Failing at strategy

I have worked with startups, scale-ups and grown up companies, their founders, leaders and team members. More often than not, when strategy comes up, the conversation quickly becomes heated and people get bent out of shape. Why?

By listening, observing and evaluating I have come to the conclusion that the problem is split in two;

Most people I meet do not actually know what strategy really is. And even if they do, they have failed at creating, acting and managing it. No wonder things get pear-shaped.

Join me as I share with you what I have learned.

It may seem like I’m on a high horse when saying this, but at the highest level, the main problem I have discovered is that few have any idea what a strategy really is. If you want to improve, we can't be offended by reality, so the first step in avoiding failure when it comes to strategy is to know what strategy is. Only then can we learn how to make one, and act on it.

What is strategy, really.

From my experience, many leaders write voluptuous sentences or even pages upon pages of fancy wording in what is believed to be a strategy. In reality, most of these are at best a collection of meaningless buzzwords portraying a dream scenario in the future. Mission statements, visions, promises, dreams, values, culture statements and marketing plans are all useful in one way or another. But they are not a strategy.

There is no need for me to deep dive into the definition and explanation of strategy, because Richard Rumelt has so cleverly done that already, in his book . You should read it. I will however give you my gist of the book and a personal definition of strategy:

A strategy is a list of identified actions you have to make, to get from here to there.

Here is where you are now or at the point when your strategy is supposed to start.

There is where you plan to be, as you reach one or several defined goals.

The list of actions is what you have identified as the best pathway from here to there, given what resources and insights you have at your disposal.

If your strategy does not spell out how to overcome the challenges you are facing in reaching your set goal, you don't have a strategy…

Read on and I’ll inspire you to make one. If you do not agree with my statements, observations or proposals, please explain why, so that we can all learn.

How do you make a strategy?

There are lengthy books on the subject, but I’ll boil it down for you. I have an affinity for the strategy framework from McKinsey, but as long as the process gives you the above, (a real strategy as I have defined it here) you are good with any method. However, there are some fundamentals you need, and some shortcuts you should not take.

A clear strategy starts with a destination. What is your goal? I have written about setting goals before, so I won't bore you with that again, but you have to define at least one goal, so that you can make a strategy for how to reach it.?

Free from ambiguity a goal must be measurable and reachable.

Some examples of real goals

• Increase our customer satisfaction score by 12% in 12 months
• Sell 65.000 units by the end of December 2023
• Reduce sick leave below an average per staff of 2 days per year by December 2023

Now that you know where you are going. Let’s figure out how to get there.

This marks the start of the strategy formation work. And this is where most people I meet make their first big mistake. They involve themselves, or a few people around them, often seniors that likely are paid for having the responsibility to deliver the goal, and then they come up with more or less evaluated ideas on how to make it happen. When everyone is fairly happy with the lofty sentences describing the somewhat unclear pathway to reaching the goal, the ‘new X strategy’ is presented to everyone, where X can be replaced with stuff like; Sales, Marketing, Company, Summer, Winter, Growth, Scale, Delivery, Implementation, Service, Support or whatever.?

The rest of the company, or any other stakeholder (partner, clients, supplier, shareholders etc) have no insight into how this strategy was made. They have no skin in the game, no impact and hence zero buy in. So… Reading this now, it should be obvious that this strategy is beyond worthless. In fact, it’s likely damaging to the company and its ability to reach goals.

You have to start with a deep dive inside your organization. You have to search for the ideas, thoughts and inspirations from many of not all stakeholders on what may be a pathway to the goal, and ask them why.

This quest for ideas, proposals and mindshare is crucial for two main reasons. The best ideas are not owned by anyone specific. And history tells us that the ‘dumbest’ people more often than not is the source of the next big idea. Secondly, the involvement, even if the input is politely downplayed by data (not opinions) when all ideas are considered, is crucial for buy-in and commitment from any stakeholder, once the strategy is formed and implemented. There is no requirement for everyone cheering the resulting strategy on as a core belief and a reason to exist, but you only need a few people actively pumping the brakes, for the whole strategy to fail. And more often than not, such breaking happens in silence, so it’s extremely hard to fix. That's why you start by actively listening to everyone.

So; in my view, you have to search in your pool of stakeholders and participants for ideas, proposals, and even just opinions, in a structured and well facilitated manner, to find the right ideas, as well as to gain buy-in, for what will later become the strategy.

Strategy formation

This process is complex and time consuming, and varies from company to company for obvious reasons. So I’ll focus on the key building blocks I see as common and relevant for most when they start to form a strategy, assuming they have set their goals and involved (all) stakeholders to collect input.

