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Five ways to tell if you’re REALLY doing strategy

By Nicholas Gruen - posted Wednesday, 31 May 2017


Introduction

Strategy is crucial for organisations. But as I've previously argued, a great deal of what passes for strategic thinking is a kind of anti-thinking. Typically strategy begins by determining some overarching objective – the end – with the rest of the process 'drilling down' to the means of getting there in progressively greater detail (which these days we've taken to calling 'granularity'). Surely that's just commonsense? After all, how can you plan to go somewhere if you don't know where you're going? But that's the problem. It only seems commonsensical because, right at the outset we've got the wrong metaphor – essentially one of the commander navigating the ship to a destination that's knowable in advance. But the flimsiness of our enactment of this metaphor starts to give the game away. What's striking about apex statements (whether of the 'mission', 'vision' or the 'where do we want to be in future' type) is how little they imply for the details of the organisation's strategy and, in the latter case, how much they resemble vain, and arguably infantile wishes.

Organisations of any reasonable size are complex. There's a lot to coordinate just to function tolerably. In addition to the constellation of existing capabilities that must be maintained, there are myriad problems and opportunities big and small, a range of new capabilities one needs to nurture as a result (with others needing to be cut back), and an assemblage of other organisations with which one interacts directly and indirectly. In that world, if the organisation is to sensibly set itself ends or goals, they will be a function of that context – of the means by which it might achieve them. In other words strategic thinking must comprehend the dialectical relationship between the ends the organisation might decide on and the means by which it will pursue those ends – with each influencing the other in an endless search for inspiration, improvement, optimisation and mutual accommodation. For instance, Google started advertising (somewhat reluctantly) to monetise its search engine and in doing so developed capabilities that became a launching pad for all manner of new objectives the firm gave itself as it grew.

In what follows I try to summarise into a summary checklist of principles, the preconditions of good strategic thinking. I'm thinking as I prepare to do so that the end result will also be no more than commonsense. And yet I can't recall being part of any kind of 'strategy work' that resembles at all closely what I'll outline.

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Note, I've been deliberately provocative in placing the first three items on the list in order of importance though I have difficulty asserting this for the remaining points below them. Strategic work should be:

Critical

Non-obvious insights can be discovered at every level of the organisation, and something which is currently minor may become major. For instance, a specific capability built to support one activity might become the feature for whole new incarnations of the company – as Google's and Amazon's growing prowess with server technology were for them as they built G-mail and AWS.

Critical imagination

One might distinguish between two uses of critical intelligence. The first being critical imagination. This emerges from critical engagement. To develop their critical imagination, those seeking to think strategically must cultivate their curiosity and so awareness of the problems and opportunities large and small facing the organisation.

Critical evaluation

Secondly critical evaluation must be deployed throughout the process – for instance in delivering the next quality on the checklist – the ordering and winnowing of ideas according to merit to arrive at some dominant view of the priorities which become 'the organisation's view' – its strategy.

Meritocratic

Good strategic thinking surfaces all ideas worthy of consideration and then develops the best. As I've argued elsewhere, although we love 'peer production' for instance as occurs on Wikipedia – for how 'democratic' or open it is, on closer inspection the real secret source here is a new kind of emergent meritocracy in which the most respected and substantial contributors gain greatest say in the project. By contrast with successful peer-production, making strategic planning within an organisation reflect the merit of the ideas put forward and their sponsors is fraught.

The difficulty of meritocracy

On the one hand, everyone should feel respected and encouraged to participate, particularly the naturally reticent (many of whom will be junior, and possibly more junior than they deserve). However, some people will overestimate the value of their contributions and should ideally be reined in. Ideally, everyone will have an instinctive understanding of the extent to which they can and should contribute with group pressure helping to protect the quality of discussion. But that requires great subtlety and judgement. And egos are involved. With intelligence and its successful simulation being key determinants and signifiers of social status, it's a huge challenge to foster well structured, truly meritocratic discussion, especially in organisations with a strong, established hierarchy.

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Meritocratic discourse as an ethical quest

This underscores something else that's rarely pondered. Encouraging thinking and decision making on the merits, rather than on the status or power of the participants and guarding against the gravitational pull of groupthink and myriad foibles and biases is best understood as an adventure in in our ethical life in which progress is cognate with our natural aspirations to virtue, with our individual and collective endeavours in that regard both reinforcing one another.

Open

Knowledge and intelligence – in both senses of the latter word – turn up in all sorts of places within and indeed beyond the organisation. The perspectives and needs of customers, suppliers and wider stakeholders can be important inputs to strategy. I originally titled this section 'Democratic', but this is subtly wrong because democracy is (ideally) rule by everyone. Where we are seeking to optimise the interests of an organisation's mission and only secondarily the interests of those within it, what we're after is meritocratic openness. Once there's an effective meritocratic system of prioritising activity, the wider we cast the net for contributions the better.

Socratic

Socrates died believing that the one thing he learned from life was how little he knew. That's why, when people talk about getting strategy 'right', they're applying for the role of hero, when what's needed is humility. As Charlie Munger, Warren Buffett's business partner puts it "Knowing what you don't know is more useful than being brilliant." Socratic humility is a mode of being that's far better attuned to individual and collective learning than its alternative – competition for status marked by 'big-noting' and the cognitive biases to which it is an open invitation.

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This article was first published in The Mandarin.



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About the Author

Dr Nicholas Gruen is CEO of Lateral Economics and Chairman of Peach Refund Mortgage Broker. He is working on a book entitled Reimagining Economic Reform.

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