Why Do Strategy Anyway?

Why Do Strategy Anyway

An ongoing series where I share a “Business Playlist” of articles that made me think in the hope that you find them valuable also.

This week: Why do strategy anyway? The case for and against strategic planning.

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Perhaps you’ve read articles with headlines like “Strategic Planning is dead”, where the authors claim that you can’t plan for the long term anymore, and you just need to be agile and plan in short sprints?

Effective strategic leadership is about thinking and planning for the long-term. It’s not about reacting to change, it’s about being proactive, and creating the future. There’s a quote from Canadian ice hockey legend Wayne Gretzky that I love, “I skate to where the puck is going to be, not where it has been”. 

Yes, we need to be “agile“ and willing to adapt. But chopping and changing direction fast to copy what competitors are doing, or chase the latest trend that you read about in the business media is not the recipe for success. That’s just a recipe for strategic incoherence, volatile performance, and confused burnt-out staff.

A winning strategy is not about being agile, it’s about being “smart agile”. Successful companies win because they think carefully, and take the time to make wise strategic choices first, and then they move fast to implement and iterate their strategic decisions using a strategic planning cadence to review and update their plans.

Why Do Strategy, Anyway?

Professor Roger Martin is a writer, strategy advisor and in 2017 was named the #1 management thinker in the world. I enjoy his insights on strategic planning and previously referenced his article on Military Strategy vs Business Strategy.

In his article, Why Do Strategy, Anyway? Martin makes the case for and against strategic planning. Here is a brief summary with quotes in italics:

The Case Against Strategy.

“The case against strategy is mainly framed as an issue of favoring practicality and action-orientation over theory and esoterica. I have observed four lines of reasoning underpinning this view. First is an undertone of: ‘tough guys/gals don’t do strategy. Strategy is for executives who like to talk and have meetings rather than take action.’ Second is an obsession with ‘execution,’ whatever that is, and a belief that somehow time spent on ‘strategy’ is time taken away from ‘execution’. Third is that they don’t have time for strategy because their business is so fast-moving. Fourth is to interpret the work of great management thinkers as arguing against strategy. It is most common to quote the greatest management thinker in history, Peter Drucker, dissing strategy by saying: “Culture eats strategy for breakfast.” The Drucker Institute has determined through a big archival research project that Drucker never said such a thing.”  

“The other misused scholar is Henry Mintzberg, who introduced the concept of ‘emergent strategy’. Mintzberg observed that because managers can’t predict the future accurately enough to have their strategy play out entirely as planned, what they actually do is often at odds with their proclaimed strategy. Instead, they make numerous course corrections in the face of substantial changes in their competitive environment. Mintzberg’s purpose was to encourage managers not to assume that they could stick rigidly with their ‘deliberate strategy’ but rather recognize that they would have to tweak their strategy to take into account unforeseen weaknesses that emerge in it. However, many executives have taken emergent strategy to mean that since the future is so volatile and unpredictable, it doesn’t make sense to waste time on strategy until such time as the future becomes clear.”

“…this line of reasoning has become the rationale for the ‘fast follower’ approach that many executives tell me proudly they are using. They just wait for someone to start doing something successful and then hop on that train. In this way, Mintzberg’s emergent strategy concept, like Drucker’s misquote, is misused to justify not doing strategy.”

“Executives also could use some of my views on strategy to buttress the case against. I clearly argue that you can’t predict the future and can never be certain in advance that your chosen strategy is ‘right.’ And I maintain that the best a strategy can do is shorten the odds of success. It can’t guarantee success.”

The Case For Strategy.

“For me, the case for strategy centers on learning. I believe that doing strategy thoroughly and religiously is the key to gaining a learning advantage over competition.”

“The way to maximize learning in strategy is to use all your current knowledge to develop a hypothesis as to the most compelling strategy choice, then enact it, and then observe the degree to which things turn out the way you expected, then, based on those observations, develop a next generation hypothesis, which you put into action, and then observe and learn again. And so on. If you repeatedly go through that learning loop rigorously and, importantly, faster than your competitors, you will maximize your chance of ending up on top.”

“This is, most assuredly, not my idea. It is borrowed from what most insiders would consider the greatest air combat theoretician in history, the late Air Force Colonel John Boyd, creator of the OODA (observe, orient, decide, act) Loop. Boyd argued that if a fighter pilot rigorously goes through the OODA Loop faster than his enemy, he will maximize the probability of beating the enemy in air combat. The key is the combination, rigor in each step; and getting through more cycles of the OODA Loop faster than the enemy. If instead, while your competition is engaging in that learning activity, you wait to see what emerges in order to fast-follow, you will always be playing catch-up on the knowledge necessary to compete, and in due course, per Boyd, you will be shot down.”

(Note: I have written previously about the OODA Loop and its applicability to strategy here: Strategy Lessons from Fighter Pilots)

“I am not a fan of big words and mega-concepts. But I always insist on a thesis concerning the industry, customers, our company, and competitors to underpin the set of choices being made. And then watch and adjust accordingly, again, and again.”

“The payoff is that you get to start working on answering important strategy questions before your competitors realize that they are questions.”

“Outflanking your competitors means learning faster than them. The fastest and most effective way of learning is to form a theory, act on the theory, observe the deviations from predictions of the theory, and then adjust accordingly.”

“Business is tricky and daunting. You are always in a position of needing to make decisions today for a tomorrow that will always be uncertain. And even if you don’t think of yourself as making choices, no choice is actually a choice.”

“You don’t have to be perfect. It is like the adage about the campers and the bear: you don’t have to outrun the bear, just your fellow campers! You just have to learn and get better at a faster rate than your competitors.”

“The worst thing you can do is sit and wait until it is clear which competitor is winning and in what way before you take action. But there is a danger at the other end of the spectrum in over-intellectualizing in a vain attempt to be perfect. Players at both ends of the spectrum have slower OODA Loops than competitors in the middle.”

“You should think hard but expeditiously. Place your strategic bet. Then watch and learn. Tweak it if it is close; reboot if it isn’t. Do it again, and again. And that will be your advantage over your competitors who learn more slowly. It will especially be the case relative to those who watch what works for you and then imitate it. You will be gone by the time they get to where you used to be. And that is the fundamental advantage of doing strategy over making excuses for why you don’t!”

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Need help?  Contact me to discuss your strategic planning needs.

Until next time…
Stephen

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