Avoiding the "hybrid" strategy trap

Most people like their coffee either hot or iced (for all kinds of interesting, but for this purpose irrelevant, physiological and emotional reasons). I often use this observation to gently nudge executives away from avoiding clear strategic choices.

By definition, strategy requires making trade-offs that often impact different individuals and departments in different (and not always positive) ways. So it's easy for executives to fall into the trap of making false compromises to "keep everyone on board" or to "combine the best parts of each option".  This post outlines why this is a mistake (and not just because warm coffee is terrible), will help you recognize when political correctness is taking over strategic decision making, and will give you some ideas for how to intervene. 

Let's say that you've gone through a choice-structuring exercise and crafted 3 viable strategic pathways. Each of these pathways is a clear choice based on a theory of how it will enable the organization to achieve its goals and a set of conditions that would have to be true for that pathway to be optimal. Each option provides a vision that can lead to a coherent activity system that is self-reinforcing and provides some unique and hard to replicate advantages. Classic examples of activity systems from the Porter article (that needs no name) and work by Prof. Siggelkow at Wharton and others highlight companies such as Southwest Airlines, Ikea and Progressive Insurance.

The one shown below is from Walt Disney circa 1957 (also discussed in some depth in this excellent HBR piece by Todd Zenger). The point relevant to this discussion is the level of connectedness between the different elements. Changing or dropping an element such as for instance Music (top right) for say budget reasons would have second order implications for the TV, Film and Disneyland businesses at the very least. 

Clearly breaking the connectedness within well-thought through strategic alternatives can leave value on the table and can reduce the ability of the firm to sustain a differentiated offering. But this is exactly what these so called "hybrid options do"

This danger is insidious because the way such a "hybrid" option rears its head in a specific situation is often couched in reasonableness. Even the word hybrid has positive connotations. Also it's easy to look favorably upon the person with the approach that appears to diffuse conflict by picking and choosing components that give something to everyone around the table. The problem as we all know is that this leads to the lack of a strategic choice, the lack of commitment to a course of action, and therefore, to the lack of decisive differentiation in the market.

In order to recognize a damaging hybridization of options, you need three defenses. First, ensure you have a deep understand the theory behind each option so you know what the core components are without which the logic of the option is weakened. Second, stay attuned to any move that detracts from this logic. Third, recognize when there is indeed a valid logic for a "Goldilocks" alternative that breaks trade-offs while retaining a defensible activity system or in order to retain real option value (for a limited period).  

So how can you put a stop to the group-think when you see a team start drifting towards making a non-choice? A phased approach works well. Start by asking "naive" questions that reveal the issue. For instance you could say, option A made sense because we could do X and Y. I'm wondering how we could best do X and Y under this hybrid approach? Often well-crafted questions will lead people to recognize what's being lost. This is much easier if the team already has a shared understanding of strategy as a differentiating activity system. Other well-suited approaches are to "play devil's advocate" or to sketch out how the option might play out with customer  and competitor reactions. 

And if all else fails, ask them how they like their coffee.