Playing To Win
How I Do Strategy — Part Two
Taking as Much Secrecy out of the Sauce as I am Capable
Last week, I published the first piece in a two-piece series on how I personally do strategy when I am fully or in part in charge of the organization. This is the second piece in this Playing to Win/Practitioner Insights (PTW/PI) series. It is called How I Do Strategy — Part Two: Taking as Much Secrecy out of the Sauce as I am Capable. And as always, you can find all the previous PTW/PI here.
Recap
The series takes a first-person perspective — how I thought my way through the Monitor Company, Rotman School, Skoll Foundation and Tennis Canada strategies. I will describe my thinking through what I think of as the four major steps that I follow every time I do strategy. Part One detailed the first two steps.
The first is to Get Myself Psyched Up, which has two components — Project Forward the Current Path and Remind Myself of the Inherent Goodness and Fairness of Most People. The key output of this step is to have personal enthusiasm for and commitment to a transformational strategy, not just a sufficient strategy.
The second is to Focus on the Problem to be Solved, which has three components — Focus Like a Laser on the Problem to be Solved, Specify the Form of the Desired Outcome, and Remind Myself What I Don’t Control. The key output of this step is a precisely defined problem to be solved and an understanding of the levers that I can pull in service of solving the defined problem.
The third and fourth steps, which I discuss below, are Imagine Possibility Portraits and Make, Enforce, and Adjust Choices.
3) Imagine Possibility Portraits
This step has three attributes:
a) Remind Myself of the Nature of Activity
People generally want to believe that the secret sauce for creating a great strategy is an algorithm, but an exact formula that produces the desired answer doesn’t exist, in part because there is no one right answer in any strategy situation. Frankly, I am not sad about that. If strategy creation was an algorithm, every organization would have a great strategy.
Strategy creation is a heuristic not an algorithm. I have written extensively on heuristics and strategy, starting many years ago with my 2009 book The Design of Business and continued more recently in the PTW/PI series here and here. While algorithms (where they are possible) produce the correct answer, the best a heuristic can do is guide you generally towards your desired goal. Genuinely caring about your customers and being good to your employees are heuristics that help companies in a positive direction — but they don’t guarantee success.
My strategy heuristic includes having a carefully and thoroughly defined problem (Step Two from last week) and a clear task — an integrated set of choices that compels the most important thing that I don’t control, which is customer behavior.
As with the nature of all heuristics, the strategy heuristic requires practice for the individual to become skilled at it. Strategy is a practice and I have yet to meet someone who is an excellent strategist who isn’t also a highly practiced strategist.
So, before starting, I remind myself that I am not looking for the one and only answer. Rather I am using the heuristic that I have long practiced to create the best strategy of which I am capable.
b) Target Form of Output
I think of the output as a picture more so than a list as I have written about before in this series. It is a portrait rather than a series of pixels. A portrait as the target output forces the strategist to consider how the individual choices fit together and helps others visualize how they do. A picture does tell a thousand words — and you want yours to be a story of how your set of choices will compel customers to take the actions that you need.
A key aspect of the target form of the output is that it is a set of choices that passes the can’t/won’t test. That is, when competitors notice that our choices are producing prosperity for us, they either can’t or won’t replicate ours.
To summarize to this point, strategy is a heuristic search for an integrated set of choices that solves a tightly defined problem, and that set of choices can be visualized as a portrait, not just as a list of initiatives.
c) Deploy the Search Vectors
As I discussed in a recent PTW/PI, when I develop creative strategy possibilities, I search along three vectors: analogy, tradeoff, and anomaly.
Analogy is a rich vein for creation of strategy possibilities with examples like Dyson using the sawmill cyclone as a powerful analogy to solve the problem of suction diminishing as the bag fills in traditional vacuum cleaners.I used analogy in thinking about the Skoll Foundation strategy, and for me analogies were organizations such as American Express with the charge card and the Marine Stewardship Council (MSC) with sustainable fishing. In each case, to build a new field, the organization needed to create a clear definition of it to help people rally around that new field and support it. For example, MSC couldn’t get people to consumers, fisheries, or processors to support sustainable fishing without defining a sustainable fishery.
At Skoll, then-CEO Sally Osberg and I wrote Social Entrepreneurship: The Case for Definition in Stanford Social Innovation Review, which has gone on to be the most downloaded article in the history of that journal and the most cited article in social entrepreneurship, helping to define the field and guide the Foundation’s philanthropic approach and efforts.
With respect to tradeoff, when the problem can be expressed as an either/or tradeoff — i.e. we could do A, but it would prevent us from reaping the benefits of B and vice versa — I use Integrative Thinking to search for creative strategy possibilities that arise from attacking rather than accepting the tradeoff.
At Rotman, I attacked the perceived (and widely accepted) tradeoff between teaching and research — supposedly a school couldn’t have great teaching and great research — by creating an environment that supported us becoming a research powerhouse with consistently exceptional teaching by insisting that professors teach their research. That helped steer professors research in practical directions while giving students access to the very latest thinking.
