Strategy Is Hard
If you’ve ever tried to write a clear strategy, read on.
I will dig into the things that might surprise beginner strategists.
Make sure you have ~ 10 minutes to focus. Bookmark it/save it to your tools of choice to read later.
How do you define strategy?
A strategy is a hypothesis. Based on current intel, certain leverage applied to the problem can fix that problem.
There is always a problem. You generate insights around that problem based on experience and knowledge. Insights help to plan policy and coherent actions. Together they have an exponential effect on the solution of this problem. This is the essence of strategic planning.
The strategy is solving a problem. There are restrictions and tradeoffs. The actions of the strategy solve the problem in the presence of restrictions. They acknowledge the restrictions and work around them.
Here’s one final way to look at it.
Something is already happening in the world. Things that are not in your power; good and bad. You need to know about those forces. You put your best foot forward, in step with what’s happening. A strategy is a direction. Forces bigger than yourself amplify your direction.
Strategy Planning Templates
The first thing you see when you Google “strategic planning” is templates.
These templates guide you down a predictable path of:
And this simplicity is what makes them so harmful.
Why is it not as simple as the templates make it out to be? Why should you avoid them?
The problem isn’t with the templates themselves. They are correct. They aim to wrap the actions in higher-level abstractions.
The problem is with how you interpret the templates. You think they give you the answer.
You wrote a rosy vision & some fluffy mission statement. You added some unachievable, unrealistic goals. Then you made a list of things to try to do about them. You think, “That’s it, I’m done now.”
But the answer is not that simple to find.
A good strategy is like a symphony, and symphonies are not written in a day.
Why can’t we just call it a day?
Vision and mission are often the outcomes of group-think. They are almost always pure fluff.
Goals emerge from some void if they are not based on metrics you’re already tracking.
Action plans pretend that you know which things correlate with a goal. They pretend that all you have to do is do those things.
But you avoid the uncomfortable question, you avoid the enemy, and so your strategic planning is radically insufficient in formulating a path.
These artifacts of strategic planning lose the point that highlights their worth: they must reflect the strategy as much as the strategy must reflect them.
The vague vision and mission remain vague and drive none of the downstream value of such exercises.
There is a quick sense check you can make.
If your competitors would have roughly the same mission and vision, keep working at it. Don’t your competitors also want to be customer-centric? Don’t they want to grow 20x the market rate of growth? Yes, they do.
So what’s your strategy?
Strategy Is Design
You have to know what’s going on right now.
What is the current state of things? What is and what isn’t, to the best of your knowledge?
Research is context-specific and is difficult to do. And someone has to do it.
Start by asking questions.
What is your problem, and what is the challenge with it?
The unspoken secret is that good strategy is almost always a surprise, but it simultaneously rests on very sound basic business principles. And simple is hard.
Giving people something they need is basic advice.
How to give it to them? How to know what they need? How to do all that in the face of competition, in a way that works for the business model and the economics of it?
You need research. You need an outside view. You need to synthesize everything together.
You need to write out the symphony as it plays out.
To a designer, these elements start to look familiar.
A good strategist is a designer at heart.
The work is never done…
You may have identified the problems as you see them, and they are right, but you have no leverage to work on them. So are they your problems? Or is the real problem — the lack of leverage?
You are not looking for the most polished strategy in the world. I am not advocating an endless session of navel-gazing.
If you don’t have an insight, do work to get it, because your problem is “no insight”. There’s nothing embarrassing about it. It’s more embarrassing to rely on a strategy document that is a waste of paper.
If You’re Stuck With Your Strategy
Try these approaches:
- Restate the problem
- Gain some outside leverage
- Pause and research
- Act, to find out what is happening.
You do not need a brainstorming session. You should even avoid one, especially in a group setting. You must find out what’s happening, not seek false hope in someone’s well-sold idea.
Your strategy is a hypothesis, and to test the hypothesis, you need prototypes, and testing and experimentation. Don’t sit in a stuffy room, pretending to do work. Don’t create 100-page presentations. Nobody reads them! Test it.
What you should have now is:
- A problem with a unique set of challenges;
- An insight and, hopefully, some leverage.
So how do you translate this into action?
Strategy Actions: Coherence & Conflict
One reason why we often choose conflicting actions is that we want to hedge our bets.
Of course, you must keep BAU happening, but you must keep it happening without making BAU the main strategy, or you soon won’t have much of BAU to worry about.
What companies usually do is that they try to optimize every single aspect of the company by X%. This is how businesses interpret the concept of the balanced scorecard.
In analytics, there is a statistical procedure called the Principal Component Analysis.
It’s a useful technique that decomposes a dataset into a smaller dataset that has all the main elements tightened down to as few as possible. If you had 50 columns, now you have 3.
These components are made up in such a way to explain the variance of the whole dataset in the most efficient way. You don’t have to worry about 50 variables, just 3 principal components now.
But these 3 components are arranged in such a way to avoid loss of information.
So if there are variables that tug in one direction and other variables that tug in the other, they will be expressed separately as 2 components. They have to explain the whole field of choices.
But in truth, you don’t need the whole field of choices, which all offset each other as they cover the most ground.
