Updated: Dec 29, 2019
(This is the second of a two-part exploration of strategy as a designed, decision making framework that can be used to identify worthwhile opportunities and the capabilities needed to pursue them. The first section provides the theory of a designed strategy)
The TL;DR of the 1st Part
1. Strategy is a theory of success. A designed strategy helps decision makers choose which opportunities to pursue and which to let pass by. It is informed by, but not strangled by, constraints. It sets priorities and defines the capabilities a person, team, or organization needs to achieve its ultimate goals.
2. Strategy-making is a creative act. Both strategy and creativity require the conversion of ideas into action, are defined by novelty, and are judged by how effectively they solve a given problem.
3. Good design solves problems…but not just. Good design is dependent on context. The suitability of a design can’t be judged without knowing the context for which it was created.
Designed Strategy is Defined by Context
A minivan and a Formula I racer could both be examples of good design, but only in their own context. A Formula I car doesn’t hold a kid’s car seat, and it can’t haul many groceries. A minivan is not known for its acceleration. But, a certain context each could effectively solve problems for users.
The same applies to strategy-making. Genghis Khan’s strategy took him from an itinerant nomad to one of the greatest conquerors the world has known. But, his ingenious strategy of surprise and terror would not have worked for his Chinese opponents who lacked the horsemanship and nomadic traditions that enabled the Mongol strategy. Similarly, Mongolians today would not suddenly become a powerhouse by reverting to Genghis Khan’s methods in a pre-mechanized world.
The formulaic ends+ways+means=strategy concept shortchanges context, especially culture and values. Too often, leaders create strategies that are rational and plausible, but, when they ignore their organizational culture and the team's values, they miss the most important elements determining whether a strategy will be effective. It is no wonder the maxim “culture eats strategy for breakfast” proves itself time and time again.
A skilled chef starts with ingredients, not with a recipe. A recipe is useless if the ingredients required aren’t in the kitchen, but with even mediocre ingredients, a creative chef can create a masterpiece. A strategy aiming for aggressive growth is unlikely to be successful in a risk-averse culture that values security but could make another organization wildly successful.
Sir Lawrence Freedman says strategy is “governed by the starting point and not the end point.” The starting point is the context, and whether you are a solopreneur or CEO of a multinational company, people—specifically the culture and values they bring with them—are the inescapable starting point. A leader may be unhappy with the current culture, but if she ignores it when creating strategy, she is wasting her time.
Baking culture and values into strategy also makes good business sense. Michael Porter’s article, “What is Strategy?”, in the Harvard Business Review reminds strategy-makers of the importance of “fit” as a competitive advantage. The more a strategy is shaped by the contours and context of an organization, the less likely it is that an organization’s strategic advantages can be copied by competitors. Stacy, of Stacy’s Pita Chips, designed a business around her (and her partner’s) desire to create healthy food, an overabundance of day-old pita bread, a line of sandwich customers, and access to the pretzel-lady’s big oven. At the moment the business shifted from sandwich cart to packaged pita chips, no competitor could match her “fit.” Porter says, “Fit locks out imitators by creating a chain that is as strong as its strongest link.” Your strategy should recognize and connect the uniquely valuable elements of your organization and drive towards unimitable success.
Finally, incorporating values into strategy taps into team members’ intrinsic motivation. As I have written in another article, intrinsic motivation is the secret ingredient that builds resilience, encourages smart risk-taking, and gives teams the grit to pick themselves up and try again after inevitable failure. Strategies that only aim for objective, "business" targets miss out on this powerful motivator.
How to Design a Strategy
Designing a human-centered strategy requires finding fit through a solid understanding of context. Organizations designing a strategy should ask themselves these 4 questions:
1. Who are we?
2. Who do we want to be?
3. What do we want to achieve?
4. What do we need to develop along the way? 1.Who are we? Understanding the current state of the organization and the people who are a part of it is a logical first step. The way you keep culture from eating strategy for breakfast is by making culture a part of the omelet itself. To understand the science of the “who are we,” you must understand the fundamentals of your specific business or organization. The following Unfolding Identity exercise helps to start the discussion: Conduct a brainstorming session (using Osborne’s 4 rules) around the objective: What factual characteristics define our organization? a. Aim to generate at least 15 facts from across the team including facts about business performance (market share, gross revenue, profit margins), finance (cash reserves, cash flow, debt-to-income ratios), personnel (number of employees, education levels), and product teams (production capabilities, inventory). You should strive to separate judgment from these facts. This is not an exercise is identifying the culture you wish you had (we will do that next) but in being clear-eyed about the current culture. b. Cluster the ideas to find the facts most salient to the group. Aim for about 5 characteristics that most shape the behavior of the organization. With my startup clients, these often include limited funding, small workforces, passion, geographical factors, etc. c. Unfold each fact to gather more detail and context. For each one, write a definition to ensure common understanding and a statement about how the fact shapes the organization’s behaviors. 2. Who do we want to be?
For this question, get a bit philosophical. This isn’t about what you want your business to be, but what values the people in the organization want to represent them. Being the “largest mattress supplier in the tri-state area” is only motivating exciting for the owner of the business. On the other hand, when employees are connected to a greater mission—one that aligns with their own, deeply held values—they are more resilient and more committed to a strategy advancing that mission.
Being trustworthy beyond reproach for mattress customers making a deeply personal choice impacting their most personal moments will tap into the intrinsic motivation that keeps team members working towards the business goals of the strategy.
