Playing To Win
What Would Have to be True?
A CEO client of mine just asked me about how she should do a mid-stream evaluation of the plan that came out of her team’s strategy exercise 18 months earlier. The answer is centrally related to my favorite strategy question: What Would Have to be True? So, I decided to incorporate an answer to her question into my 43rd Year II Playing to Win/Practitioner Insights (PTW/PI) piece What Would Have to be True: The Most Valuable Question in Strategy. You can find the previous 95 PTW/PI here.
What is True?
The world is obsessed with the question: what is true? It is understandable. The truth is worth searching for because some things are, in fact, true. The sun comes up in the east and sets in the west. Ice is lighter than water. Every person that is born dies someday.
Our formal education system reinforces the obsession. If your answer comes back with a red checkmark, it must be true. If it is a red X, it must be not true. And if you get a disproportionate number of the former, generally speaking, things will work out well for you, and if the latter, you will face many challenges. So, truth becomes a centrally important construct to everyone. That is unavoidable.
The truth has become a modern obsession of the news media. It is now en vogue to fact-check any controversial news item in order to declare as to whether it is true or not. But notice how little consensus that fact-checking produces. For the most part, those who believed something was (say) true before the fact-checking think it is true afterwards and those who believed it was false continue to do so, regardless of what the fact-checking declares about ‘the truth.’
That is because in the realm of human endeavors, ‘the truth’ is always elusive. Whether graduation rates in computer engineering are rising or falling depends entirely on the base year for the calculation. Same with crime rates, homelessness, etc. As a result, evaluations of truthfulness tend to be highly divisive.
That is most certainly the case in strategy. When managers differ on what is true about customers, or competitors, or capabilities, or costs, or anything else for that matter, it just raises temperatures and entrenches combatants on each side of the argument: yes, it is; no, it isn’t; etc., etc., etc.
What Would Have to be True (WWHTBT)?
WWHTBT is a better question for three reasons, which make it the most valuable question in strategy.
Helps Decompose Analysis into Logic and Data
As a community, we generally agree that something is ‘the truth’ when we combine two things. We have a logic structure — e.g., there is a universal force that attracts bodies to the center of the earth — to which we apply sufficient data — e.g., we carry out trials in which we measure what happens when we let go of a weighted object — to conclude that the logic is valid. After that point, the operation of gravity is considered to represent ‘the truth’ and we don’t question what will happen if a coffee mug slips from our hand. In this way, analysis can be seen as the application of data to a logic structure. However, the two distinct pieces are generally muddled together as one thing: analysis.
That is why fact-checking doesn’t bring people together the way it is done. One side has a logic structure to which it ads data that is compelling to it, to declare that its analysis has produced ‘the truth.’ The other side has a logic structure to which it ads data that is compelling to it, to declare that its analysis has produced ‘the truth’ — the opposite. They don’t get closer together because they muddle together logic and data into a thing they call ‘the analysis,’ which they each declare to have produced ‘the truth.’
If instead, the two sides focus on laying out the logic using WWHTBT, it gives the two sides the chance of coming to agreement on the logic — i.e., the set of things that would have to hold for this to be a good choice. It enables rigorous thinking together before any data is collected or applied to the logic.
In my decades of working with management teams, the thing I find valuable about WWHTBT is that teams can almost always agree on the logic of choices. They often have differing views as to what they think the data does show or will reveal. That is why if you focus on ‘what the analysis says,’ — i.e., the combination of logic and data — you will only produce fighting and standoffs — yes, it is; no, it isn’t.
If instead you focus first on laying out WWHTBT, it can bring management teams closer together and isolate the beliefs about data that cause discord so that you can focus your data collection efforts. Most importantly, you can agree in advance (not after the fact, which is what universally happens in media fact-checking) on what data you want to collect and analyze together to come to a joint point of view. That produces the kind of fact-checking that brings people together rather than intensifies their fighting.
Helps Focus on Creating the Future
A key problem with ‘what is true’ is that the question focuses entirely on the here and now. Determining ‘what is true’ requires the combination of logic and data, and there is no data about the future — yet. Thus the ‘what is true’ question focuses on analyzing what is currently happening and declaring the truth about the present. Focusing on ‘what is true’ is fine if you are confident that the future will be identical to the past. That is the domain of science and its immutable laws — like gravity.
