Playing To Win
The Strategic Choice Structuring Process
Theory & Practice
I received a reader question recently: “You write a lot about the Strategy Choice Cascade in the Playing to Win/Practitioner Insights (PTW/PI) series, but not about Strategic Choice Structuring Process (SCSP). Do you talk about SCSP in Playing to Win?” It is a bit of a lazy question. A quick glance at the book would reveal that SCSP is the entire subject of Chapter Eight. But it got me thinking about making SCSP a little more prominent, which I do in this PTW/PI called The Strategic Choice Structuring Process: Theory & Practice. All previous PTW/PI can be found here.
Where is SCSP in PTW/PI?
The Strategy Choice Cascade is about the content of strategy — i.e., what the result of a strategy exercise should look like — while the SCSP is the process for creating a strategy. And while it isn’t true that it is missing from PTW/PI, I haven’t talked about it much, especially lately. I have discussed it just six times in the nearly 200 original PTW/PI pieces. Five of the six were in Year 1, and most of those weren’t about SCSP itself but rather the linkage between it and Design Thinking, Integrative Thinking, Scenario Planning, SWOT Analysis, and Boards of Directors, respectively. I skipped SCSP entirely in Year 2, I mention it in passing in the Year 3 piece on Business Model Generation, and nothing yet in Year 4. I have advanced SCSP a lot since the publication of Playing to Win 11 years ago, so it makes good sense to delve directly into the theory of practice of the overall tool and of each individual step.
Overall SCSP
Theory
Effective strategy choice requires a process that helps a company’s leadership — i.e., senior management plus the board — explore the logic of its existing strategy enough to compel itself to make a set of choices that solve its most pressing problems and take advantage of its best opportunities. It is ineffective for strategists (whether internal or external) to attempt to convince leadership to make a different set of choices. Leadership must convince itself for change — i.e., different actions — to truly happen.
Practice
SCSP is completely flexible in terms of required time. The first five steps can be done in a day if there is high pressure for action. The time required for Step 6 (Testing & Transformation) is entirely dependent on the risk profile of the company. If it is a venture-funded start-up with high risk tolerance, the step can be skipped entirely. If the company has lower tolerance, as with most big public companies, the time for testing can be adjusted accordingly.
1) Problem Definition
Theory
The place to start is with your biggest problem, the biggest gap between what you wish was happening and the actual outcome. Note, that can be a disappointing existing outcome, or an opportunity not seized. The current outcome is a product of all prior choices interacting with competitive environment. Hence, unless you want to depend entirely on luck — and hope is not a strategy — a better outcome requires a different set of choices.
This is a practical approach to development of strategy. Don’t start in some esoteric place like ‘we need a bold new strategy.’ Start with your biggest problems — and work on making them go away. That is the most powerful approach to strategy.
Practice
Remember, the purpose of strategy is to compel desired customer action. Hence, it is important to define the motivating problem from the customer perspective. “Our margins are falling” is defined from the company’s perspective. A better definition is: “Customers are no longer willing to pay prices that enable us to meet our margin goals.” That problem definition will help you determine what different choices you need to make to cause customers to act differently.
Don’t proceed further without checking with colleagues above and below if this is the problem they want solved. For example, if you are the CEO/Executive Management Team, check with the board the extent to which it believes this is the most important problem to solve — and modify if necessary. Also, check with your direct reports to see whether it resonates with them as well. There is no use working on a problem that only you think is important!
2) How Might We Question
Theory
For longtime readers, I have changed this from Frame a Choice — which seemed to confuse people — to create a How Might We Question. I borrowed this from the world of design with the intent of pivoting from the negative of ‘problem’ to the positive of ‘solution.’ It creates an objective function for the subsequent generation of possibilities. For example, in the above case, the question could be: “How might we engage with customers in a way that causes them to value our offering more highly.”
Practice
Remember to focus on the customer. It is not about our margins; it is about compelling different behavior from them. Yes, that might include cutting our costs — but not independent of causing the customer to take the actions we need. For example, if we cut our costs by the entire amount of the margin gap, customers would need to still behave the same way while we are spending less to serve them.
3) Possibilities Generation
Theory
To compel desired customer action, we need to generate multiple different ways in which we could make the problem go away, framed as different sets of choices on the Strategy Choice Cascade, and choose the most compelling one. I call them ‘possibilities’ not ‘options’ because the latter sounds too serious. At this point we want to generate the maximum breadth and creativity of possibilities for making the problem go away.
