy can be seen as Brin’s wild bets, which devise new ways of working, and Taleb’s wildcards which are risky but potentially offer huge returns. Strategy, seen in this way, is distinct from business-as usual, which is keeping the lights on and the wheels turning, whilst providing modest returns on investment with low risk.
All of which makes for some interesting decision-making when you start planning for your next strategy in your own organisation. How big should strategy be? How much effort should be put into it? What budget should be allocated to it, and how? How much risk is too much?
I’ve worked with clients who have set aside a certain percentage of their budget to fund strategic initiatives. This is great but it doesn’t cover the investment made in people’s time to work on strategy, which may turn out to be the bigger investment.
3. What do you move on to, after the strategy is written? There are three common answers to this, all of which I believe are wrong: strategy execution, strategy implementation and strategy deployment. This is what I wrote in The Strategy Manual:
“Such labels raise two issues. The first is that they make it look as though, once the hard work of producing the strategy is done, strategy success will just happen, almost on its own. It just needs to be deployed. It merely needs implementation. It requires only execution, as per the instructions that the strategy itself contains. The second, somewhat related, issue is that it looks as though strategy is something done by leaders to followers. It makes the front-line teams appear to be passive recipients. All of which, of course, is nonsense. It is once the strategy is written that the hard work begins. Aspirations need to be translated into actions. Actions need to be delegated, and possibly delegated again and again in a large organisation. Resources need to be prioritised. Targets need to be set and then checked to ensure they aggregate up to strategic success. New ways of working need to be devised. Innovation needs to be conjured into existence. Strategic success needs to be squeezed from the organisation (or individual), drop by drop. So, strategy doesn’t just need to be implemented, deployed or executed. It needs to be adopted.” p303-304.
How, then, do we get strategy adopted? Having worked with several clients on this challenge, this often comes down to 4 key actions:
- Turn your strategy into clear, discrete goals;
- Secure commitment from senior executives to take ownership of the top-level goals in the strategy;
- Conduct “adoption conversations” where the senior executive explains the aspirations of their strategic goal and asks for input from the relevant individuals and teams on how to achieve this goal (see my H-model of Strategy Adoption). This creates a cascade of goals from high-level strategic goals to the lower-level goals necessary to achieve them;
- Use these adoption conversations to delegate goals, agreed by both parties (delegator and delegatee). These delegated goals can be either imperatives (this is what we will do) or hypotheses (this is what we will try and, once we know the result, we will review the delegated goal). They also ought to be time-bound and have explicit success-metrics.
This strategy adoption process needs to be built into a robust planning process to ensure commitments to work on strategic goals are accompanied by appropriate resourcing (of time and money) and to ensure progress is tracked, aggregated meaningfully and acted upon, where necessary.
There is a lot more to be written here and I’ll maybe return for Part 2 in a future Strategy Distilled newsletter. My main take-away from what I’ve written so far is that understanding how strategy actually works within your own organisation makes strategy a lot more systematic and effective. If any of this resonates with you, I’d love to chat more about it and learn from your experience. Drop me an email.
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Strategy snippets you might have missed …
Participatory governance
More and more organisations are committing to having stakeholders involved in the creation and adoption of strategy. Fewer have a clear idea of the best way to do so. One idea that really struck a chord with me recently was ‘participatory governance’ – read Jurriaan Kamer’s introduction. If, like me, you think the principle of participatory governance is good then you might want to explore some tools and methods to help you do it. Here are a couple of examples I’ve been reading about recently:
- Delphi Technique – see review article by Beiderbeck et al, 2021.
- Lessons to be learned from Citizen’s Assemblies – see the OECD review (2020) of Innovative Citizen Participation and New Democratic Institutions: Catching the Deliberative Wave.
- Instead of a referendum, think about having a ‘preferendum’, where participants rank different policy options presented to them – read more in David van Reybrouck’s article in Noema magazine, from last week.
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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.