At Tennis Canada, we attacked the tradeoff between control and independence in high-performance tennis development. Rather than mirror the US laissez-faire approach or the French Federation tight control over all inputs to the process (our coaches at our facilities), we chose to control outputs. If a player met our age-based development standards, they were able to choose train with our coaches at our national center or their own coaches (funded by Tennis Canada) wherever they wished.
I pay attention to anomalies that may reveal something currently hidden from the mainstream. At Monitor, I looked at the anomaly that most of the truly great firms — a tiny proportion of all firms — didn’t use strategy consulting firms. It turned out that they didn’t because they had a philosophy that if something was important, they had to learn to do it themselves. Our strategy became to teach our clients how to do strategy not to do strategy for them — as did all our competitors.
I must say that I had a burst of pride when I had lunch with George Stalk, one of the greatest half-dozen consultants in the history of Boston Consulting Group (BCG), to ask him to join my Dean’s Advisory Board at Rotman, and he told me that BCG had done an in-depth analysis of Monitor to figure out why our clients loved us so much. While they weren’t certain why, they knew it had something to do with the process we used to develop strategy alongside clients. I knew he was describing the Strategic Choice Structuring Process that I had pioneered at Monitor — nice!
My experience is that if you search along each of these vectors, you will come up with a solution — and with increasing practice, you will generate ever better ones.
4) Make, Enforce, and Adjust Choices
The fourth step involves making, enforcing and adjusting your integrated set of choices.
a) Make
You must be bold and to choose which strategy possibility portrait is most compelling to you. And remember, if you think you can avoid the risk of making a choice by not explicitly making one, not choosing is a choice — and it is your strategy choice.
b) Enforce
Once you make your integrated set of choices, it is essential to vigorously enforce it. This week I talked to a new client whose strategy failed because no one enforced it — every business did whatever it wanted to. If you aren’t willing to enforce your strategy, then get out of the way and give someone else that job.
At Skoll, I had to enforce our strategy at every board meeting. The natural desire of successful organizations, especially non-profits, is to broaden, which dissipates energy because there typically is no strategy behind the additional random things they want to do. I finally gave up enforcement and left the board when new directors refused to follow any strategy.
At Tennis Canada, I had to be in enforcement mode every board meeting. There was always something off-strategy on which someone wanted to spend our very scarce resources.
At Rotman, I had to both model the strategy in all my own behavior and enforce it in everybody else’s. There would be no deviation from the strategy without a compelling reason. I kept my own hands on all the important levers until I gained the confidence to hand them over to colleagues who would enforce the strategy — which many helped me do.
At Monitor, I came to believe that organizing practice areas by industry was an anathema to our strategic approach and would eventually be the death of the strategy consulting industry. As one of the four members of the Global Executive Committee from 1991 to when I left in 1998, I enforced our refusal to copy the rest of the industry in moving to industry practices. That changed virtually the day I left. Sadly, I was 100% correct and the shift destroyed our distinctiveness making us look evermore like our bigger and stronger competitors.
I have learned the hard way that one of the trickiest things about strategy is that you can’t enforce a damn thing you are gone. If your strategy is successful, it will generate the resources that enable your successors to spend on lots of things that will dissipate the energy of your strategy.
c) Adjust
Enforcement should only go so far. It is a bad idea to enforce a strategy that longer matches the competitive environment. You need to be open to adjusting — but only purposefully, not in an aimless drift.
I did that at Rotman. I announced in 1998 that our strategy would feature three content pillars:
Integrative Thinking; Canadian Competitiveness; and Value of One. I followed through decisively on the first two and we became known globally for the first and across Canada for the second. But I completely dropped the third because I couldn’t figure out a way to invest in it enough to be distinctive. I replaced it with business design as a third pillar and a decade later added the Creative Destruction Lab/entrepreneurship to the content pillars.
At Monitor, I realized that simply working in partnership but operating similarly to competitors otherwise (i.e. with big pyramidal case teams) wasn’t sufficiently distinctive. And I found our case teams sliding into doing too much for clients and taking away client opportunities for learning. That caused me to take our offering to a more extreme place with the creation of the Strategic Choice Structuring Process about ten years after the founding of Monitor. If George Stalk was correct — and I think he was — that was truly our secret sauce.
Practitioner Insights
Strategy is a heuristic. That means that practice is absolutely critical. I am good at strategy because I have been practicing it for 44 years. But the second part is critique by experts. That is the only thing that ensures continuous learning rather than ensconcing bad habits.
The set up for strategy is important. If you stroll into Step Three without Steps One and Two, you will produce crap. Setting yourself up well for Step Three is important because generating strategy possibilities is the nub of strategy. Steps One, Two and Four can’t save you if your possibilities are mediocre. Get rid of extraneous ideas by making sure that each possibility you consider is indeed an integrated set of choices that passes the can’t/won’t test and paints a compelling portrait.
When you choose, realize that you have just set yourself up for an enforcement task because I guarantee that there will be people in the organization who will attempt to water it down. You must guard the strategy. But at the same time, don’t shy away from adjusting when that becomes necessary. Just do it with principle — not convenience.
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As a reminder, I am doing a PTW/PI podcast series with friend Tiffani Bova. The twelfth in the series will be on LinkedIn on Wednesday, August 20th at 12 noon EST and 9am PST. I will provide the link during the week before it. I look forward to seeing you there.
