Playing To Win
From Strategy to Planning
The interplay of strategy and planning is fraught with confusion. A testament to the interest in the subject is that Strategy vs. Planning: Complements not Substitutes is the second most popular of my first 34 Playing to Win/Practitioner Insights (PTW/PI). Another piece related to the topic, Strategic Choice Chartering, is also highly read, reinforcing the level of interest. Still, I get questions, lots of good questions, on the relationship between strategy and planning. So, my 35thPTW/PI is on From Strategy to Planning: What is Next After Strategy? (Links for the rest of the PTW/PI series can be found here.)
Going Back to First Principles
The most typical question I get asked is: After I have finished my strategy, what do I have to do to convert it into action? It is a good question, the answer to which is not entirely intuitive. Plus, my views don’t exactly follow the standard thinking out in the world of strategy.
For that reason, I will go back to first principles to build the logic. It starts with the recognition that strategy is a problem-solving tool. Its job is to overcome a gap between the outcomes we experience and the aspirations we hold. That gap is a product of the current set of choices that has guided our actions up to this point in time, regardless of whether that set of choices evolved implicitly over time or was the product of an explicit strategy effort.
A new strategy seeks to close the gap by means of a new set of choices. By definition, this needs to be a different set of choices, or it would fail entirely to close the gap that has been produced by the current set of choices. Because strategy is what you do not what you say, that different set of choices need to be manifested in different actions. Otherwise, there is no reason to believe that there will be any progress toward eliminating the gap. To summarize, strategy needs to produce a new set of choices that translates into action and, by doing so, eliminates the problematic gap produced by the existing set of choices.
The heart of strategy is the matched pair of Where-to-Play and How-to-Win (WTP/HTW) choices. There will be no elimination of the problematic gap between outcomes and aspirations without a change in the WTP/HTW pair. You can change one, the other, or both. But if you don’t change them, you haven’t changed your strategy choice.
Note that it is a real change to move from an espoused strategy that you don’t enact to the enaction of the previously espoused strategy. That is, if a company claims its existing strategy is to win in a particular place but it hasn’t invested in the Must-Have Capabilities (MHC) necessary to win and/or doesn’t have the Enabling Management Systems (EMS) that build and maintain those MHC, then its existing real strategy is to play, not to win. It would be a strategy change to have a HTW that is now backed with MHC/EMS that facilitate actual winning.
MHC and EMS play a central and critical role in bring strategy to life. For a new WTP/HTW choice to bring about real change, MHC and/or EMS must change. Otherwise, the purported change will be an espoused change, a theoretical WTP/HTW, not a real change in strategy, and the gap won’t be diminished.
An Illustration with the Burberry Turnaround
Let me illustrate the tie between WTP/HTW and MHC/EMS with Angela Ahrendts’ epic turnaround of the venerable but fading luxury fashion brand Burberry during her time as CEO (2006–2014). Her Winning Aspiration (WA) to restore the glory of a great British luxury brand necessitated a major upgrade to its strategy, so she dramatically altered both its WTP and HTW. The WTP shifted from the traditional older luxury fashion demographic to focus on millennials. It also shifted from dedicating resources indiscriminately across a broad array of fashion and accessories to applying disproportionate focus on its core signature product: the trench coat. The HTW featured a shift edgier luxury fashion, delivered in a more digitally oriented manner — a HTW nicely matched with its WTP!
While that was a bold WTP/HTW shift, it would have meant nothing without changing MHC and EMS. She needed an enhanced MHC to design fashion apparel that would appeal to the millennial demographic while being true to the Burberry brand heritage. And she needed a consistency to that brand image, which had been fractured globally by having numerous country design leaders each doing their own things. To build MHC to deliver edgier fashion, she elevated a (then) young but brilliant designer named Christopher Bailey to Chief Creative Officer. She also changed EMS by appointing Bailey the global “brand czar.” Design directors in individual countries could no longer make design decisions independently; decisions had to be coordinated through the office of the brand czar.
