Designing for superior business performance

A guide for technology, creative and startup leaders

Chapter 2 - What makes strategy difficult?

The problem is in recent years' strategy has become something of a buzzword, whenever we want to sound smart and demonstrate our business acumen we just make sure the word strategy shows up in our ideas.
David Kryscynki Brigham Young University

In this section

1. Understand the barriers to creating and executing on a complete strategy

2. Use that understanding to crush the obstacles to a complete high performance strategy.

Strategy is a relatively young concept in the business world. For example, one of the most compelling strategy books, Michael Porters book Competitive Advantage was published less than 40 years ago.
That may seem like a long time ago, but consider that Frederick Taylor wrote his theory of Scientific management back around 1900. Despite being considered an "out of date" theory since around the time Peter Drucker introduced the concepts of the new age of the knowledge worker, many scientific management practices still dominate organizational thinking today. Change takes time, and original messages get lost.

Lack of understanding

Confusing implementation time with strategy

Strategy is also often confused with implementation time. It is anecdotally common to see people consider an initiative that takes 1, 2 or 3 years as strategic. In contrast, short-term 1, 2, 3-month activities are seen as tactical. Strategy, however, is unrelated to implementation time. Strategy is about making an integrated set of mutually supportive choices for optimizing how the aspirations related to business performance are achieved. Strategy is not something that happens sometime in the future, it ideally starts happening today and is continuously occurring. If we say that strategy is the design for superior business performance, the question is, why would resources be allocated to anything else?

Strategy takes courage

Strategy requires you to make decisions purposed to produce outcomes outside your direct control. These are not routine day-to-day activity decisions, but significant decisions affecting resource allocations and business performance subject to uncertainty. For example, we will invest in product A focused on market B at the expense of product C in another market D. It takes courage to make these types of decisions. What if we are wrong? Consequently, many leaders and leadership teams avoid making these types of decisions. Instead, these teams try to do a bit and often too much of everything. Resources are spread too thinly, often failing to achieve any superior or valuable outcome in any area and mediocrity or failure in the others. The leadership then laments the failure to execute, but in reality, the failure was in making choices to focussing the capability and resources on what would offer the best possible return. Setting high performance expectations and then making the decisions necessary to achieve them takes courage and a willingness to test the assumptions in those decisions and learn whether those decisions are right or wrong.

Courage to break with conformity

One additional courage aspect of business strategy is about choosing to be different. If we want superior performance, we may not be able to do what we have always done, nor what everyone else is doing. Conformity, nonetheless, is a powerful motivator and hence choosing to be different takes courage. Doing what everyone else is doing provides the comfort of the herd mentality. If everyone is doing X then it must be right, we should do that too. Strategy will often involve not doing what everyone else is doing but following a reasonable theory of what a market needs which in return offers return of business value. The value proposition section will highlight differentiation choices.

Productivity prioritized over creativity

Strategy as a creative design process is fuelled by curiosity. A good strategist, like a creative child, asks a lot of questions, asks for clarification on a lot of assumptions, and historical decisions. They do this over and over switching between understanding external events, industry events and internal situations until clarity is accomplished, constraints revealed and opportunities discovered. This can be difficult in many business environments where everything is seemingly urgent and time-bound. Consequently, good insight driven strategy becomes difficult. It is just too tempting to skip all that thinking, questioning, investigating and analysis and instead go straight to action.

Lack of methodology

In the absence of a viable recipe to create a strategy, strategy creation can take up more time that anyone has and then not deliver the benefits anticipated from that time. Hence, many leadership teams will prefer to just get on with it, whatever it is. It will often take some significant (Kodak, Blockbuster moment) event that seriously undermines the viability of business performance for these types of leadership teams to embrace a complete methodology for business strategy.
StrategyCAD™provides extensive guidance on the steps / recipe to create a complete strategy along with detailed thinking guidance on related decisions including which markets, industry segments, customer segments, products, offerings, distribution channels, costs management and more

Non-sensible Strategy Negating Mantras

There are ridiculous quotes that are uttered far too frequently that undermine the value of strategy. Some of these include:

1. Culture eats strategy for breakfast Attributed to the great Peter Drucker. It is the classic scarcity type thinking, that implies you can have strategy or culture. Why not create a great strategy and culture. There is nothing to indicate these are mutually exclusive. Indeed, a good strategy enables the way people work. Strategy contributes to culture. The absence of sustainable strategy will see the death of any great culture. Blockbuster had a fun in store culture but lacked a sustainable strategy.

2. Bad strategy well executed is better than a good strategy not executed This is of again engages the scarcity or limited thinkin assuming you can only have one unsatisfactory option or another. Why not have a good strategy and have it well executed?
   A little thought can save a lot of wasted effort.

The perception of needing a business degree

There is a reason why many of the top business leaders today have technical backgrounds. Strategy is a creative design process. It is performance design of a business, and the components (as you will see later) are defined as are the relationships between them.
A business degree offers some advantage for financial modelling and financial management for strategy validation and implementation. However, many people with business degrees lack skills in strategy to match their accounting or finance skills. Strategy in terms of its’ purpose, methodology can be learned by anyone. Many successful business leaders have never been to business school. Strategy is a creative process driven by the desire to serve, create value, make an impact, and then engineer the value chain to enable the delivery of that value. A business degree offers no substantial advantage to do that. Given the close relationship of Strategy with architecture and design, creativity then technically minded people may be more accustomed to dealing with the ambiguities and engineering methods supportive of business strategy.