Rather than concentrate on a big long plan, companies should focus on answering those five questions. If they do that, they have the best chance of winning and achieving a great aspiration. Many companies, if they did that, could win in the same arena because they have different places to play in that arena.
Colin: Yes, I really like that point that you just made about the separation of decisions. From where, what game are we playing? Where we are staking our ground, versus how are we going to win, what are the tactics that we are going to bring, and what’s the competitive advantage once we have staked our claim within a particular market place.
Roger: I often think that the enemy of strategy is vagueness and conflation. People often have these grand strokes: “We’re going to be an awesome company,” and there is never an answer to where exactly are we playing and exactly how are we choosing to win. The good news is that anyone can do it. This is not rocket science. It does require commitment and thinking about commitment.
Colin: But many organizations must struggle to apply the framework, otherwise the outcomes would probably be better. Where do you see them struggling? Why is it so hard and what advice would you have to help folk overcome some of those challenges?
Roger: One thing that’s a really a problem is “busy work.” I honestly think that lots of companies make strategy into busy work. We need an analysis of this, and they busy themselves with putting together huge decks of analysis instead of stopping and saying, “Before we analyze, why don’t we think what our hypothesis might be?” People try to be faux-scientific. Last time I checked, before you do analysis, you have this thing called a hypothesis. Then you analyze, based on the hypothesis. I find most strategy work is actually hypothesis-less analysis. Without the hypothesis, someone junior in the strategy area goes and assembles massive amounts of analysis that distracts people from thinking. Then they get handed the analysis and try to make sense of it, but what they don’t realize is that that process traps them. It traps their thinking. They then get focused on thinking about what is then analyzed, on whether that stuff is relevant to the proverbial price of tea in China or not. It does not matter. Your mind will be drawn to what you have in front of you as the analysis.
That sort of distractedness is a big part of it. When I do strategy with companies, I say, I do not want analysis. I do not want a fact-base to be created, the binders to be created before we think. I want to think and frame the challenge that we have. Frame the problem, and ask ourselves the question: “What are some of the challenges here? We are not growing as fast as our competitors; we think there is a big opportunity here; our growth is slowing; our profitability; etc.” Then to imagine the kinds of choices that we could consider that would make that problem go away.
I start strategy by saying, “Colin, tell me a happy story about Invetech five years from now, when the company’s in a great place that would make you deliriously happy.” Then I would turn to your colleague and say, “Colin’s story is off limits, you have to tell me another happy story that doesn’t look like his happy story, but it’s got to be happy, and it can’t be like his.” After I have done that with Bill, I turn to Sally and I say, “This is getting harder, but no Colin, no Bill, tell me another happy story.” Then I ask the question: “What would have to be true for those happy stories to come about?” Then we discuss whatever they are we worried about, things we actually don’t know if they’re true or not, and then why don’t we go and think about and get whatever analysis we can have on that stuff.
Remember how I talked about conflation? Often in strategy processes, things are unhelpfully conflated. What I have done in the “tell me a story” question is to draw apart logic and data. Those two things tend to be merged together in a thing called analysis. Often when people say, “We’re not very analytical here, we don’t believe in taking forever in using this analysis-paralysis.” What they are talking about is data, and I’m talking about logic. I’m really interested in Colin’s logic, in Bill’s logic, and Sally’s logic, and then we will populate the logic with data to see the degree to which one logic is more sound than another’s. We sort a little to make the best of what we thought, because that is what is driving you to shorten your odds. You never get it perfect if you shorten your odds, but if you start with analysis, the analysis is actually presupposed by a given logic.
The interesting thing is that you can’t analyze anything without the reason for why you did it. What generally happens in strategy processes is that part gets farmed out to somebody in the strategy planning area, the finance area. Then you get the analysis, but you don’t know the logic behind it—and it is often the most junior people in the organization, not the people with the most developed logic about the business—and then we use that. So we are constrained to an implicit logic that we don’t even know or see, and we try to optimize the decision based on that. Now we understand why at least 85% of every strategy document I have ever seen in my life is not worth the paper that it was printed on! Some percentage has some utility, and the other 85% is somewhere between useless and severely damaging.
Colin: It’s the structure and it’s the hypothesis that you put down, and the assumptions that you have, that you try and prove with data. It’s an ongoing process of evolution. But if you don’t start with a hypothesis, then you just end up with a bunch of PowerPoints with interesting, unrelated facts.
Back to the five-question framework: what game are we playing? How does the data help us clarify our thinking or support our hypothesis in that area? How are we going to win?
Roger: Based on what I have now described, you can see why a lot of entrepreneurial, hands-on managers look so askance at strategy. Lots of them just hate it: “We’ve got to do this stupid strategy thing; the board wants this strategy; I’ll just ship it out to whoever the most junior person I dislike the most and get them to do it.” It’s because they have a proper and healthy disrespect for it, because the way it’s typically done is not conducive to getting good things out of it. What you don’t want them to do is just recuse themselves emotionally from strategy processes. You want their best logic, because often that entrepreneurial CEO has got really cool logic. Some of it can be tested and analyzed to a better extent then it is now, but if you don’t get it out of their heads, you will never benefit from it, and they will never see how your strategy work is relevant to them. That’s why when I work with CEOs on strategy, I keep the data and the analysis out of it until such time as it can be usefully deployed on the problem or challenge.
Colin: Yes, a terrific insight and very practical guidance. Some of your more recent publications have been in the area of design thinking, a topic very close to my heart. How do you see the link between innovation and design thinking?
Roger: Well, I am glad you have asked that now, because there is a direct link to what I have just described in the creation of strategy that is more innovative: I believe that core principles of design need to be infused into business.