Deeper Thoughts on Strategy Crafting Moving Forward

Evolving Origins for Strategy Crafting. Over the last 40 or 50 years it seems that the genesis of strategy has shifted from organization-centric to environment-centric origins. Perhaps in the last 10 to 15 years, the environment-centric perspective has dominated many industries, and not yet fully reached others. Phrases like voice of the customer, design forward strategy, blue oceans, and open innovation give example to the shift. More rare and possibly a glimpse into the future of strategy crafting is a third perspective – that of the health of the large systems in which organizations are embedded. Systems thinking crept into organizational language as early as the 1970s and with the popular works of Senge, Capra, and others in the 1990s, the concepts became more common in business practice. A holistic origin would be a more complicated approach to strategy development. Let me go on about the three perspectives in a bit more depth.

Organization-centric origins: Strategies that emerge from the internal perspective have their genesis in the wants, needs, and dreams of the organization. This is the most common perspective taken by strategy development teams. During strategy development the chairs are turned inward. While external scanning and reflection may be conducted early in the strategy crafting process, the information is used to help determine the likely success and potential risks associated with the organization-centric strategies that are developed. The strategies that arise benefit the organization first, most often the shareholders if the organization is for profit, or the funders if the organization is nonprofit. We see language about winning, war, competition, market share, profit, and owning.

Environment-centric origins: Strategies that emerge from the external perspective have their genesis in the wants, needs, and dreams of those external to the organization. This is a less common but emerging perspective taken by strategy development teams. During strategy development the chairs are turned outward. Both intense external reflection and internal reflection characterize the early parts of the crafting process. Primary are the likelihood of success of strategies based on the adoption, participation, and engagement of those external to the organization. Internal capacities, values, and alignment are all important, but secondary in the environment-centric strategies that are developed. The strategies that arise may fully benefit the organization, shareholders, and funders, but the shift in perspective puts their interests secondary to the customers, related businesses, interest groups, or the public. This shift is grounded in the wholesale belief that if their needs and wants of external parties are met first, internal interests will ultimately achieve greater benefits that will be sustainable. We see language about collaboration, partnership, win-win, mutual gain, and customer experience.

Holistic origins: I am not aware of models or methods for strategy crafting that are wholly developed from the perspective of the health and optimization of larger systems. Learning about these is a keen interest of mine. I can give some examples of where I think this is happening. Strategies that emerge from the holistic perspective would have their genesis in the complex systems dynamics of the combined internal, external, peripheral, and hidden components of the larger system in which the organization lives. Reflection early in the strategy crafting process would focus on understanding the long-term complex characteristics of the organization, its surroundings, and the possible futures that could be forecast. Primarily are the potentials for the strategies encouraging and optimizing health of the entire system, in turn benefiting both the organization and the external stakeholders.

Three Buckets or Categories for Emerging Strategy Methods. My strong focus moving forward will be more on discovering and explaining methods for crafting strategy, and less on the scholarship of strategy, the waters my toes dipped into in the last few paragraphs. To help organize and explain what I uncover, would like propose a simple taxonomy for the innovation and methods – the expected, the unexpected, and the future.

• Expected innovations in strategy crafting: These are the new methods that we all saw coming. Whether just apparent or little used a while back, there was evidence of these methods early and their popularity increased in recent years. There are the “Why didn't we think of this sooner”? methods.

• Unexpected innovations in strategy crafting: These are the new methods that might have caught us by surprise. I will place some of the most novel methods in this category. An early example is the expedition mapping method. We may not have seen these methods coming nor are they perfected, they appear to have value and hold interest for the future. These are the “Why didn't I think of that”? methods.

• Future innovations in strategy crafting: This the most exciting category for me and at the same time the most intimidating. These are the innovations in strategy crafting that really are true innovations. Something brand new or something different. I’m on the hunt for these ideas and methods now and I have a few candidates. What intimidates me about this category is establishing the methodology. My approach – create a sloppy early model and iterate the prototype until is make sense. This is probably going to be the most fun as well  – these are the “That is really interesting, but I need to learn more” methods.

My Own Course Corrections. So my initial research has been very rewarding. I articulated five core components of strategy. I compared and contrasted strategy from the often confused concepts of excellence and innovation. I reviewed changes in strategy crafting over time and looked at the environmental dynamics that may be at play in these shifts. I synthesized many models of strategy creation and extracted five common steps in the process. I've also seen glimpses into the possible future of strategy crafting with some emerging practices or happenings. I'm pretty excited about the work ahead.

These learnings have caused me to correct course in my work. I'd be unhappy if I were not doing this, but I had no way of knowing what I would learn nor which path forward I would take. This all has helped me build a framework moving forward exploring innovations in strategy crafting – I have three evolving origins for strategy and a taxonomy, or buckets, in which to place new methods. Over the next six months, I plan on draft short methodology articles and posting the methods and explorations of their application on my blog and summarizing useful articles for the newsletter.  

I’m going to need some more help. If you have an interest in communicating about what I'm writing, please reach out. If you have an opportunity to sponsor an application or exploration of one of the methods in an organization, I’d appreciate the opportunity to work with you.