She also needed to dramatically enhance on-line capabilities and that meant changing the EMS for resource allocation to dedicate dramatically more resources to on-line initiatives. She needed to refocus retail sales on the trench coat and marketing leadership on marketing to millennials.
Ahrendts could make some of these MHC/EMS changes and enhancements alone — such as the elevation of Bailey and broadening of his role — but for most of them, the key was in carefully chartering the choices that her next level of subordinates needed to make. Ahrendts couldn’t (and shouldn’t) directly make the choices that would make the fashion edgier, create a breakthrough online presence, or ensure an intensive focus on the trench coat. But she could, for example, explain to Bailey what output she was looking for in the first two, in addition to changing the EMS for branding by making him the brand czar and enhancing the potential for capability-building by upping the allowable investment level in digital.
It was up to Bailey to make the key strategic choices that produced edgier fashion and the finest online presence in luxury. On the former, his HTW choice involved leveraging the youth within the company, which he did with a change to the EMS that built the edgier MHC. He created an Innovation Council that uniquely drew from all levels of the company design community to generate edgier fashion ideas and paired it with a more senior Executive Council charged with making business sense of those ideas and bringing them to fruition.
In digital, Bailey’s WTP choice was to drive deeply into social media before it became the obvious thing to do. Its interactive Art of the Trench website became legendary for being the place that Burberry trench coat customers could post photos of themselves in their beloved coats and it made Burberry the #1 luxury brand on Facebook and Twitter.
Elsewhere, retail sales leadership shifted the incentive compensation EMS to make sure that in-store salespeople no longer had the biggest incentive to sell polo shirts but rather to sell trench coats. And marketing leadership built its MHC by spending 60% of its of marketing budget on digital.
The Elements of What Comes After Strategy
What then is the planning activity that follows your strategy choice? You should create a plan comprised of three elements. First, it should specify and communicate the choices that you personally will be making and the timing of those choices (for example, elevating Bailey and appointing him brand czar). Second, it should specify the choices you will be chartering (for example, asking the head of retail operations to find a way to alter the EMS for in-store commissions to result in the necessary focus on selling trench coats). Third, it should specify your own EMS for following up on the chartered choices to make sure they are being effected and made consistently with your choices. This is why I argue that the wise and thorough chartering of strategy choices is one of the highest-leverage activities for any executive. Ahrendts achieved legendary success as CEO of Burberry by making and communicating great strategy choices, chartering strategy choices wisely, and following up to make sure those choices were made and made consistently.
The implication of this approach is that an organization doesn’t have (or at least shouldn’t have) one humongous plan. It has many — in fact one for every manager. Attempting to smoosh them together into one interminably long document creates no value — except to bureaucrats. And trying to manage such a plan centrally is a key reason why there are such problems turning strategy into timely action. Every manager should have a plan. And that manager’s supervisor should make sure that the choices she chartered to that manager are being made. And that manager should be making sure that the choices he chartered to his subordinates are being made — and so on throughout the organization.
Regardless of where you are in your organization from CEO to first-level manager, you have three tasks. First, you need to make and communicate your strategy choices (WA, WTP, HTW, MHC & EMS). If your superior is doing her job properly (and you aren’t the CEO), your superior will have chartered you with making choices that are consistent with and reinforcing of her choices. If not, and sadly this will be the case more often than not, you will need to reverse-engineer her choices and charter your own choices on that basis. Second, you need to charter the choices of your subordinates. Each one needs to know what choices you are counting on him to make that will enable your strategy. Third, you need to develop and deploy a personal system for you to make sure those subordinates make their choices in a timely manner. This could involve helping them make the choices you need them to make, considering possibilities for choices that they present to you, ratifying their choices, etc.
If you do this well with your subordinates, they will follow your model and do it with their subordinates. And that in turn will create a culture of planning that isn’t bureaucratic and controlling but rather decentralized but coordinated, and empowering.