Hey friends 👋,
Picture this. You’ve spent the last 90 days trying to hit growth targets, only to fall agonisingly short.
Or, your company has placed all its bets on one breakthrough idea (for which you’re leading). Yet, you can sense it’s going nowhere; it’s failing.
Now you have to report to the C-suite or board.
Your anxiety is rising as you prepare to deliver the bad news.
How will the news be perceived? What are the consequences?
Don’t worry, you’re not alone. According to IDEO, successful strategy sits at about 10 – 40%.
What if I told you there is an alternative way to view strategy and goal setting?
An alternative more aligned to the turbulent times we currently face and is more sustainable and motivating.
Say hello to agile strategy.
Let’s dive in!
🧠Deliberate Strategy Versus Emergent Strategy
A deliberate strategy is a process designed to achieve a specific goal step-by-step.
​Michael Porter (the legendary Harvard business academic) initially introduced the concept. Michael, credited for ‘Porter’s Five Forces’ and ‘Value Chain Framework’, stated, “Strategy is about making choices, trade-offs; it’s about deliberately choosing to be different.”
The approach results in one of three competitive advantages, cost, differentiation or focus (niche).
Consider it as understanding where you are, where you want to get to, the steps needed, and periodic checks to assess and adjust strategy.
Fundamentally it is more of a top-down, prescribed approach that relies on more certainty to execute.
In other words, leaders make the decisions, and teams implement the steps.
Canadian academic Henry Mintzberg pioneered an alternative view around the same time Porter developed his strategy idea.
Emergent strategy is based on the view that business is constantly changing, so a more flexible approach is needed.
Fundamentally, it is a more bottom-up approach, providing flexibility to respond and include new learning that replaces what isn’t working (as strategy is done) towards a realised strategy.
In other words, you are constantly learning and adapting on the fly.
The typical view is that deliberate strategy is more valuable during more stable times, and in times of uncertainty, chaos and turbulence, emergent strategy is more beneficial.
Two main questions come to mind when we use emergent strategy:
- How do we think about targets when things are constantly moving?
- What tools can help us to manage emergent strategy?
🎯 Emergence and Targets
Typically, we use binary targets to get laser focused.
Using SMART goal setting (Specific, Measurable, Attainable, Relevant and Time-bound) to describe what we’re trying to attain.
Let’s say we’re having a marked drop in employee retention. So our target might look like this ‘We will increase employee retention from 75% to 90% by the end of 2023.
Then, there’s a detailed strategic plan prescribing what needs to be done to achieve the goal.
On the face of it, this goal seems perfectly reasonable. It’s clear, with no room for misunderstanding. But there are two big problems with it:
- This type of goal does not account for a shifting environment.
- The goal could be psychologically demotivating.
For people to apply sustained effort towards a goal, it must be both attainable and challenging. Single-digit goals are often a compromise between the two.
The solution is to use a range that has high and low targets.
I was sceptical about this because I was schooled in a single-digit mindset. But, in this experiment, only 50% of people with a single-digit target achieved the goal. Compared with 80% of people with a high/low target range, attain the goal.
Setting a range also helps to avoid the problem of unrealistic goals developed by the board, leaving the team demotivated and frustrated.
An acceptable range can help people sustain energy towards a goal while at the same time providing flexibility to adapt as things change in the environment.
💪 Designing an Agile Strategy
“Agile strategy is an admission that we can’t possibly know everything up front, and should therefore design plans meant to adapt, evolve, and respond to new information.” – Agile Sherpas.
As you know, I’m a big fan of design thinking. Design thinking is great for innovation but also offers a helpful way to make sense of complexity for designing an agile strategy.
If you’re keen to know more, I recommend starting with these two articles:
Then, combine design thinking with futures thinking for an even more powerful duo to design strategy.
Once you’ve made sense of information and developed an intended strategy, how do you manage the process?
Do you spend more time documenting a plan that nobody uses? Or do you use a more agile method to respond and adapt?
A more agile approach is found by using the five pillars from this HBR article:
- Define extreme but plausible scenarios. Consider what scenarios are plausible (extreme) rather than likely (incremental) and develop ‘no-regret’ tactics that might assist under most of the scenarios.
- Identify Strategic Hedges and Options. Rather than solely making one ‘best’ choice that ‘locks’ you in, consider choosing an alternative that offers more flexibility to respond to change.
- Run Experiments. Validate strategic ideas by running small experiments and increasing investment and scale over time.
- Performance Monitoring. Design your performance monitoring to answer not “How did we perform?” but “Should we alter course?”
- Review Intervals. Deploy shorter cycles that are action orientated to respond to ‘live data’ and change.
The five pillars align with Roger Martin’s choice cascade framework that surfaces the core strategy components and helps you to articulate your strategy.
Roger’s framework is underpinned by the Strategy Process Map to guide you through the process of designing a strategy.
These two processes are my go to for designing a winning strategy.
That’s all for today friends!
Feel free to reply to this email if you have any questions or newsletter requests.
Thanks for reading and I’ll catch you next week.
Keep future-state thinking,
Vaughan