Please reach out with any comments or questions about what you have read here. I'm open to further shifting course. Thanks... Rob

Robert Brodnick, Ph.D.

Vice President for Strategy & Innovation

www.strategicinitiatives.com

robert@strategicinitiatives.com

530.798.4082

Initial Reflections on Strategy Crafting

Initial Reflections

What is strategy? Through my research and discussions, I’ve found that nearly every individual I spoke with had a handy and practical definition of strategy. In fact many were able to quickly recite a definition, email a short slide deck explaining strategy, or forward a paper they had used, preferred, or written that talked about the definition. Then, I was rewarded with a slew of articles from the Harvard Business Review, several book recommendations, and some great stories about why understanding strategy is important and how so many leaders can get it wrong. So strategy is deemed important, it’s well discussed and written about, and there is a lot of material we can quickly access and share on the topic. A few primary components were common among the definitions and characteristics of strategy that emerged:

• orienting toward a future, destination, position, or purpose
• responding to or managing change
• communicating with and motivating people
• taking action and adapting
• managing scarce resources

There were two clear approaches to strategy, deliberate and emergent. Deliberate strategy refers to those predetermined or initial expectations about where to go, how to get there, and what the future will be like when the strategy is realized. Emergent strategy is not explicitly defined nor expected when the strategic course is initially set – it emerges from actions that respond to changes in the internal or external environments and adapts initial expectations.

Strategy Differentiated from the Excellence and Innovation Orientations. Regarding an important point on clarity and vocabulary, it was interesting to see how my interviews and the literature bifurcated on a simple concept – those that differentiated strategy from effectiveness (or excellence) and those that did not. Whereas effectiveness and excellence can be seen as “polishing the marble” – improving  or incrementally adapting what exists – strategy is about purposeful navigation and adaptation in a changing environment. Even with Harvard professor Michael Porter’s hope to make this clear in his seminal writings, this is not well understood by practitioners nor clearly communicated by thought leaders. Extending this line of thinking, there is also a noted confusion regarding the differences between strategy and innovation and innovation’s role in effectiveness. To extend the metaphor, if effectiveness is polishing the marble, innovation is creating new kinds of marbles or using them to do things marbles have never done before. I see the relationships in this way.

I’ve defined strategy in a general way as having the five components (future orientation, change, communicating, taking action and adapting, and managing resources). Generally, strategy is adaptation to emerging conditions to achieve the desired strategic results. The effectiveness, or excellence, approach focuses on improving and optimizing existing core components of people, processes, technologies, and in turn organizational outcomes. By contrast, innovation processes generate new ideas and create value through action. There are three requirements for something to be called innovation:

• creativity, novelty, a new idea, or using something in a new way
• putting it into use or practice
• the resulting change creates value

The challenge is that in most cases these three orientations are approached individually and independently; at best they are understood to be different, and in most cases confused or misapplied. Choosing a single orientation – whether it be strategy to adapt and evolve the organization to changing conditions, innovation to put ideas into action to create value, or effectiveness to improve and perfect – is a strong approach. Working from the combination of two of the three to solve a problem or create change, is an even stronger approach. Take a look at the diagram below.

What Appears to Be Changing in the World of Strategy? In short – everything! The overall environment in many industries has become increasingly disruptive. For a long time, the flow of the energies and resources in these industries had been laminar, or flowing along consistent, predictable trajectories and lines. However, during times of disruption, the flow of energies and resources experiences increasing turbulence, where chaotic changes in the expected trajectories occur. For organizations and markets, disruption leads to unplanned (and sometimes negative) deviations from expected outcomes and objectives.

In the last ten or fifteen years, the inability to make predictions during disruption has gained significant attention. The term VUCA rose out of the military and was extended by the Institute for the Future and others. VUCA is an acronym for volatility, uncertainty, complexity and ambiguity of environment conditions. Volatility – the speed of change coming from various forces and catalysts. Uncertainty – lack of predictability and likelihood of surprise. Complexity – a large number of forces acting and interacting in unpredictable ways. Ambiguity – lack of clarity in reality and multiple, confounding meanings, and the breakdown of expected cause-and-effect relationships. The VUCA world calls for forecasting rather than predicting during chaotic change and poses significant implications for strategy. A variety of different methodologies are required along the continuum from placid, laminar change on one end of the spectrum to high complexity and turbulence on the other. More on this later.

What core models for strategy crafting are people using? During the interviews and related readings, there appears to be more convergence than diversity. In fact, when you strip out the language and compare the core models, a common set of steps or stages emerge in the strategy creation process. Five stages to the process became pretty clear – reflect, create, depict, communicate, and resource.

1. Reflect: there are a large number of possible tools and processes in this stage from data collection, to environmental scanning, to market analyses, to trend analysis, to deep ponderings by senior teams on the meaning and outcomes of what they do, but this collection of activities can be called reflection, insight, futuring, or sense making. Understanding current internal and external activities and forces to make sense of reality and gain insight into the potentials in the future.

2. Create: from the reflection stage, most models employ tools or processes to identity opportunities for the organization that match of the needs of others with what lies within the realm of possibility for the organization. This creation stage articulates these opportunities by creating a vision for the future and elaborating on how the organization could go about putting things in place to achieve that vision.