You need just 1.
The balanced scorecard is not the 3 components.
It should be all the original variables that go into the 1 component that your strategy will be based on.
You’re betting on 1 number, not hedging by betting on all 3.
Or at least, the part of your strategy that bets on the other 2 only kicks in if the original strategy didn’t work.
Strategists speak of focus, but the manager thinks that focus means several things at once, done rapidly and with brute force.
So what are the components of the policy and actions?
- The policy describes the main principle of the strategy;
- Actions are concrete things that specific people will do according to the policy;
- Actions must be checked for coherence (do they supplement each other or pull resources apart?);
- Actions must be checked for conflict (do they cancel each other out?).
What About Goals & Objectives?
They’re not enough for a strategy, and they’re not a replacement for strategy.
Once the actions and policies are clear, goals and objectives will easily emerge. You can now put them on a dashboard because you have a list of actions that will be triggered if goal A is not reached, or if KPI X goes down.
Goals may stay the same, but objectives can change. Increasing sales by 50% can be done by a huge variety of ways.
And goals may change based on the policy.
Don’t put the carriage before the horse (or the donkey 👇)
I cannot promise you that this post has solved your critical problems around building strategy.
Here’s what you should take away today:
- Templates for strategy formation breed fluff and bad strategy. Don’t rely on them alone — think!
- Group-think and brainstorming may hurt your strategy. You need an outside view.
- Goals are not substitutes for strategy, they don’t come before it, they are not dictators. Objectives may change based on goals. Don’t start with them, but keep them in mind.
- By avoiding the enemy — the problem & the restrictions — you forfeit the whole exercise. Don’t be lazy, don’t be dismissive of it.
- Leverage is the core component of the strategy. This is the one thing that, if missing, invalidates the strategy completely.
- Actions the policy generates must not be incoherent (tugging in various directions) and conflicting (cancelling each other out);
- None of this is guaranteed to be successful!
Your strategy is still a hypothesis.
Questions About Strategy
How do you understand the limitations of a strategy and when to get back to it?
If a core team member is sick, how do we make sure we achieve the goal?
The strategy will always have limitations. You have to make choices. It’s deceitful to think that the best strategy can achieve it all. How to understand the limitations? If you have made choices, look at the cutting room floor, find the pieces you have decided not to do: those are your limitations.
If a person is not available, can someone else do it? Can you hire quickly enough?
This is more tactical and your strategy shouldn’t disintegrate because of such questions unless this person WAS your leverage and the whole strategy was to hire THIS genius to do the work.
If they WERE, you should have protected that leverage with everything in your power.
If they WEREN’T, then they were not as crucial to the fulfilment of the strategy and you can find a way to go without them for a while.
How do people present strategy?
Most companies post their strategies online. Of course, there are internal documents which may be hard to reach.
Some companies explicitly state their strategy on their blogs. You can find examples below.
To create your own, a pitch deck seems like the perfect starting point, but a well-written blog post also works. Think memos.
- If it’s too long, nobody will read it.
- If it’s too short, it’s fluff.
- If there’s a chart, make sure it has a purpose.
A strategy cannot be so simple that it fits in a small sentence, but it shouldn’t be a book either.
What if the best strategy to solve a problem may not fit the culture of an organisation?
If the culture fit wasn’t there, you probably went in with a template strategy and didn’t think well enough, i.e. you had no strategy for this particular client.
Entering a new environment should always start with the research and the understanding of the problem.
How can you fix it now? What is this thing in the culture of the organization that is preventing the “best” strategy from working? What are those limitations? Is it certain people who oppose it? Is it the guidelines from the top? Are there time limitations, or technology limitations, or skill limitations on your side?
A strategy is a hypothesis. Your roadmap is the strategy, and it’s not guaranteed to win.
If you understand the problem well enough, now that you’re in the org, do your best to diagnose the problem. There are some specific tools that can help unearth more insight into the problem. That’s not the point.
Examples of bad strategy
Whenever you hear stuff like “continue to focus…”, “further strengthening…”, you know there is fluff coming up.
Take a look at this chart from the corporate strategy document posted on the website of Yokogawa (Japanese electrical engineering and software company) website:
Does that tell you anything? What’s digital transformation, and why do it?
Perhaps not all of it is fluff.
Perhaps some parts of the plan are there to alleviate certain investor concerns.
Perhaps the real strategy is elsewhere and it’s really good, but why post this?
In one statement, the company commits to probably conflicting goals of simplification + addition of a new business unit.
Cost reduction may or may not provide an additional layer of complexity to the simplification policy, because to simplify, you probably need to do some digging, and then probably some automation, unless you’re cutting costs everywhere — which doesn’t recognize the competition, the market, the landscape, and what will happen once you do improve profitability.
And here’s a deceptively organic flywheel-looking chart that actually fails to communicate how one thing leads to another:
The pinnacle of fluff is Hilti’s statements on strategy and goals.
“We passionately create enthusiastic customers and build a better future.” Fluff.
The focus areas say nothing about the challenges, just BAU, or it’s cousin, “Try-Harder BAU”.