In my last article I asked the question “is your strategy bold and exciting, or safe and comfortable, but dull? In other words, is your strategic making process perpetuating the status quo or is it creating breakout opportunities?
Without realizing it, the conventional approach to strategy making may actually perpetuate the status quo. Every year your team gets together to solve important issues by poring over data and analysis the heck out it. You develop what seems to be a strategy that is data driven. Decisions are made by fact, not fiat. Cognitive bias is removed because the data doesn’t lie.
It’s not that data driven strategy is bad – it just doesn’t open up the possibilities
Strategy driven by numbers and facts sounds like a great approach. But strategy is more than analyzing data and extrapolating into the future. Effective and bold strategy making involves intuition and creativity. Thinking strategically is a continuous process of sensing the environment and synthesizing the information into a novel strategy.
Like idea generation, strategic thinking is happening all the time, but it may not be formally captured in a strategic making process because conventional strategy making has become a yearly event where everyone gets to take time away from the office and “plan for the future.”
Further, conventional strategic planning focuses on issues, such as declining profits or market share. When we focus on issues, we tend to investigate data related to the issue and come up with ways to solve the specific issue in front of us. And forgetting to look ahead to what the future might be.
While addressing important issues is critical – and certainly something all companies need to do, its outcome typically is operational planning and not the bold and novel new strategy required to create a vibrant new future where we can consistently compete and win.
Constructing strategic possibilities is the ultimate creative act in business
In the article“Bring Science to the Art of Strategy“ published in the September 2012 issue of HBR, A.G. Lafley (former Chairman & CEO of P&G) and Roger Martin recommend that companies not focus on issues but rather focus on constructing “ strategic possibilities” to break free from incremental operational planning.
Here’s what they say:
“Constructing strategic possibilities, especially ones that are genuinely new, is the ultimate creative act in business….. To generate such creative options – you need a clear idea of what constitutes a possibility. You also need an imaginative yet grounded team and a robust process for managing the debate.”
“… a possibility is essentially a happy story that describes how a firm might succeed. Each story lays out where the company plays in its market and how it wins there. It should have internally consistent logic, but it need not be proved at this point. As long as we can imagine that it could be valid it makes the cut.”
And here’s the real benefit in thinking in terms of strategic possibilities:
“Characterizing possibilities as stories that do not require proof helps people discuss what might be viable but does not yet exist. It is much easier to tell a story about why a possibility could make sense than to provide data on the odds that it will succeed.”
The article outlines a seven step process on how to apply creativity to a scientifically rigorous process that results in the creation of novel strategies and a selection process that pinpoints to the strategy most likely to succeed
Lafley, Martin et al – “Seven Steps to Strategy Making”
Frame a Choice: Convert your issues into at least two mutually exclusive options that might resolve it.
Generate Possibilities: Broaden your list of options to ensure an inclusive range of possibilities
Specify Conditions: For each possibility, describe what must be true for it to be strategically sound.
Identify Barriers: Determine which conditions are least likely to hold true (in other words, are the riskiest assumptions in the possibility under analysis).
Design Test: For each key barrier condition, devise a test you deem valid and sufficient to generate commitment (more on this concept in a future article).
Conduct the Tests: Start with tests for the barrier condition in which you have the least confidence.
Make Your Choice: Review the key conditions in light of your test results in order to reach a decision.
The core concept behind the Seven Steps of Strategy Making is that by thinking in terms of strategic possibilities, a company can formulate a well-articulated hypothesis. The process then ask “what would have to be true about the world for each possibility to be supported?”
The remaining steps provide the framework to apply the scientific process in testing and validating critical assumptions to make a final judgment based on well vetted discussions and supporting market data pinpointing which possibility is most likely to succeed.
In future articles we will explore in greater detail each step in the Seven Steps to Strategy Making and how to implement it into your strategic thinking process.
In the meantime, I highly recommend you read the article “Bring Science to the Art of Strategy“ It will open your eyes to new possibilities on creating a future where you can compete to win and enjoy success.
Here’s to the possibilities!
Kevin
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