Playing To Win
Is or Is Not The Opposite Stupid on its Face?
I am fortunate to have awesome clients with super smart people in them. By the way, I don’t think it is an accident. I help them think through strategy rather than give them strategy solutions and smarter clients like that better — but I digress. The point is that working with very smart clients spurs my thinking in useful ways, which happened several weeks ago with one. I came to a framing that helped that client and two more since then. So, I thought it would be worth sharing in this piece, which I call Is or Is Not The Opposite Stupid on its Face: A Key Distinction in Strategy.
I had a meeting with one of my awesome clients, which by objective standards is the acknowledged #1 global performer in its industry. The purpose was to discuss a topic with the COO (to whom all the functions reported), but the CEO and the executive to whom the line businesses reported were the other participants (giving his title would give away the industry and give away the company, so I will use that generic definition). The COO is super-smart with a varied and impressive background. The topic was Information Technology (IT) strategy, a topic for which he had deep expertise. Hence it was a case not of business unit strategy but of functional strategy, which I have talked about before in Harvard Business Review.
The COO had done some excellent thinking on the company’s IT strategy and had written up a very thoughtful piece on it — a prose document, by the way, which I love because the logic has to be much tighter than in a PowerPoint presentation.
The document contained a list of choices that he proposed making, with lots of logic and principles behind them. I had three reactions. First, the items and the logic behind them all made excellent sense. I couldn’t disagree with even one of them. Second, it felt like a lot of items, which had me worrying a bit about focus. And third, I couldn’t help but ask myself: what makes this list ‘strategy?’
During the discussion of the IT strategy document, I had an insight. That is, of course, my opinion. Maybe it wasn’t an insight, but I hadn’t thought about it that way before. And this client and two others since have found it helpful, so I am going to go with insight!
I realized that the single list contained two very different kinds of items. And the distinction revolves around the question that I have written about before: Is the opposite of your choice stupid on its face?
For some on the list, the answer is yes: the opposite is stupid on its face. For example, one item on the list was ‘suitability,’ i.e., the IT solutions need to aim for suitability for the internal users it served. Nobody strives for unsuitability in their IT solutions. That would be stupid.
For some, the answer is no: the opposite is not stupid on its face. And that is demonstrable because other players in the industry make the opposite choice and it doesn’t prevent them from succeeding. For example, another item on the list was ‘modularity.’ Many other players attempt to achieve their desired IT outcomes with systems that are more integrated and not modular at all.
I realized that I could go down the list of items and pretty quickly categorize them as yes-the-opposite-is-stupid or no-the-opposite-is-not-stupid.
The latter meet my definition of a Strategic Choice. Since the opposite isn’t stupid, it represents a real choice to do something meaningfully different than some or all competitors/peers. The former don’t meet the definition. Does that mean they are unimportant and shouldn’t be mentioned in a strategy document? No. This is what I have come to call an Operating Imperative. Because it is smart and there is no other obvious approach, we will fall behind if we don’t do the positive thing that everybody else is doing.
We make Strategic Choices when we want to gain an advantage over our competitors. That doesn’t happen when we do the same things as competitors. We follow Operating Imperatives when we want to avoid falling behind competitors on a meaningful dimension.
The two require very different thinking approaches.
With respect to Operating Imperatives, this is the domain in which you should be doing rigorous benchmarking to determine best demonstrated practices. This is the power alley of the (so-called) strategy consulting firms. They have worked for everyone in your industry (at least the biggest ones have) and they can give you chapter and verse on exactly what your competitors are doing and how they do it. They encourage you and tell you how to copy the best practices currently out there. It isn’t particularly ethical for the consulting firms, but that is how that world works. Clients buy their services on that basis so clients shouldn’t be surprised that the firms subsequently sell what they learned on the resultant assignment with (perhaps) their closest competitor. In any event, after receiving this advice about what competition is doing, the task is to rigorously follow the best demonstrated practice.
