Distillations in this newsletter: The Strategy Manual – one year on; the Strategy Lifecycle Model; antifragility; strategy and the eigenquestion; the ‘hot streak’ model of innovation; strategy and culture.
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 …
- The Strategy Manual – one year on.
- The Strategy Lifecycle Model – released from Goal Atlas on Creative Commons.
- Lessons for strategy from other fields: Antifragility.
- Three snippets related to strategy you might have missed: strategy and the eigenquestion; the ‘hot streak’ model of innovation; strategy and culture.
One small favour – spreading the word by forwarding this newsletter to a friend or colleague is a great way to say thank you for the time and effort invested in producing it.
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The Strategy Manual – one year on
This month saw the first anniversary of the publication of The Strategy Manual, giving me the perfect excuse to reflect on the whole experience of writing and publishing a book on strategy. Overall, my reflection is hugely positive. The book and the models derived from it are, by far, my most frequent go-to source in my own day-to-day work. This has been a complete surprise to me. I’d always assumed I was writing the book for others – to guide and inform readers on how to make sense of strategy, how to communicate strategy ideas with colleagues using common terms of reference and how to undertake strategy using a structured, explicit process.
It probably shouldn’t have been a surprise that I’d use the book and its models so much myself. In writing the book, I was distilling years of strategy experience into carefully crafted prose. In saying ‘carefully crafted prose’, I don’t mean this as a throw-away turn of phrase. Every chapter was drafted and re-drafted several times; some chapters have 10 re-writes in my archives. So, this was a genuine attempt to capture and communicate my knowledge of strategy in the best possible way I could. When I now find myself wanting to present some aspect of strategy to a client, more often than not, I will have a nagging feeling that I have written about this before … and reach for The Strategy Manual.
Having this reference source to all my strategy thinking is great, but it is a snap-shot in time. There have been a number of times since publication that I’ve moved my thinking further on. A couple of times my work with a particular client made me realise that what I’d written didn’t cover all eventualities – what I’d written needed re-framing. Other times, I realised that where I’d got to in my writing was not the final destination. There was more work to be done and more insights to be gleaned, as illustrated in the following example.
Chapter 1 of The Strategy Manual is called Strategy Fundamentals. By and large, it set out to define strategy. I started by suggesting that there are six elements making up strategy: 1. analysis, 2. choice, 3. positioning, 4. design, 5. storytelling and 6. Commitment (see Six Elements of Strategy). I explained that strategy ought to serve four different purposes within organisations: 1. an identity mark alongside vision and mission; 2. a navigation beacon to inform and guide future decision-making; 3. a high-risk, long-term investment commitment and 4. a method of replenishing value for customers which tends to erode over time in all but the most stagnant markets. Then I explained that strategy is complex – it is multi-dimensional and has multiple causes, symptoms and solutions. And, of course, it IS complex.. but there are some simple distinctions I didn’t cover that I now realise can help when, as I am so often asked, you are looking to ‘improve’ strategy.
The word strategy can refer to either a ‘process’ or ‘thing’. In my Lifecycle Model of Strategy (introduced below) strategy-as-a-thing is the output at the end of the strategy production stage of the lifecycle. Usually, it ends up as a published (at least internally) strategy document. Lots of useful insights, and certain strategy tools, can improve strategy-as-a-thing. Your strategy, for example, should be about change, not about business as usual (see the Boundary Model of Strategy). Your strategy should be strictly separated from your strategic plan (see the Separation Model of Strategy). Your strategy should be relatively brief and designed to remain unchanged over the strategy lifetime.
Strategy-as-a-process, on the other hand, is all about the activities involved in the production, adoption and adaptation of strategy. To improve ‘strategy-as-a-process’ means improving these activities, and the ways to do so will be different for the different stages:
- Improving strategy production: Tools such as Porter’s Five Forces (a framework for systematically analysing the competitiveness of your business environment), Kim & Mauborgne’s Blue Ocean Strategy (the principle that most businesses operate in a competitively cut-throat red ocean but radically innovative strategies seek to identify the blue ocean of uncontested market space), or Rumelt’s Strategy Kernel, and our own Strategy Mapping, Framing and Strategy Design Model, can be used to improve the scoping and development of strategy.
- Improving strategy adoption: Ensuring the active engagement and willing participation of all those involved in strategic planning requires a two-way exchange of information as senior leadership work together with front-line teams to find the best ways to achieve the goals committed-to in the strategy (see the Goal Adoption Support Model). These two-way exchanges can be improved with, for example, some simple rules for conversations about strategy.
- Improving strategy adaptation: Strategic plans need to adapt to changing circumstances; this requires strategic risks to be identified and managed (see the Strategic Risk Model and Strategic Risk Register) and the building of agile/resilient capabilities around those strategic risks (see the Pyramid Model of Strategy Adaptation). Understanding and anticipating the future can also improve your strategic adaptability (see the Futures Cone and VACU Analysis).
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A new strategy model from Goal Atlas, released on Creative Commons…
The Strategy Lifecycle Model
The Strategy Lifecycle Model shows the strategy lifecycle divided into three sequential stages (produce, adopt and adapt), and the activities and outputs that occur at each stage. It can be used to prompt deeper conversation about your organisation’s strategy, the stages involved and the activities that need to be pursued to achieve strategic success.
Download the Strategy Lifecycle Model as a pdf or see all 19 strategy models released by Goal Atlas so far.
Released under Creative Commons License, all our models are free for you to use in your strategy documents and presentations (attribute to Goal Atlas 2021).
