Strategy is the art of thinking intentionally about the things you want to achieve, working out how you will get them and then aligning all your resources to focus on the desired outcome.
Without a strategy, everything becomes reactive, which means we drift along waiting for events to unfold, before scrambling about to work out how to respond to them. Many people will have experienced this at some point in their careers, both at a personal and organisational level, and it is never ideal.
Unfortunately strategic thinking tends to get parked because there is too much day-to-day work going on to think, or people are worried that the future is so unpredictable, that there is little point wasting time trying to plan for it.
But one trend that we can guarantee for the future is that the world will continue to increase in pace, complexity, competition and change. What works today, may not work tomorrow and existing businesses can very quickly see themselves replaced by new trends or innovative startups.
Because guessing what will be required tomorrow is becoming increasingly difficult, strategy needs to be adaptive. We still need the thinking and focus that comes from a well-executed strategy, but at the same time we need to update the way we work to enable our strategies to adapt to changing market conditions.
Before we look at how strategy can be made more adaptive, its important to understand the difference between good and bad strategy.
Good strategy, bad strategy
In his book, Good Strategy, Bad Strategy; Richard Rumelt shows how leaders fall flat by limiting their strategic thinking to goals, without considering the overall context and approach required to tackle the challenge.
This often materialises in big goals being set (such as becoming the market leader or doubling share value) without any sort of plan for reaching them.
On the one hand, it is great the organisation has a big goal to tackle; but without any guidance on the approach, individuals are left to their own interpretations of what the strategy looks like, leading to misalignment and confusion.
A good strategy on the other hand, starts with a diagnosis of the challenge to understand the major obstacles. It then sets a guiding policy for tackling the challenge, enabling a coherent set of actions to be designed by different parts of the organisation, which when combined, work together to build momentum and achieve maximum impact.
In essence, a good strategy is the combination of three key activities:
- Guiding policy
- Coherent set of actions
Designing an adaptive strategy
Given a good strategy starts with a diagnosis of the challenge, a time investment is required to answer these questions:
- Where do you want to get to (goal)?
- Where you are now (baseline)?
- What the key obstacles that will prevent you from getting there?
A clear, focused goal that is understood and owned by all stakeholders is vital for aligning the organisation’s resources later on, so a large part of the time investment requires engagement and buy-in to define the goal with different groups.
Note: You can replace the word ‘goal’ with vision, outcome, objective, transformation or whatever term you use within your organisation to describe the overall place you are trying to get to.
With a focused goal in place, the next step is to define a clear baseline of where your organisation sits in relation to the goal. This is similar to orientating yourself on a map when you are trying to find your way.
Finally, by working backwards from your goal to your current position, you can begin to identify the major obstacles that will hinder your journey. These could be anything from technical limitations or regulatory problems, through to limited market awareness or competition issues.
It’s important to remember that despite best intentions, you won’t be able to recognise all your obstacles from the beginning and even the ones you have identified will probably turn out to be very different to what you originally thought. However, this is not a problem, provided you are prepared to accept the constraints and update your diagnosis when you learn more.
Once you have a strong understanding of the challenges you face, you can begin to design your strategy for tackling them. This starts with a guiding policy to provide an overarching narrative for the way you’ll approach things.
Having a guiding policy in place ensures the actions you make in the execution of the strategy remain aligned and coherent with each other. For example, will you aim to be the cheapest in the market or will you differentiate on quality? Maybe you’ll just target a very specific sub-sector or the market?
Just like the obstacles, the guiding policy will not be perfect from the start, so similar mechanisms for feedback and adaptation are needed throughout the execution.
Coherent set of actions
Beneath the guiding policy should be a set of coherent actions that will build on the momentum of each other to move you closer to your goal.
Coherence is key to maximise impact and a useful mental model to picture is Jim Collins’ flywheel concept, where lots of small activities focused in the same direction eventually create enough force to start turning a giant flywheel, which then begins to gather momentum – slowly to begin with and then faster and faster – until eventually the flywheel is spinning so fast it is able to exponentially propel the organisation forward.
Actions should originate from the different departments and teams within the organisation who will be executing the strategy and the challenge (and therefore the art of strategy) is maintaining the difficult balance so that actions remain aligned by the guiding policy, but without suffocating the creativity and freedom of the individuals proposing them.
In addition to this, it’s also important to be able to learn what actions are working best and be able to modify future activities based on this knowledge.
The GIST planning model is a useful tool for this as it frames each action as an idea or hypothesis in an experiment.
So when proposing an idea, people need to explain how it will contribute to the goal and how they expect to be able to measure it. It goes a bit like this:
We believe doing [idea] will result in [outcomes] happening. We will know whether the idea is working when we see these things [performance metrics] happening.
GIST also allows for the fact that the best ideas don’t all happen at the beginning, but can pop up from anyone, anywhere, anytime. Instead ideas are collected in an ‘ideas backlog’ and can be tested quickly with ‘step projects’, where minimum viable products (MVPs) are launched and measured to gain solid evidence of what works.
I recommend reading this article about GIST, as the principles play a key role in an adaptive strategy.
Personally I prefer to use the term ‘bet’ rather than ‘idea’, as it reinforces the experimental nature of the approach. Essentially you are betting an initiative will result in an improved condition and you’ll only back the initiatives with the highest potential for success.
Experimenting and adapting
As the strategy starts to take form, you’ll have:
- A diagnosis
- A guiding policy
- An initial set of coherent actions, in the form of bets
Your initial bets can be ordered onto a roadmap and individual teams can use this to begin organising themselves to develop the various projects and initiatives they think will enable the organisation to navigate around the obstacles.
As the strategy is rolled-out, there needs to be a system for capturing new ideas and for sourcing those ideas broadly, so they don’t just originate from the same small team of people. Ultimately all new ideas should be collected in a ‘bets backlog’, so they can be ordered and added to the roadmap.
Another system is required for measuring and evaluating performance, and ensuring new insights are captured and used to inform decision making. This feedback loop will help evaluate whether a bet is working (or not), whether to scale up, adapt it or focus on an alternative.
Feedback speed is a critical factor for quickly understanding if an initiative is working or whether something needs to change. So the sooner you can get a new product, service or feature into the hands of users the better.
The GIST model promotes the use of step-projects, projects that get the minimal viable solution to users within as few steps as possible, enabling the things that don’t work to be stopped before they swallow too much time and money. This means making use of wireframes, prototypes and alpha or beta versions to test ideas quickly.
By limiting investment in each bet at this early stage, it is possible to test a greater number of ideas to build evidence of what works, before committing further investment to the ones with the most potential.
Managing adaptive strategy
At the beginning of this article, I stated that strategy is the art of thinking intentionally about what you want, working out how you will get it and then bringing everything together to actually get it.
One of the biggest challenges lies in the part about bringing everything together – the strategy execution bit. All too often execution gets separated from planning, as if there is a single person who can mastermind a brilliant plan and then hand it over to the minions to implement. But this approach misses out on the valuable feedback, insights and ideas that can come from different groups throughout the organisation.
The art of strategy is as much about good facilitation as it is about planning. On paper, the process I’ve outlined is pretty obvious and simple, but trying to coordinate this within an organisation involves a significant time investment to engage and involve stakeholders at all levels. This is not something that can be quickly done once and forgotten about.
Just like creating an adaptive culture cannot be done overnight, embedding adaptive strategy processes into an organisation takes time and on-going attention. But the investment is worthwhile and as adaptive strategy becomes a core part of the organisation’s operating system, it increases internal capabilities for anticipating and adapting to ever changing market conditions, giving your organisation a significant competitive advantage.