Strategy as a Practice
For my 8th Playing to Win/Practitioner Insights (PTW/PI) piece, I am channeling Peter Drucker, the greatest management thinker in history. The inspiration came from my friend and Drucker aficionado, Brendan Calder — thanks much. He encouraged me to write on Strategy as a Practice. (Links for the rest of the PTW/PI series can be found here.)
In 1954, Drucker wrote one of the most important and influential books on management in history, The Practice of Management. After 66 years, it is ranked #84,351 in Books by Amazon (as of 11/22/20). For an ancient non-fiction book on the topic of management, that is a truly impressive ranking. By comparison, the median rank of the nine management books published in 2019 by authors ranking on the 2019 Thinkers50 list is #126,856. After one year, they already trail Drucker’s 66-year-old book by a substantial margin!
The Practice of Management is well worth the re-read. It brought the world Management by Objectives (MBO) among many other useful tools and insights. But if you re-read it, you will find more about the practices in which managers need to engage than about why Drucker thought management is a practice.
For that, you need to go to an interview of Drucker found in this journal article:
“Management is definitely not a “science”, as the word “science” is used in the English-speaking countries. It is equally not an “art”. It is a Practice. In that, it is similar to medicine, which it resembles in a good many other respects as well — for instance, in the need in many situations for a careful diagnosis, rather than a standard prescription. And, as in medicine, the results are not “scientific”. A successful doctor is one who cures his patients. A successful executive or manager is one whose enterprise prospers. In medicine you have a good number of foundation disciplines which are the “medical sciences”: chemistry, physiology, anatomy, and so on. But the end result is not knowledge as it is in a “science”. It is a cured patient. Management, similarly, has a substantial number of foundation disciplines. A successful manager must know a fair amount of psychology, for instance; a fair amount of economics; a fair amount of statistics — which, by the way is the one area where most executives today are most deficient. But at the same time, these are foundations rather than the practice itself.”
I agree. And as a key aspect of management, strategy is naturally part of that practice of management. This continues to be the case despite decades-long efforts to make strategy a science. I lived that experience. Monitor Company, the firm I helped build, was a strategy consultancy built on the original intellectual property contained in Michael Porter’s 1980 classic Competitive Strategy. The scientific framework that generated the most client attention and enthusiasm was the ‘Five Forces’ model and we spent a disproportionate amount of time in the early days calculating the structural attractiveness of our clients’ businesses using the Five Forces model. However, when the excitement of the shiny new model wore off, clients started to ask us: “OK, you assessed our industry’s structural attractiveness as medium-high, what do we do now that we know that?”
The truthful answer was: “The hell if we know!” But it spurred us to build a practice of strategy. Much as we might have wished that Competitive Strategy had made strategy a science with a proprietary tool to apply that science, it wasn’t. Each client situation (like each patient above) had a unique circumstance with a unique set of challenges and possibilities. We had absolutely no choice but to become experienced practitioners of strategy, not strategy scientists.
That having been said, the strategy discipline has continued down a highly scientific path. Strategy courses teach students to calculate the Cournot-Nash Equilibrium to determine what to do. Or to figure out the valuable, rare, imperfectly inimitable, and non-substitutable assets (or maybe the ’N’ for non-substitutable should be ‘O’ for organization so that the scientific model is VRIO not VRIN) and, on that basis, make scientifically driven decisions. And regardless of which model you use; you absolutely must make your decisions based on intense data analytics. It is a seductive thought to be so scientifically deterministic, but sadly that is not the way the world works. Once you have performed your VRIN/VRIO analysis and your data analytics, there is still a judgment call on what to actually do. And how might you do that?
One alternative stream of thought that has emerged — I think in response to this excessively scientific vector — is that strategy is an art. This is manifested in the world of design thinking at its extreme. Strategy is an entirely creative act. Understand the user. Brainstorm ‘out-of-the-box’ solutions. And prototype them along a pathway to victory. That is, of course, a caricature. I am a proponent of design thinking, but I see lots of design thinking straying into the territory of strategy-as-art in violation of Drucker’s principles.