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Lessons for strategy from other fields
Antifragility
We usually think of strategy as avoiding or mitigating risks, but the concept of antifragility turns this on its head. We say something is antifragile if it gets stronger the more it is stressed. A well-known example of this is bones getting stronger in response to the loads they are subjected to. Here is how Nassim Nicholas Taleb described antifragility in his 2012 book ‘Antifragile: Things That Gain from Disorder.’
“Some things benefit from shocks; they thrive and grow when exposed to volatility, randomness, disorder, and stressors … Yet, in spite of the ubiquity of the phenomenon, there is no word for the exact opposite of fragile. Let us call it antifragile. Antifragility is beyond resilience or robustness. The resilient resists shocks and stays the same; the antifragile gets better.”
A good strategy will, therefore, not just avoid fragility. It should actively seek to promote antifragility. Becoming proficient at building and testing minimum viable products (MVPs) is one way to become antifragile. Another is having leading indicators within your framework of strategic KPIs; leading indicators can be ‘early warning systems’ of poor outcomes, enabling you to grow stronger by failing fast.
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Snippets related to strategy you may have missed …
Strategy and the eigenquestion
Knowing your matsaaruti from your pukak is important if you live in central Siberia. Matsaaruti is wet snow that can ice-up the runners of your sledge, pukak is the salt-like crystalline snow that your sledge glides over. Just like words for snow in the Eskimo family of languages, discovering a word for an idea that didn’t previously have one can be something of a revelation. For me, ‘eigenquestion’ was one such word. Derived from the mathematical concept of the ‘eigenvector’ (the most discriminating vector that accounts for most variance in a data set), the eigenquestion is ‘the most important question’ to ask about a challenge or opportunity.
I discovered eigenquestions in an article by Shishir Mehrotra and Matt Hudson from Coda.io and they provide a useful operational definition, which connects to a process for finding eigenquestions. The eigenquestion for a particular topic is, they suggest, a question which, when answered, will also answer many other questions about the topic. To find the eigenquestion for strategy, start writing down a bunch of questions about a strategy issue you are working on. Let’s imagine that your strategy issue is how to increase quarterly revenue consistently over the next few years. You start writing down questions about pricing and margins, costs and efficiencies, innovation and new product launches. Then, according to Mehrotra and Hudson, you rank these questions in terms of importance. Does one high-ranking question also provide the answer to many of your other questions? In our example, the eigenquestion is probably whether you can attain market leadership in your sector. If so, you can charge more than your competitors, drive harder negotiations with suppliers, drive up margins and have more to spend on new product development.
Why does this matter for strategy?
Strategy is plagued by Type III errors – getting the right answer to the wrong question. Applying eigenquestions to your strategic thinking makes it more likely that your strategy will answer the right question.
The ‘hot streak’ model of innovation
This is an eye-popping piece of research on innovation, published a fortnight ago, and a great concept to come out of it. A team from Northwestern University and Pennsylvania State University collected together:
- 800,000 images of visual arts from museum and gallery collections, by a total of 2,128 artists;
- 79,000 films by 4,337 directors and
- the combined publication and citation datasets for 20,040 scientists.
They then ‘developed computational methods using deep learning and network science’ to find patterns in the output of these diverse types of creatives. The pattern, which they describe as a ‘hot streak’, is where an individual has an intense period of high-quality, highly innovative activity, following a period of much more exploratory work. Examples include Jackson Pollock’s drip paintings, produced between 1947 and 1950, Peter Jackson’s Lord of the Rings trilogy between 2001 to 2003, and the late career success of scientist, John Fenn, who won the Nobel Prize for chemistry in 2002 at the age of 85.
Why does this matter for strategy?
Strategy is usually about innovation. Maybe not the type of ground-breaking innovation explored in this study (and the study has nothing to say about how generalisable its findings are), but, nonetheless, innovation to some extent. The lesson from this study is that innovation cannot simply be turned on because strategy demands it. It needs to be cultivated within the culture of the organisation and the key individuals driving the innovation may need to be at the right stage in their career for them to do their best work. They need to have been exploring the possibilities for innovation and maybe testing its boundaries. Then they need to immerse themselves in exploitation mode, where they work intensively and productively for an uninterrupted period.
Strategy and culture
Culture eats strategy for breakfast. Or so the saying from Peter Drucker goes, suggesting that an organisation’s culture will determine its success regardless of how effective their strategy might be. I disagree and explained why in this video with Peter Abraham and Michael Crowe. This, however, doesn’t mean that culture is strategically unimportant. Having the right culture across an organisation is a key ingredient for both strategy adoption and strategy adaptation. A recent article by Donald Sull and Charles Sull, published by MIT Sloan Review, gives the 10 Elements of Culture That Matter Most to Employees:
- Employees feel respected. Employees are treated with consideration, courtesy, and dignity, and their perspectives are taken seriously.
- Supportive leaders. Leaders help employees do their work, respond to requests, accommodate employees’ individual needs, offer encouragement, and have their backs.
- Leaders live core values. Leaders’ actions are consistent with the organisation’s values.
- Toxic managers. Leaders create a poisonous work environment and are described in extremely negative terms.
- Unethical behaviour. Managers and employees lack integrity and act in an unethical manner.
- Benefits. Employees’ assessment of all employer-provided benefits.
- Perks. Employees’ assessment of workplace amenities and perks.
- Learning and development. Employees’ assessment of opportunities for formal and informal learning.
- Job security. Perceived job security, including fear of layoffs, offshoring, and automation.
- Reorganisations. How employees view reorganisations, including frequency and quality.
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Goal Atlas runs workshops and sprints to help your strategy work better across your organisation. Get in touch if you think we might be able to help.
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One small favour – spreading the word by forwarding this newsletter to a friend or colleague is a great way to say thankyou for the time and effort invested in producing it.
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