3. Depict: most models include a step or stage where ideas about the future and the opportunities are turned into a communication device – often this is a graphic or framework followed by explanatory text. Both the literature and practice are replete with hierarchies and taxonomies that deploy letters, numbers, labels, and symbols to help organizational members read, understand, and connect actions and resources to elements of the strategy. Sometimes these depictions include estimated costs of the resources necessary to achieve the goals and metrics attached to the path forward working towards the outcomes. Many people call this stage planning.

4. Communicate: once the strategy has been depicted in some fashion, it’s time to share the depiction as widely as possible. Names and approaches for this stage in strategy crafting vary, but in nearly all models it is explicit or implied.

5. Resource: most strategy creation models deal with resourcing the portfolio of prospective activities. Some call the strategic budget the operationalization of the strategy; the strategy is not complete until the resources are obtained or accounted for. Other models do not include resourcing as part of strategy crafting, leaving the resourcing to execution. I find this shortsighted as the ability of an organization to pursue any strategic course depends on human and financial resources. Strategy morphs to match organizational capacity made possible by available resources, and vice versa.

From this point, practice in crafting strategy goes off in any variety of directions. Vocabulary shifts with interchangeable phrases and terms, some specific to certain industries. Graphics use a variety of images and icons to show the interrelationships among the steps in unique ways. There are a multitude of ways in which consultants and thought leaders try to differentiate their methods and models so they stand out in a crowded space. For the most part, however, the core models I’ve observed consist of familiar and repackaged elements, most of which are not very new. In fact, quite a bit of what is being called strategy sounds more like sound management practices.

What’s been exciting? During the interviews, only a few spoke excitedly about what they’ve seen lately. The literature supports the observation that while there is a lot of pontification about strategy and a fair share of analysis and criticism post mortem, few people are writing with excitement about the wonderful future for strategy crafting. Here are a few of the more exciting things I’ve read or heard.

• Design Thinking: the last 10 years have witnessed a growing number of books, articles, and other writings espousing the benefits of applying design thinking approaches to strategy crafting. I’ve been a fan of this approach myself and have crafted several applications of models and processes in different strategic settings. The particular six-step model I prefer includes design, futuring, divergence, convergence, prototyping, and implementation.

• Big Data: years of data collection, larger and larger databases, low-cost and high-efficiency computing, the handheld revolution, and new analysis techniques have opening up the world of big data and the insights obtained through analytics. While it’s not strategy creation itself, there are myriad applications of big data to strategy crafting, especially reflecting and creating stages and executing strategies in customized and personalized way, informed by the insights provided by big data.

• Open Innovation: seeking novelty from the periphery of traditional sources, open innovation employs knowledge from outside normal places to improve internal innovation and expand new markets. Open innovation can significantly impact strategy, turning ideas into valuable action over time while adapting to emerging conditions to achieve the desired strategic results.

• Deconstruction: a philosophical approach to testing the primary assumptions of an organization’s reality. Especially useful in the reflect and create stages of strategy creation, a deconstructionist approach can uncover new strategies that remained hidden by assumptions and best practices.

• Intersecting Previously Disconnected Disciplines: an emerging trend in strategy crafting comes from the mashup of thinking and doing. The challenge here is identifying the intersections that may be productive, harvesting the learnings, and developing strategic applications likely to succeed.

• Crowdsourcing: by the dictionary, crowdsourcing is the process of obtaining needed services, ideas, or content by soliciting contributions from a large group of people, and especially from an online community, rather than from traditional employees or suppliers. In the world of strategy crafting, crowdsourcing seems to be open innovation on steroids. Turning to the wisdom of the masses at any of the five stages of strategy creation (reflect–create–depict–communicate–resource) would be quite interesting.

I’ll explore these perspectives in more depth later in future writings.

Reflections on Innovations in Strategy Crafting

I have been a practitioner and continual student of strategy creation for the past 25 years. Recently I’ve become engaged in a research topic that has me fascinated – I am seeking to better understand if and how organizations are using new methods to craft strategy. My observation is that over the past ten years there has been a shift in how leaders are attempting to create fresh strategy, and if not a shift in approach, at least a significant shift in the need to do so. My hope is to identify new approaches to strategy crafting and explore and explain the methodologies for leaders and practitioners. I will post this content on my blog, author short articles on my newsletter, and collect the writing to eventually publish in some format. I am also looking for candidate organizations to collaborate with me to prototype and help me evolve some of the new methodologies. I began my journey researching innovations in strategy crafting with a lot of reading, both the classics and new articles, and with interviews of colleagues. For my first round of interviews, I reached out to people I knew had various perspectives and practice with strategy who also worked in a wide variety of industries. I interviewed executive leaders (presidents, CEOs, and directors of large units), consultants across several sectors, and thought leaders to include a few authors, speakers, and professors. While a significant proportion of my application of strategy crafting is with higher education institutions, I wanted to be purposeful to sample broadly across industries and sectors. Next week I'll share my initial reflections on the readings and interviews.

Downloadable Large-Scale Facilitation Article

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