Uncertain About The Future? A Well-Defined Strategy Can Help Rita McGrath
The word “strategy” has come to mean anything in an organization that is important. But great strategies drive real purpose and decisionmaking. Define one that is meaningful, and you can guide real-time choicemaking across your organization.
Strategy, unfortunately, has come to mean just about anything that those in an organization deem to be important. Thus, we have strategic human resources, strategic finance and Lordy, even strategic procurement! When things aren’t predictable, solid strategies are essential – they help provide guidelines and act as guardrails. When well crafted, they get you past the frozen-in-the-headlights reaction many have to uncertainty.
From the military to the corner office
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Strategy started as a concept in military thinking. As Patrick Marren, writing in The Journal of Business Strategyobserves: “The word “strategy” comes from the Greek “strategeia”, which means “generalship”. The Greek word for “general” is “strategos”, which in turn comes from “stratos”, “army”, and the verb “ago”, which means “to lead”.” Literally translated, the term means ‘armyleading.’
The business equivalent of the general is often equated to be the CEO, or other general manager with decision-making rights. One of the most misunderstood ideas in strategy, as my colleague Roger L. Martin notes is that decisions are made at the ‘strategy’ level and everybody else just executes. I would argue that the purpose of a good strategy is to allow smooth decision making throughout the organization, but particularly at the ‘edges’ where real information about what’s going on lives.
Why do we need strategies? What all these definitions have in common is that strategy is all about making choices – both of what to do and even more importantly, what not to do. There are two main reasons that having a clear strategy is helpful: the first is that resources are not unlimited, and the second is competition – for customers, for talent, for other assets and for attention.
Strategy is about making choices Central
Integrated
Concept
This means that the strategy being pursued is both widely understood by key stakeholders and embraced by key stakeholders. A simple litmus test of this is whether you could ask three people working for an organization at random, “what is our strategy?” and get back relatively consistent answers.
Integrated means that the choices informing the strategy work together to form a consistent and coherent whole. Different strategies imply differences in priority and resource allocation, and the choices need to work together.
Strategies, fundamentally, are ideas. This is what makes them sometimes so difficult to pin down and so difficult to communicate. Strategies reflect decision-makers’ beliefs about what course of action will lead to desirable consequences. Of course, in uncertain times, some beliefs about what will lead to what are bound not to be borne out, and a host of cognitive and other biases can sometimes get in the way of making sensible decisions.
Strategy is about making choices How
Objectives
Far too many expressions of strategy are really statements of goals in disguise. “We want to be number one or number two” is a popular example. Increasing operational efficiency, targeting this or that market or becoming more or less of something are all statements of intention, but they say very little about how you plan to make the choices and the tradeoffs that would realize these goals.
Good strategies are informed by clear goals, and it is often astonishing to observe how often the over-arching goals for an organization are left to chance. Without knowing what goal one is trying to achieve, it’s virtually impossible to weigh tradeoffs and make decisions – and decisions about what not to do are every bit as critical as decisions about what to do.
Strategy as a roadmap in uncertain times (I/II)
Karl Weick, an American organizational theorist, points out that in uncertain and confusing circumstances, the goal of strategy is often directional, not predictive. In his book Sensemaking in Organizations (p 54), he offers a famous story: This incident, related by the Hungarian Nobel Laureate Albert Szent GyÖrgi and preserved in a poem by Holub (1977) happened during military maneuvers in Switzerland. The young lieutenant of a small Hungarian detachment in the Alps sent a reconnaissance unit into the icy wilderness. It began to snow immediately, snowed for 2 days, and the unit did not return. The lieutenant suffered, fearing that he had dispatched his own people to death. But on the third day the unit came back. Where had they been? How had they made their way?
Strategy as a roadmap in uncertain times (II/II)
Yes, they said, we considered ourselves lost and waited for the end. And then one of us found a map in his pocket. That calmed us down. We pitched camp, lasted out the snowstorm, and then with the map we discovered our bearings. And here we are. The lieutenant borrowed this remarkable map and had a good look at it. He discovered to his astonishment that it was not a map of the Alps, but a map of the Pyrenees. This incident raises the intriguing possibility that when you are lost, any old map will do…. So strategies are not about iron-clad unchanging five year plans. They are about making the best hypotheses with imperfect information, providing clarity to people and founding an environment in which people up and down the organization are at liberty to make smart choices.
Implications for leadership As rates of uncertainty increase in the environment, a new perspective on strategy is emerging. It relies less on analysis and more on pattern-recognition than conventional prescriptions. It embodies the sense that strategies themselves must adapt in an agile manner. It recognizes that when the landscape is very uncertain, strategies may be no more precise than Weick’s map, and a directionally correct strategy that emphasizes learning may be the one to adopt. Leading indicators, not lagging ones, become more important.
Looking for a little strategic insight, yourself?
With so many rules being re-written, 2022 promises to be a great year for it! An easy place to start is with the short, affordable but high-impact learning modules you can find out about at the Valize Learning Hub. There is one short course on discovery driven planning that can get you off to a good start. A longer one on creating customer insight is also available.
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