Take your time - Those delivering the strategy are typically under a lot of pressure to deliver. Everyone needs to know what is the right next step. Everything we do now, while we wait may be garbage. While they wait, productivity may be damaged.. Often this leads to a tendency for narrowing down the circle of people involved and the push for early delivery is increased. A good strategy should not be rushed. You can always iterate if your fundamentals are good, such as involvement, buy-in and a solid structure for dealing with change. If that is not in place, chances are you will stick to a simplistic, shallow and outright failed strategy, because you rushed it. Take your time.

Add value - when forming hypotheses and building each step of the strategy, you should add value to it. That is, calculating its cost and revenue impact. This helps sanity check the assumptions and root the strategy in a financially sound, or at least evaluated environment. When someone is hyped about a step that seems great on paper, the value reality may often come at a surprise. Scarcity is not the mother of all inventions, but it sure as hell will help you rethink your path, if you only have money for a bus ticket, but you have planned for flying first class. Add value.

Myth bust - As with adding value, each strategic step is often based on an idea. An assumed condition that more often than not proves to be commonly accepted by the collective as likely or even true, when reality has taught us that about 80% of ideas, services products and start-ups fail. So we should myth-bust our strategic propositions, as rigorous as a new product idea, before we accept it as an integral part of our strategy. It’s extremely hard to walk away from our bias, but we have to form our strategy on data. And if there is no data, we must scrutinize our own assumptions and give room for the counter assumptions from others, especially those who have the opposition to our own belief.

Playing chess

So far we have portrayed a strategy process that only factors in a simplistic world view. A chess game where you have decided what path to take, what moves to make to win. But we have not considered the opponent, variations of moves, the loss of a piece or several along the way. No alternative strategies, no dynamics. This is not reality for any of us.?

A good strategy needs to factor in changing conditions. We can use forecasting, predictions, market data and ultimately plain opinions to draw up scenarios we can build our strategy around. We can evaluate the likelihood and propose alternative moves to form a conditional strategy. If this, then that. Having such alternatives factored in from the start is extremely hard, time consuming and leads to an exponential degree of complexity. But nevertheless one should strive to bring in the forecasts and insights that are known, fairly likely and can be comfortably shared with all stakeholders as early as possible. Buy-in for change is equally important at the start of a strategy journey, as it is when you have to make changes along the way. If they are known as possible, but unlikely outcomes, the change will be smoother than if it comes out of the blue.

It’s a circle, not a line

Finally, and as clearly portrayed here, a strategy, while concrete, action based and tangible for all involved, is not a line. It’s a circle, as you must run it as a constant feedback loop, and iterate, even when your strategy is short term. Conditions will change, and you need to change accordingly. Either inside your strategy, because you made a complex and conditional strategy that allowed for change. Or outside your strategy, because conditions have changed to the extent that your strategy does not fit anymore.?

In either case, involvement and transparency is crucial. This dynamic is a key ingredient in a well governed strategy, as it is never static. It needs evaluation, so that we are making (strategic) actions as we planned, as long as the conditions for the action are present. And when and if the conditions change, to the point that we need to change with it, we have to apply the same process as when we first started.

Having a super detailed and well calculated strategic plan for how to get from here to there does not work when the landscape we made our route for has been washed away by a flood. Walking the designated path, planned in detail and known by all, is still going to be a catastrophe, as you all drown in the mud that has displaced the road. In such situations, and especially when your strategy has no action planned for these dramatic conditions (very hard to do), most organizations fail. They typically rush to make hasty decisions and flee from their strategy. Under the said conditions, leaving the strategy behind is the right move, but you have to replace it with a new strategy. Rapid decisions from leaders have a tendency to emerge under these conditions, and can quickly lead to a situation where leaders change to becoming commanders, and team members becoming worker and before you know it, your company has become a big ship roaming the open sea without a plan, in lack of a map and with an engine room that is sick and tired of the captain and his henchmen screaming out random orders, and in a short while, you will be lost at sea with several anchors deployed, going nowhere.

So in summary, to succeed you should;

• Understand that as strategy is a clear list of actions to reach a goal
• Set clear and indisputable goals
• Involve as many as you can to propose a path from here to there
• Add value to proposed strategic steps so you know you can afford them
• Myth bust your assumptions
• Consider what you know and plan for the unknown
• Take your time and involve as many as you can
• Build a feedback loop
• Execution is the responsibility of all
• Abandon the strategy if it’s futile
• Always form a new strategy, the right way
• Never become a mapless captain