Imperatives of a Great Strategy Vol.8

Data-Driven Decision Making:

featuring "Playing to Win" by Roger Martin and AG Lafley .

Crafting and executing a successful strategy is a fundamental aspect of organizational leadership. The imperatives of a good strategy design and execution have been explored and articulated by many prominent contemporary strategists whose insights have become widely accepted in the business world.

Suppose we can understand the foundational imperatives commonly shared by these thinkers and identify the recently emerged imperatives that will significantly impact the future. In that case, we can offer a new synergistic and holistic strategy thinking that builds on the foundations and addresses what is needed today.

This is why I analyzed a representative set of books and authors discussing strategy.

I selected ten that had the most significant impact on today's business practices or will have it soon. I targeted to identify and delve into the common imperatives recommended by these selected strategists, drawing from their influential books and studies.

In my research covering ten books and the thinking of their authors, I found ten common imperatives to craft and execute a great strategy:

1.???? Understanding the landscape

2.???? Distinctive Competence and Competitive Advantage

3.???? Strategic positioning

4.???? Agility and adaptability

5.???? Innovation and disruption

6.???? Alignment and Execution

7.???? Customer centricity

8.???? Data-Driven Decision Making

9.???? Continuous Learning and Feedback Loops

10. Ethical Considerations

I covered the 7th imperative, "Customer Centricity" "Blue Ocean Shift" by W. Chan Kim and Renée Mauborgne in the 7th article . Now we move to the 8th imperative and the specific book and the authors who covered this specific imperative extensively in their book:

8. Data-driven Decision Making:

In the era of big data, strategists A.G. Lafley and Roger L. Martin, in "Playing to Win," stress the role of data in strategic decision-making. They argue for a disciplined approach that involves collecting and analyzing relevant data to inform strategic choices. A good strategy is rooted in evidence and insights derived from data.

In their influential book "Playing to Win: How Strategy Really Works," A.G. Lafley and Roger L. Martin present a comprehensive framework for strategic decision-making, underscoring the pivotal role of data in shaping effective strategies. The authors draw upon their experiences, particularly Lafley's tenure as the CEO of Procter & Gamble, to offer valuable insights into the strategic thinking that drives successful organizations.

My 5 cents add:

The combination of big data and predictive analyses power of new GenAI technology opens a totally new frontier in data-driven decision-making. In the former business world, data was usually less available internally and mostly outsoruced, covering only the past and not updated frequently enough, scattered in multiple locations, and possibly low quality to analyze. There needed to be enourmous manual work from organizations to make sense of this type of data to make needed business decisions.

First, with direct-to-consumer (DTC) models, companies started to have much more directly collected data from their websites or physical channels used for information, sales, or both. Then, with the digital transformation efforts, they improved the quality of the data they collected to make sense of it. With cloud computing, they started to simplify and make it more effective to access the data. Then, they started using Business Intelligence and visualization software to make sense of the data in a more user-friendly way. Now we are entering the era of predictive analyses and real-time visualization of the insights driven from multiple data resources by GenAI. This insight will be real-time available to the decision makers via co-pilots, the virtual assistants powered by GenAI. We also start to see auto-pilots as well for some selected areas of customer engagement with Chat Bots. We will probably see the auto-pilots in more areas of the sales and operation funnels of the organizations as the GenAI capabilities grow. This will mean some of the decision-making (to some extent) is and will be outsourced to machines. Probably not all of the decision-making for a long time, if not ever.

Net, the importance of the data in decision-making will stay forever as a foundational imperative for a great strategy, yet the form and use of the data will continue to evolve, and the organizations will need to adapt to stay ahead of the sigmoid curve of data-driven decision-making.

Lets delve into the teachings of this book further. They will have other common foundational imperatives of a great strategy mostly overlapping with the other books we covered but in its own framework.

Understanding the Context:

Lafley and Martin begin by emphasizing the importance of understanding the context in which a company operates. They argue that effective strategies are not generic; they are context-specific. The authors introduce the concept of the "strategy cascade," a hierarchical framework that aligns objectives at various levels, from the overarching corporate strategy to specific actions at the operational level.

Defining Winning Aspirations:

The first step in the strategy cascade involves defining winning aspirations. Lafley and Martin advocate for clear and ambitious goals that guide the entire organization. These aspirations should be measurable and actionable. Data is crucial in this phase, providing the empirical basis for setting realistic yet challenging objectives. Market share, revenue growth, and profitability are essential data points.

Developing Where to Play and How to Win Choices:

The second layer of the strategy cascade involves choosing where to play and how to win. Lafley and Martin stress the need for a rigorous analysis of market opportunities and competitive advantages. Data-driven insights about customer preferences, market trends, and competitor behaviors inform these choices. This phase requires a systematic examination of data to identify the most promising avenues for growth and the unique value propositions that will lead to success.

Building Capabilities:

The next step is building the necessary capabilities once the where-to-play and how-to-win choices are made. Lafley and Martin assert that capabilities are the organization's competencies and resources and must align with the chosen strategic direction. Data plays a critical role in assessing the organization's existing capabilities and identifying areas that require enhancement. This involves thoroughly analyzing internal processes, employee skills, and technological infrastructure.

Crafting Supporting and Reinforcing Strategies:

To ensure the successful execution of the overall strategy, supporting and reinforcing strategies must be crafted. These strategies address specific functional areas and align with the broader corporate strategy. Data is instrumental in identifying areas that require support, understanding market dynamics, and assessing the impact of various initiatives. Lafley and Martin argue for an iterative process involving continuous learning and real-time data adjustment.

Ensuring Strategic Alignment:

The final layer of the strategy cascade involves ensuring strategic alignment throughout the organization. Lafley and Martin stress the importance of cascading the strategy to all levels and functions. Data serves as a tool for communication and alignment, providing a common language for all stakeholders. Key performance indicators (KPIs) derived from data help in monitoring progress and ensuring that the organization remains on course.

Data as a Strategic Asset:

Throughout the book, Lafley and Martin position data as a strategic asset. In the contemporary business landscape, where information is abundant, leveraging data for strategic decision-making is a competitive advantage. The authors argue for a disciplined approach to data collection, analysis, and interpretation. They emphasize the role of leaders in fostering a data-driven culture within the organization.

Challenges and Critiques:

While Lafley and Martin's approach to data-driven decision-making has been widely praised, it has its challenges. Critics argue that in rapidly changing environments, historical data may not always indicate future trends. Additionally, there is the risk of data overload, where organizations drown in information without deriving actionable insights. Lafley and Martin, however, counter these challenges by highlighting the importance of adaptability and the need for real-time data which I also tried to explain above, the new form and use of data.

"Playing to Win" provides a robust framework for strategic decision-making, with data as a central pillar. Lafley and Martin's insights offer a blueprint for organizations seeking to navigate complexity and drive success. By emphasizing the strategic role of data at each step of the process, they underscore the transformative power of informed decision-making in shaping winning strategies.

One needs to keep in mind the data strategy and data-driven decision making is also living its own sigmoid curve and needs to be intervened before going into a plateau or a decline.

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Cheers,

C.Firat Caliskan