Here’s how to uncover those values:
a. Brainstorm: What organizational values do we want to define us in the future? These should be so important to the team that they are ready to forego achievement of the “business” goals of the organization if it means not being true to these core values.
You can ask people to fill in the blank for statements like…”if someone was talking about your team in 5 years, how would you want them to finish this statement? You should really connect with the folks at team XYZ, they are really a group of _____________ people in this industry.” What if you were being introduced at an industry event; how would you want to be described? What if you were telling your future grandchildren about your time at XYZ…”I really enjoyed working with the team at XYZ, they were a ______________ group of people to work with.”
Answers to these questions are unlikely to be “5% growth per annum” or “profit-oriented”. People want to (and need to) make money and help businesses be profitable, but being able to be their authentic selves pursuing moral values is the fuel of a high-performing team.
b. Aim for 15 values from across the organization. Include both internal and external representations of values…respect, diversity, environmental responsibility, fair trade, etc.
c. Cluster the values to find those most salient to the group--aim for about 5 characteristic values. Remember, these values should be so important to the organization that you are willing to forego profit and other goals to pursue these values. Decision makers using this strategy should be able to say, “I turned down that opportunity, because it didn’t align with our value of X.”
d. Unfold each of these values to gather more detail and context. For each one, write a definition and a statement about why this is important to the organization.
3. What do we want to achieve?
Now it is time to define the value-informed route to take from the culture defined in step 1 to the “business goals” of the organization—the traditional ends of strategy.
Unfold possibilities with the following exercise:
Brainstorm observable outcomes the organization may choose to pursue over the strategy’s timeframe. These outcomes can range from quantitative “5% profit growth” to the less mathematical, “develop a robust network of supporters.” Asking questions like…”In 5 years, if someone asked you what this organization achieved, what achievements would bring you pride?” or “What current challenge would you like to eliminate in 5 years?”
Remember, quantity is the goal here. Aim for at least 15 possible outcomes in this phase of the exercise. Combine similar ideas and cluster according to broad categories…financial goals, personnel goals, outreach goals, etc. Then converge on the few that are most important to the business of the organization.
Don't figure out how to get to these goals in this step (you will do it in the next), just focus on what the organization wants to achieve.
4. What do we need to develop along the way?
The iterative process of asking “what if…” and discovering “if…then” answers is the heart of design thinking. As Jeanne Liedtka points out, there is no fact of the matter about strategy. Because there is no objective truth, strategy designers are left with conjecture and argument to explain why strategy A is more appropriate than strategy B. Each sequence of “what if…” and “if…then” is a mental prototype using logic and conjecture to test possible routes.
1. Each of the goals identified in Step 3 is the “what if…”. Now ask the group to identify the capabilities the organization requires to achieve these goals. For instance, one non-profit client wanted to host an annual convention to raise awareness for their issue. IF “we want to host a convention,” THEN “we need to develop sponsors, a brand identity, event planning expertise, a robust network of followers, etc”. Each of these are capabilities the organization needs to develop to achieve their definitions of success.
2. Continuing offering “if…thens” until no ideas remain. Team members should look to identify the capabilities that are important for multiple goals. These are likely the top priorities for development.
Teams should be vigilant for outcomes or capabilities that might violate an aspirational value identified in Step 2. For instance, instituting a formal review process for decision-making may violate values of personal initiative, equality of opportunity, or smart risk-taking.
Putting it all together
This exercise adds value in 2 ways. First, the output of the exercise allows the team to draft a concise strategic intent serving as a guide and decision aid to get from the current state to a desired future. Because the “fluff” has been stripped away, an effective strategy can be expressed in a few short pages. The organization’s decision makers….owner, Board, partners, or entire workforce…should have a voice in the creation of strategic intent. Stakeholders should be given the opportunity to express reservations if they do not believe they can commit to the strategy. This process creates a covenant among the stakeholders and decision makers enabling a powerful tool for coherent decision making and opportunity seeking.
Second, the process of creating this strategic intent has included hundreds of thought experiments. Each of these thought experiments explored dependencies, interactions, consequences, capabilities, and possible futures. When new opportunities arise, the team members have considerable experience evaluating the potential these opportunities offer. This experience combined with an understanding of the desired future and the overarching values of the organization allow distributed intelligent opportunism that will ultimately bring the organization closer to its desired destination.
Now with a useful strategy, USE it. Reference it when you make decisions. It is short enough to turn it into an infographic to post in your workspace. Pick a time each month to debrief your decisions to see how clearly they aligned with the intended strategy.
If you do this, over time, you will find the culture you have today slowly starts to bend towards the aspirational values you defined. As the organization builds the capabilities it needs for success, decision-makers find themselves with more tools to apply to the challenges they face. With every decision, the organization gets closer to its goals and there is no doubt where the organization is headed and what values represent the guardrails on the path to success.
Dan Manning is the Founder of Firepower Concepts, LLC, a firm teaching applied creativity to help businesses and non-profits solve their toughest problems. Combining academic study with techniques refined over a career as a fighter pilot and warrior-diplomat, Dan unleashes the transforming power of creative thinking to do what could not be done before.
My DMs are open. Let's talk about designing a strategy for you and your business. -- Dan
The opinions expressed here do not necessarily represent the opinions of the United States Air Force or the Department of Defense.