Playing To Win
The Whether/How Distinction
One thing I love about my work is that I can advance strategy tradecraft as I help my client teams create strategy. Most of the time, there is just gentle progress from repeated practice. But other times, there is a meaningful step-function enhancement. I am writing about one such advance that happened while working with a client last week. My 25th Year III Playing to Win Practitioner Insights (PTW/PI) piece is on The Whether/How Distinction: A System for Navigating Corporate Strategy. You can find the previous 135 PTW/PI here.
The Corporate Strategy Context
Corporate strategy is tricky — trickier than business unit, functional, geographic, product or service strategy. As soon as a company has multiple businesses, it needs to think about the strategy that exists above the businesses — its corporate strategy. The same holds for a single-business company that enters multiple geographies. And it is doubly the case when a company has multiple businesses in multiple geographies, as is the case with most large companies these days. Every one of these diversified companies has the challenge of creating strategy at multiple levels — the corporate level and the business unit and/or geography level. And many have multiple strategic units within each business unit or geography, so it can be strategy at three or four levels, not just two.
I frequently get asked whether it is proper to start with strategy at the corporate level and work down or start from the bottom and work up to corporate strategy. My answer — which I know is a bit cheeky — is yes! It is frustrating for the questioners because they are hopeful for a clear answer on the direction — down or up. But my reason for the cheeky answer is that a company has to do both. If it does bottom up only, the effort will produce an incoherent mess. The chance of the pieces and levels fitting together powerfully is miniscule, as companies that do it this way find out to their chagrin. But if it does top down only, the higher-level strategies will be distant from the customer. A diversified, multilevel company needs to find a way of generating coherence from the top and relevance from the bottom.
As I have argued, competition takes place at the coalface, which I think about as the Country-Offering Combination (COC) — that is, a particular offer in a specific geography. The job of the hierarchy above the coalface is to help the coalface business compete and to build reinforcing rods that run through the businesses. These are crosscutting capabilities and management systems that make the whole worth more than the sum of its parts.
This means that the corporate level needs to make a thin layer of choices at the top of the organization and then charter the next level to make choices that are consistent with the top-level choices — and, if that next level can’t make a choice consistent with the corporate level, help the corporate level modify its choices to be more compatible with the needs of the businesses below. That is the necessary back-and-forth. This involves the corporate level explaining the choices it is making, specifying the outcomes it seeks from the next level, and assigning the responsibility clearly.
The process needs to go back and forth until there is coherence across the choices at all the levels such that the businesses at the coalface of competition are helped by the organization above and the corporate level of the organization builds a set of reinforcing rods that underpin its ability to help the coalface business. In this back and forth, everybody across the organization has responsibility for contributing to strategy choice.
How Exactly to Do It?
While the principles of corporate strategy may be clear and the target output understood, it is still tricky to get through the process. I typically start corporate strategy work with the senior leadership team — knowing full well that the work will have to cascade down and back up along the way. But I struggle with how to explain to clients what needs to be done, when and how.
I tried a new way last week and it really resonated the leadership team. The company is a diversified, global player and I have been working with the leadership team (we’ll call it the EC) to create a strategy using my Strategic Choice Structuring (SCS) process — defining problems to be solved, generating possibilities, asking what would have to be true (WWHTBT), identifying barriers, and performing tests.
They were reviewing the pieces of work that various EC members were leading and were feeling a bit overwhelmed. There were about a dozen problems being worked on and for each, several possibilities had been developed. They were wondering what to do next.
The Whether/How Distinction
I had the brainwave to suggest that the EC perform a simple sort between whether and how. A possibility was placed in the whether category if the EC still didn’t know whether or not it felt confident enough to select it. Alternatively, it was placed in the how category if the EC had gained sufficient confidence that it wanted to pursue the possibility, but all the specifics/details hadn’t been worked out yet. If a possibility was in the former whether category, the EC would keep leading the SCS process — working to refine the WWHTBT, testing barriers, etc. If instead a possibility was in the latter how category, it was time for the EC to charter that choice to the next level in the organization.
That meant, as I have discussed in this series, letting the appropriate next level personnel know that the EC wants to pursue this possibility as part of its corporate strategy and asking them to treat it as the next level of strategy choice-making and come up with the best strategy for realizing the outcome of the EC’s choice — that is, what are the possibilities for bringing it to fruition, WWHTBT for each, what are the barriers, how could they be tested, etc.? Then they should come back to the EC with their recommendation for how.
This sorting and organizing method worked extremely well. It simplified things for the EC. It gave the team the ability to peel off issues as they ceased to remain a question of whether and transitioned to one of how, and get the right folks in the organization working on the how. We came out of the EC meeting with a ratio of about three quarters how and one quarter whether. That enabled the EC to get the chartered work underway for the how choices while focusing its own attention on the remaining whether choices.
This gave the EC a greater level of confidence in and clarity about the decision-making process overall. And I learned a lesson. Historically, I would have waited until we got all the choices past whether to how. But I realized that transitioning each as soon as it is ready for how is a smarter approach.
I have long railed against the purported dichotomy between strategy and execution. That is a fantasy. Strategy choices are nested all the way from the top of the organization to its frontlines. But that reality is inherently complicated. Looking at it this way doesn’t complicate the situation. It just acknowledges the inherent complexity of running a large modern corporation. The productive way to deal with this reality is to become great at both making and chartering choices.
While we can never know the future, we can shorten our odds of success by thinking rigorously about strategy. And at some point, you need to stop thinking and pull the trigger. When you are sufficiently confident that a given choice is a part of the integrated set of choices that you want to make, move it from whether to how. Then charter it thoroughly for the next level of choices.
Keep working on the remaining whether choices and support the teams that are working on the how choices. This dual focus is what makes for great corporate strategy.