With respect to Strategic Choices, this is indeed where Benchmarking is for Losers, as I have written about before in this series. This is the domain in which you need to focus your bold choice-making. This is where you need to make sure that the opposite of your choice is what your competitors are doing. This is where you are going to get zero help from those who spend their lives figuring out what your competitors are doing and telling you to do the best version of that. In fact, zero is the best you can expect. They are actually most likely to convince you to replicate your best competitor, which is a recipe for losing. These unique choices are going to be the source of your competitive advantage.
You should have a limited number of Strategy Choices. The number of Operating Imperatives can be longer — say five-to-ten. More than ten and they cease to become real imperatives, in my experience. But there should be three-to-five Strategy Choices. It shouldn’t be one because a singular unique choice is easier to replicate and hence not sustainable. If it is more than five then you are probably going to underinvest in each of the five most important in order to do number six, seven, etc. It is not some scientifically derived, hard and fast rule, but I try to guide towards three-to-five. And as I always say, there has to be a unifying theory that connects these distinct choices into a unitary whole.
It is not a surprise to me, in retrospect, that this insight came up in the context of functional strategy. Functions tend to have strict mandates for things. Human Resources doesn’t have the choice to ensure that there is a well-functioning payroll system. IT has to make sure that servers are up 24–7. Manufacturing has to produce the specified volumes on the specified timing, etc. Hence functions will have imperatives for which the opposite cannot be in the consideration set. So, functional leaders tend to cavil when I ask them to focus on the small number of Strategic Choices for their function. Now I think I have a better way of engaging with them. It is by getting them to create two lists, with lots of the things for which they have an ironclad mandate to deliver, their Operating Imperatives, on a different list than their Strategic Choices.
I have quickly found this distinction between Strategic Choices and Operating Imperatives to be a very helpful way to characterize and communicate strategy. It helps with inclusivity. While not everyone in a company will be able to tie their daily work life to one of the three-to-five Strategic Choices, virtually all will be able to see their part in one of the Operating Imperatives. And it is not pandering. Fulfilling the Operating Imperatives creates the platform upon which the Strategic Choices to be better than competition is built. No platform; no advantage.
During the entire time you are working through your strategy, keep in mind the distinction between Strategic Choices and Operating Imperatives. Your thinking process on the two should be completely different. Your thinking about Strategic Choices should be oriented heavily toward creativity and uniqueness. It is about what could be, not what is. Your goal is a set of things that, collectively, nobody else is doing. Your thinking about Operating Imperatives should be entirely devoted to replication. Survey what is to aid in replicating the best of what you see out there. Pride of authorship is not welcome. Faithful imitation is.
Be extremely careful in choosing whose advice you employ to help you. I guarantee that if you go out into the market and solicit proposals for help with Strategic Choices, you will receive proposals from the usual suspects that cite the numerous companies in your industry for whom they have done the exact same thing. That is how they sell — because that is how clients buy. However, the more comparables that they provide and the more similar the comparables, the less likely they will be to be of any use in the specified task. The only thing at which they will be any good is benchmarking and replicating — at which they are very good.
The only thing for which you should ever hire a firm that cites its similar/identical experience in your industry as the reason they should be hired is to help you with Operating Imperatives. Never do for Strategic Choices — ever. That having been said, before you hire a consultant to help you benchmark and replicate, you should ask the consultant whether it can provide you with explicit written permission from those previous clients in your industry to share their proprietary IP with you. It doesn’t happen enough for my liking, but those previous clients should be suing the pants off both the consultants facilitating the theft of and the new clients benefiting from the IP of those previous clients. Those previous clients don’t do so because they have played the same game before and feel too sheepish — so the nasty game keeps getting played over and over.
Net, you are better off focusing on your Strategic Choices and when it comes to Operating Imperatives, benchmark non-competitors with their explicit permission (often you can trade insights with them). That is the more ethical way to do strategy!