We believe that a leader’s most important responsibility is getting their organisation’s strategy right, whether it’s a general strategy that sets out how an organisation is going to achieve its mid to long term vision or a specific strategy to exploit a sudden opportunity or respond to an unexpected threat.
Why strategies are different to plans
True strategies have two defining features that differentiate them from plans. The first is that they are high level and set out the desired direction of travel of an organisation, what General David Petraeus calls its ‘azimuth’. The second is that they are deliberately designed to cope with uncertainty. This latter characteristic lies at the very heart of what good strategy is all about and it’s therefore worth exploring it in more detail.
In 1973, Horst Rittel and Melvin Webber, two professors of town planning at the University of California, published a ground-breaking paper that differentiated between ‘tame’ or ‘benign’ problems and what they called ‘wicked’ problems. They argued that some of the challenges associated with town planning, such as putting in a new water supply or building a bridge, were ‘tame’ because, although they might be complicated and technically difficult, there is little doubt that a definitive solution exists. Other problems, such as reducing urban crime or improving a city’s educational standards, are ‘wicked’ because there is a high degree of uncertainty about the solution. The uncertainty might be because the problem is difficult to define, and causal relationships hard to identify, or because the environment in which the problem exists is constantly changing. It might even be because a definitive solution does not actually exist and the best one can hope for is to identify a range of measures that might improve the situation, rather than resolve it outright. It is these sorts of ‘wicked’ problems that strategies are specifically designed to address.
Theory of victory or success
Because they operate in the realm of uncertainty, strategies need to be adaptable as the dynamics of the problem they are trying to address change, whether because our understanding of the problem is becoming clearer, because our own strategy is beginning to have an effect or because the environment is changing. For this reason, strategies should provide a ‘theory of victory’ or ‘theory of success’, rather than just an exhaustive list of detailed actions to be carried out over a particular timeframe. Having a ‘theory of victory’, essentially a ‘big idea’ that binds the strategy’s ends, ways and means together, provides a touchstone when circumstances change and the strategy needs to be adapted. Richard Rumelt, author of the best-selling Good Strategy/Bad Strategy: The Difference and Why It Matters, refers to this as the ‘guiding policy’ and suggests that it is “like a signpost marking the direction forward but not defining the details of the trip.”
Jeffrey W Meiser, a US academic at the forefront of strategy development, suggests that “defining strategy as a theory of success encourages creative thinking…it forces strategists to clarify exactly how they plan to cause the desired endstate to occur.” His point about creativity is a critical aspect of strategy development and yet it is often overlooked. Harnessing the intellectual capital of an organisation is the most effective way of identifying the creative and innovative solutions likely to meet the organisation’s needs but it is not something that the majority of leaders do particularly well. Often, this is because it requires them to take a step back, admit that they do not have all the answers and then be proactive in encouraging others to offer their ideas. When leaders are unable or unwilling to do this, the consequences can be catastrophic. Take the Royal Bank of Scotland as an example. As early as 2003, the Financial Services Authority expressed concerns about what it termed the “the challenging management culture led by the CEO” which it believed “raised particular risks that had to be addressed.” But the risks were not addressed and the bank failed spectacularly in 2008.
Helping you think about strategy and leadership
Although we offer a full range of strategy and leadership development services, the most useful starting point is often a discussion about the nature of strategy, the problems that strategies are designed to address, possible approaches for developing strategy and the role of senior leaders in the strategy-making process. This discussion works best when it takes the form of an interactive presentation, followed by a Q&A session.
We begin by examining some of the most popular definitions of strategy before suggesting one that we believe captures its essence. In doing this, the aim is to establish a common understanding of what a strategy is, as well as what it isn’t. We then explore why strategy-making seems to be so difficult and why so many organisations struggle to get it right. As part of this, we explain the concept of ‘wicked’ or ‘adaptive’ problems and why they defy easy resolution, drawing on a number of recent examples, such as the way different governments have responded to the COVID-19 pandemic, to illustrate some of the difficulties faced by strategy-makers.
We then explore the characteristics that effective strategies have in common, such as being based on a thorough understanding of the operating context, having a realistic and clearly stated endstate or vision and being underpinned by a theory of success that will endure when the situation changes (as it inevitably will). We then suggest how a strategy might be structured and the sort of detail it could include. We conclude by considering some of the actions, attributes and attitudes (the 3As) that seem to characterise the most effective high-level leaders, highlighting the relevance of some of these, such as humility and self-awareness, to the strategy-making process.
Having discussed what an effective strategy might look like, the second part of the presentation explores a number of different approaches to strategy making. At their heart, most methodologies are very similar and involve: understanding the situation and identifying what the strategy is trying to achieve; developing options; deciding which option to select; implementing the option; and then reviewing, refining and adapting the strategy as the situation changes, either because the strategy is beginning to have an effect and/or the environment is changing. The process sounds relatively straightforward but, for example, it is difficult to ‘understand the situation’ or ‘decide which option to select’ without some sort of handrail to guide the analysis. We therefore explore some of the different tools and techniques that can help bring rigour to each stage of the strategy development process. In exploring the 5-stages, and the tools available to support each stage, the aim is to illustrate how a structured analytical approach can increase understanding, reduce uncertainty and therefore deliver a strategy that it more likely to be successful.
We have found that this interactive two-part discussion, tailored to the specific area in which an organisation is striving to be more successful, can provide a helpful introduction to senior level discussions about strategy and leadership. Not only does it act as a powerful catalyst, prompting those present to review how their own organisation currently develops strategy (and whether the process could be improved) but the discussion about the actions, attributes and attitudes of effective strategic leaders also usually leads to those present reflecting on their own leadership styles, a hugely valuable outcome in its own right.
The next step
Our approach to helping organisations develop their strategy-making and high-level leadership skills is both modular and scalable. To find out more, click the button below.