However, in the world of business, the future has the capricious habit of being different than the past, often in fully unpredictable ways. As a business, you want to create that future — not let someone else do it to you. WWHTBT helps you ask what we have to make happen to make the things true that would need to be true to create the future.
That is why I ask management teams to imagine any possibilities that would involve creating an attractive future for the company, and I refuse to allow any immediate opinions on whether it would work or not — i.e., is it true? I insist on giving each possibility a chance. Instead of opining on what is true, I have the team ask WWHTBT so that the team can consider whether it can make true the key things that would have to be true. It turns the management dialogue from arguing about evaluating today to imagining winning futures. The evaluation of those possible futures only takes place after you have created the environment that encourages the generation of possibilities rather than one that inadvertently squelches them. That will only happen if you suppress the ‘what is true’ impulse and, instead, elevate the WWHTBT question.
Helps You Evaluate Your Strategy on an Ongoing basis
A key benefit of asking WWHTBT during the strategy process — and deciding which possibility is strongest — is that you will automatically produce the WWHTBT chart for the chosen strategy, which has a valuable use going forward. It identifies the features that you must track on an ongoing basis. If they are heading towards being true, then you should remain confident in your strategy. But if one or more of the features that have to be true either have ceased to hold true or our actions couldn’t make true, it is a signal that you should revisit your strategy — right now.
In fact, when you arrive at your desk every morning you should pull out the WWHTBT for your strategy and ask: Is our WWHTBT still true? If it is true, then you can comfortably get back to whatever is on your agenda for the day. If not, then you should start retooling your strategy that very instant.
But periodically, it is good to do this assessment more formally. Go back to the logic of your chosen strategy and assess the data that the world has produced since you made the choice, using the reverse-engineering diagram.
Are the segments of the industry that our strategy assumed to exist still similar or has the map of the industry changed in ways that are problematic for our strategy? Is our assumption as to the fundamental structural attractiveness of the industry (or industries) in which we chose to participate still operative, or has competitive intensity heightened?
Has the channel (if we sell through one) reacted to our strategy the way we assumed it would, or has it redefined value in a way is problematic for our strategy? Have end-customers reacted to our strategy the way we assumed they would, or have they redefined value in a way is problematic for our strategy?
Have we been able to build the distinctive capabilities for which our strategy called, or have we fallen short in some ways? Have we been able to build the cost structure for which our strategy called, or have we fallen short in some ways?
Have competitors acted in ways that we failed to predict and that have undermined our strategy?
To the extent that your assumed WWHTBT isn’t true anymore, or potentially ever was, it is time to revisit your strategy. In my experience, often only a tweak is required — e.g., we had customer value nearly correct, but our offer needs to be tweaked within the construct of the current strategy. Or a new competitor that was not anticipated has entered and we need to improve our capabilities to achieve the competitive position that we sought.
However, sometimes the competitive environment has evolved to such an extent that the WWHTBT just isn’t collectively close enough to being true for the strategy to have a chance of working. Then the only choice is to take a fundamentally fresh look at a new set of strategy possibilities to come up with a new WWHTBT that you feel confident that you can make true.
You have been trained for your entire formal education and most of the other parts of your life to focus on the question: ‘what is true?’ Try instead to force yourself first to ask: WWHTBT? ‘What is true’ should come later.
WWHTBT will help you decompose whatever question you are facing into its logic and the data that might be helpful in evaluating that logic. It will also be helpful to you in focusing you on future possibilities, not just current conditions.
If you are seeking to achieve agreement with anybody else, don’t on your own select the data that you think you should use to test the WWHTBT logic. Seek agreement on the WWHTBT logic and then develop the process for testing it together. That will produce agreement not discord.
And think of your WWHTBT as your canary in the coal mine. Use it to test whether your work combined with the evolution of the world is producing outcomes that are consistent with your WWHTBT. If they are: power forward. If they aren’t, start reviewing and revising your strategy immediately to give yourself the best chance of rejuvenating your strategy before its fatal flaws become evident.