Practice
At this point, there should be no bad possibilities. When facilitating, don’t let anyone question whether we should include a possibility that someone has raised. Vetting of possibilities comes later. For this reason, the proponent of the possibility doesn’t need to supply supporting data, just the logic. Data comes later.
Each possibility must be fleshed out into a full cascade of choices. They can be rudimentary at this point (e.g. Enabling Management Systems), but they need to be expressed as a full set of strategy choices.
Finally, make sure that each possibility is connected back to the problem. It must be an approach that promises to solve the specified problem — not something else!
4) What Would Have to be True (WWHTBT)
Theory
Teams tend to disagree intensely on what is true, and when the focus is on that disagreement, strategy discussions tend to grind to an unproductive halt. In contrast, they almost always can come to agreement on WWHTBT. The reason is that asking WWHTBT instead of what is true separates the logic of a possibility from the data associated with the logic. If a team can agree on WWHTBT, it can focus productively during the next step of determining what data it requires to make a choice.
Practice
It is important in this step to show no interest in what people think is true because that will just create unproductive conflict. The focus needs to be on getting agreement on WWHTBT. Whether those features will or will not be declared true comes later. But if the team cannot agree on WWHTBT, it will never make a strategy choice to improve the status quo.
Be open to any WWHTBT — and put it up on the chart. But after you have sourced all the WWHTBT elements, ask for each of them: “If this single WWHTBT was shown to be not true, would you reject the associated possibility?” If they wouldn’t reject, then it is a nice to have not a need to have and should be removed as a WWHTBT.
5) Barriers to Choice
Theory
The thing that stops commitment and action are the elements that would have to be true that the team is not confident are true. These are the Barriers to Choice (BtC). To have the chance of moving forward with a possibility, the team needs to agree on the BtC so that it can work on addressing them. Unaddressed, the BtC will stop action being taken on any possibility — regardless of what team members say to appear agreeable in strategy meetings.
Practice
Focus on the BtC that are most widely felt. Usually, it is three (+/- one) that a meaningful number of team members see as BtC. But if only one team member feels very strongly that a given one is important, keep it on the list of BtC that must be submitted to testing.
6) Testing & Transformation
Theory
To commit to and take action on a possibility, the team needs to perform tests to determine whether each BtC is in fact are currently true or if there is a plausible transformation path to making it true. Both are positive outcomes. For some strategy choices, the WWHTBT are indeed true. But for many great strategies, the things that needed to be true were not true at the time, but the company took the steps necessary to make them true. For example, as of the time of the iPhone launch, it was not true that users were comfortable typing on glass because only a tiny fraction (early tablet users) had ever done so. However, Apple was successful in providing a great enough offering that users got used to it and have come to believe that is the only way to use a smartphone.
Practice
In sequencing the tests, work on the most concerning BtC first (and then the next and next in descending order). That way, if the most concerning BtC can’t be overcome, no work needs to be done on the remaining BtC. It is the most efficient approach to strategy.
Put design of the test in the hands of the most skeptical member of the team. If others design the test, their standards of proof may not be as high as that of the most skeptical member — and the test won’t necessarily be compelling to that member. If the BtC is passes the most skeptical member’s test, it will have cleared the bar of everyone else.
The goal of the work is to achieve confidence in possibilities — either confidence that each possibility in question should be dismissed or confidence that it should be enacted.
7) Choice
Theory
If you consider strategy choices using this process, you will translate problem into choice and choice into action. The keys are: framing a motivating problem, thinking expansively about possibilities, working on logic and data sequentially, and focusing on building confidence across the process.
Practice
Keep reminding the team of the journey. Action is the goal but that takes seven steps, which can be performed more slowly or quickly depending on the mindset of the team and the external environment. But they have to be taken by the team together without leaving anyone feeling left out or left behind.
Practitioner Insights
The status quo has a deathly grip on every company — and it kills many of them. The process for developing strategy must respect that grip — otherwise the status quo will win. The SCSP is designed to help the management team gain sufficient confidence to overcome the status quo to make change that is needed for continued prosperity.
It is an all-purpose tool for tackling any gap between actual and desired outcomes. It is completely flexible with respect to time. A team can run the process in a day if it wishes. But that will generate longer odds of success because you have to bet that the BtC can be overcome without having done any testing or creation of a plausible transformation path. As a team, you should take as much time and spend as many resources on testing and transformation as to shorten the odds to a level you find satisfactory. Though always remember that strategy can’t guarantee success — the best it can do is shorten your odds.