Practice, Practice, Practice
The implication of strategy as a practice is that you must get lots of practice. I have never met a great unpracticed strategist. All the great strategists I know have practiced and practiced to get there. People think of star former P&G CEO AG Lafley as a ‘natural strategist.’ I don’t. I have worked with him and interviewed him about his career (for both The Opposable Mind and Playing to Win) enough to know that he was practicing strategy as far back as when he was a very young Navy officer running the retail operation of a naval base in Japan. By the time he had become a CEO and became famous as a strategist, he had three decades of intense strategy practice behind him.
For his practice of strategy, he had a great context. Many people think of General Electric as America’s CEO factory — at least historically. Indeed, it has produced lots of CEOs. However, P&G is one heck of a CEO factory as well — maybe even better. Why? I think that the structure of its business, with so many brands requiring independent strategies, requires its managers to get in more strategy practice reps than managers in companies in which the strategies are set more centrally. Even though Pantene and Head & Shoulders are part of Shampoos & Conditioners, which is part of Hair Care, which is part of Beauty Care, which is part of P&G, the Global Franchise Leaders of Pantene and of Head & Shoulders each have to make really important strategic decisions. That consistent practice, throughout the many layers of P&G, creates future CEOs.
Strategy as a Reflective Practice
But not all practice is created equal. You can go to a driving range, hit 1,000 golf balls, and not get any better. In fact, you can get worse if you practice grooving a flaw in your swing. The key is reflecting on your practice as you practice. I believe that the best thinking on this question can be drawn from Donald Schön in his 1984 book The Reflective Practitioner: How Professionals Think in Action. While he doesn’t address strategy in particular, his advice for professionals is perfectly aimed at the strategist.
Consistent with Drucker, he contrasts the theory of “technical rationality,” in which management can be reduced to a science with if-then relationships that hold in every case, to the reflection-in-action approach of a practitioner. The technical rationalist needs a pre-determined problem to which to apply a scientific reasoning solution. Unfortunately for them “In real-world practice, problems do not present themselves to the practitioner as givens. They must be constructed from the materials of problematic situations which are puzzling, troubling, and uncertain. In order to convert a problematic situation to a problem, a practitioner must do a certain kind of work. He must make sense of an uncertain situation that initially makes no sense.” (p. 40)
The reflective practitioner continuously frames and reframes the problem based on the intended and unintended effects of actions: “In a practitioner’s reflective conversation with a situation that he treats as unique and uncertain, he functions as an agent/experient. Through his transaction with the situation, he shapes it and makes himself a part of it” (p. 163). For Schön, the reflective practitioner builds a repertoire of expectations, images, techniques, examples, understandings, actions, metaphors in order to interpret, interact with and shape the unique situations encountered and, in utilizing those metaphors, make better decisions.
That captures the essence of the strategist. She practices reflectively to build a repertoire that enables her to interpret each unique situation in a way that enables her to guide towards choices that are better rather than worse, in a way that uses reflection to correct the errors from unintended consequences of actions and to build on the intended consequences.
For him, the contrast between the normal view of the professional and the stance of a reflective practitioner is stark.
If you want to be a great strategist, don’t aspire to be a great scientist or artist. Strive to be a practitioner, per Drucker, and a reflective one, per Schön. Accomplish that goal through practice, practice, and more practice — and reflecting on every single iteration. Capture the reasoning behind what you intend to do before you do it so that you can make a comparison between what you hoped and what you achieve. If you don’t capture your logic before you act, you will ex-post-rationalize yourself as having succeeded brilliantly — and thereby doom yourself to not learning a thing. Build your repertoire of expectations, images, techniques, examples, understandings, actions, and metaphors. That is what will make you a great strategist.
How do you get that strategy practice — isn’t it only done once a year by the most senior of management? That is a fallacy for you to reject. Everybody throughout the organization makes strategy decisions — to do some things and not others. It is more obvious at some corporations, like P&G, as mentioned above. But you make Where-to-Play and How-to-Win decisions regardless of where you sit in the organizational hierarchy. Practice on making every decision that your supervisor gives you. If you think about it, the decision will require choices to do some things and not others. Think about it in terms of WTP and HTW and it will provide you the strategy practice you need to work toward becoming a great strategy practitioner.