How to build an effective strategy even in constant change
A strategy is not a plan. A strategy is a statement of intent with very specific properties. To qualify as a strategy, the statement must describe a focus for activity and an implicit or explicit set of conditions for an end state that, when successfully executed, guarantee the organization will achieve its desired goals. Good strategies ensure that the goal will be achieved irrespective of any reasonably foreseeable competitive activity or probable change to an arena activity. A well-crafted strategy, successfully executed, will guarantee a desired outcome irrespective of anything but a black swan event completely outside the scope of even robust scenario planning.
In addition, when expressed, all good strategies manifest several key characteristics. They are:
- easily understood and explained
- provide sufficient detail regarding a key purpose to provide clear prioritization and guidance but are not so detailed as to restrict how teams and leaders with distributed authority choose to execute
- are a useful tool in decision making and resource allocation in all specific areas of activity conducted by an organization
- make self-evident or intuitive what a stakeholder should not do as well as what they should do
- allow for arena specific strategies to be defined that are universally aligned with the overall higher level or organizational strategy
Often when I put forward this definition, people balk at the notion that an outcome can be “guaranteed”. They then become positively disparaging when they see “irrespective of competitive activity...or changes to a market.” But great strategies, and there are many examples throughout both military and business history, have always satisfied this definition. While black swan events and poor execution can always lead to failure, the goal of anyone crafting a strategy, at any level, should be the simplest expression of a method paired with an achievable end state or directed purpose that will guarantee success.
Let’s look at some examples, one from geopolitical history and several commercial examples. First, the Allied strategy of WWII. This was simple and clear; “Self-preservation. Starve the enemies war machine.” This strategy meets all of the criteria of our definition. Despite setbacks, problems with execution, and fierce competitive activity, by the end of the war, the average Allied soldier had 2 tons of supply accessible to them or on the way in the supply chain. The average Axis soldier had less than 2 kilos. Victory for the Allies had been made inevitable long before hostilities ended. It’s just that neither side realized. Despite changing conditions during the war, this strategy did not change while arena specific plans changed or were adapted regularly.
Cisco’s early acquisition strategy is another good example. “Acquire companies that own or are developing the key technologies required for each step or component in the burgeoning IT network market.” This was further bounded by a rule to ensure a focus on acquiring leading and new technologies, “acquire companies with no more than 75 employees, 75% of whom are engineers”. Computer networks were and are mission-critical systems for most businesses. If any component failed, people couldn’t communicate and information stopped flowing. By buying the companies that owned and produced the best new technologies for each component in a network, Cisco could ensure its products were included in nearly every project implemented as well as those that would be implemented in the foreseeable future. By controlling the development of future generations of key technology products as well as providing leading components now, it was able to substantially influence or control the standards established for all network products sold. This strategy, effectively executed, guaranteed Cisco would achieve its objectives. It produced an end state for the ecosystem in which Cisco products were included in nearly every solution sold and its influence over specifying technical standards would ensure it could maintain that lead.
Proctor & Gamble’s longtime strategy to “constantly improve on market-leading products that make lives better and sell them using great brands” continues to be highly effective. By focussing on making already market-leading products better, Proctor & Gamble ensures that its brands are always associated with the value, quality, and the certainty of being both a safe purchase and the best available solution for a need. Effectively executed, this strategy prioritizes resources on just two things and these two things produce the ultimate advantage within a fast moving consumer goods market.
In all three cases, rapidly changing technology or market conditions may require arena specific plans to change. But a constant prioritization of resources to achieve the strategy guaranteed or at least maximised the probability of successfully achieving the desired outcomes.
Since the beginning of recorded history technologies, conditions, and methods have changed. In relative terms, sometimes at often unprecedented rates. Competent leaders have nonetheless crafted sound strategies that reduced uncertainty, empowered rapid and distributed decision making, enabled effective prioritization of resources, and ultimately that were fundamental to their success. For the best of these leaders, tactical plans changed frequently, but their strategy remained constant over extended periods of time. The same is true today. An effectively crafted strategy does not need to change and yet will dramatically reduce risk while facilitating better, faster, and easier decision making throughout an organization.
For more details on this subject, read A Deeper Truth: The new science of innovation, human choice, and societal scale behavior.