When defining strategy, choose the right tools for the job
Imagine you have the opportunity to serve as the proverbial fly on the wall for various organizations across different sectors to observe the process of strategy creation.
When asked to share what you observed, I'm confident you will highlight a confusing morass of discussions, political debates, arguments over resources, glorified attempts at operational planning and the gross abuse of something called SWOT. I'm equally confident you won't have a better understanding of the actual work of defining strategy as a result of your adventure.
While we live and work in interesting times where traditional elongated planning processes no longer fit, leaders still have the responsibility to define a coherent strategy. After all, organizations must determine how and where to apply resources to serve stakeholders, beat competitors, and navigate the unexpected twists and turns of shifting business models and accelerating change. An organization's leaders must develop competence as strategists.
Inevitably, defining strategy revolves around discussion driven by the use of various tools and frameworks. These tools provide different views to the organization's situation, and in theory, help teams identify possible strategies. Yet, a confusing array of options makes selecting the right tools for strategy work a perilous process.
In this article, I share guidance on cultivating your skill with strategy through selection and practice with the right tools and frameworks.
The importance of selecting the right tool for the situation
As a child, I marveled at the variety of my father's tools for fixing and building things around our home. He patiently answered my questions about the different tools and their uses and would always conclude our discussions with the statement, "There's no substitute for the right tool at the moment."
He's right, of course, on matching the tool to the situation. If you need finesse, it doesn't pay to bring a tool that delivers force. And, if you need force, using the wrong tool is an exercise in futility.
And while I'm sure Dad isn't the originator of this oft-repeated saying, he sure burned it into my brain from a young age: "If the only tool you have is a hammer, every problem looks like a nail."
Yet, the most important thing I learned from observing him was that a good tool is only valuable in the hands of a well-practiced craftsperson who cares deeply about the work. The same goes for strategists.
Making sense out of the noise
Working as a strategist is a commitment to learning to make sense out of the noise in the environment. From shifting industry dynamics to the macro forces creating seemingly chaotic, relentless change in our world, the work of strategy is more complicated than ever. We need the right tools to help us find coherence out of the cacophony.
Run a search on business strategy at your favorite online bookseller, and you'll be swimming in blue and red oceans, playing to win, painting with a palette, crossing chasms, battling market forces, building platforms and growing hungry as strategy eats culture for lunch.
It's confusing! What's a leader to do? Especially when the board wants to review the strategy refresh at next quarter's meeting.
Learn to use tools that help you create clarity out of complexity
Here's why I highlighted the tools topic earlier. Strategists need help in making sense of our complex company, industry and evolving market forces. This work requires the application of the right tools for the situation.
While every practitioner has their favorites, I find three different tool sets to be head and shoulders above the rest for creating clarity and helping groups navigate the confusion surrounding working on strategy. I use these tools both independently and interdependently to help assess a situation and form a strategy.
1. Find the "kernel of your strategy"
Richard Rumelt's "Kernel of a Strategy," described in his fabulous book "Good Strategy/Bad Strategy," is the best tool I've uncovered for getting teams on the same page about strategy.
The kernel, as Rumelt describes it, includes the diagnosis, a guiding policy and key actions. Teams work until they cultivate a clear assessment of the situation -- the diagnosis. The guiding policy follows the diagnosis and clearly articulates what the firm must do given its situation.
Expect to spend a good deal of time cultivating an accurate diagnosis and even more time working on the guiding policy. (See the tool sets described below for help with this important work.) Effectively, when finished, you will have identified the firm's base strategy given the circumstances. The key actions are the steps and investments essential for bringing the strategy to life.
2. Learn to HOP
In another foundational book, "Escape Velocity," Geoffrey Moore describes a framework of frameworks with his Hierarchy of Powers (HOP). This tool set challenges teams to think of their business in a series of cascading layers starting at the top with category choice and proceeding through the company, segment, offer and execution layers.
The challenge for the management team is to assess their situation vis-à-vis each layer and identify unique areas to compete, innovate, serve and win. While Moore, the author of several outstanding strategy books, offers many more tools, the HOP is excellent for helping teams view their situation and opportunities through different lenses. I adapt Moore's HOP as one tool set to help me create my diagnosis and guiding policy.
3. Paint with a palette
In "Your Strategy Needs a Strategy" by Martin Reeves, Knut Haanaes and Janmejaya Sinha, this team from Boston Consulting Group suggests the proper analysis of your external environment and market segments is along the dimensions of predictability, malleability and harshness.
Depending upon your market's or segment's characterization, there's a palette of five core strategy approaches and distinct actions that guide your choices. This tool set is extremely helpful in suggesting guiding policy and jump-starting defining coherent actions.
3 views, yet the synthesis is up to you and your colleagues
No magical machine or silver bullet framework automatically spits out the correct answer for your strategy. It's a process of exploration, assessment and, ultimately, soul-searching decision-making for an organization's leaders.
The three strategy tool sets I've described above, The Kernel, The HOP and The Strategy Palette are invaluable aids in helping you reduce the noise and find signal clarity in market and company conditions. Use them independently and, ideally, use them interdependently as you strive to build a shared view of your firm's situation and options with your team members.
The bottom line
There are countless traps in the work of creating or refining an organization's strategy. My counsel is to find the tools that help you create clarity and that promote a common language. Choose your tools carefully, practice with them diligently, and remember that they are only as good as the hands wielding them.
Art Petty is an executive and emerging-leader coach and a popular leadership and management author, speaker and workshop presenter. His experience guiding multiple software firms to positions of market leadership comes through in his books, articles, and live and online programs. Visit Petty’s Management Excellence blog and Leadership Caffeine articles.