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January 29 - August 26, 2020
The core of strategy work is always the same: discovering the critical factors in a situation and designing a way of coordinating and focusing actions to deal with those factors.
A good strategy honestly acknowledges the challenges being
Like a quarterback whose only advice to teammates is “Let’s win,” bad strategy covers up its failure to guide by embracing the language of broad goals, ambition, vision, and values.
A good strategy includes a set of coherent actions. They are not “implementation” details; they are the punch in the strategy. A strategy that fails to define a variety of plausible and feasible immediate actions is missing a critical component.
A good strategy has an essential logical structure that I call the kernel. The kernel of a strategy contains three elements: a diagnosis, a guiding policy, and coherent action.
Steve Jobs talked Microsoft into investing $150 million in Apple, exploiting Bill Gates’s concerns about what a failed Apple would mean to Microsoft’s struggle with the Department of Justice.
The power of Jobs’s strategy came from directly tackling the fundamental problem with a focused and coordinated set of actions. He did not announce ambitious revenue or profit goals; he did not indulge in messianic visions of the future. And he did not just cut in a blind ax-wielding frenzy—he redesigned the whole business logic around a simplified product line sold through a limited set of outlets.
My interview plan was simple: I asked each executive to identify the leading competitor in their business. I asked how that company had become the leader—evoking their private theories about what works. And then I asked them what their own company’s current strategy was.
Marine commanders had estimated they would lose 20 to 30 percent of their force if chemical weapons were used against them.3 But Saddam was deterred—postwar intelligence gleaned from the Russians revealed that he feared a U.S. nuclear retaliation to such use.
Thus, we are surprised when a complex organization, such as Apple or the U.S. Army, actually focuses its actions. Not because of secrecy, but because good strategy itself is unexpected.
Half of what alert participants learn in a strategy exercise is to consider the competition even when no one tells you to do it in advance.
Wal-Mart’s advantage must stem from something that competitors cannot easily copy, or do not copy because of inertia and incompetence.
In particular, it recommended investing in technologies that were expensive to counter and where the counters did not add to Soviet offensive capabilities. For instance, increasing the accuracy of missiles or the quietness of submarines forced the Soviet Union to spend scarce resources on counters without increasing the threat to the United States.
identify your strengths and weaknesses, assess the opportunities and risks (your opponent’s strengths and weaknesses), and build on your strengths.
Many bad strategies are just statements of desire rather than plans for overcoming obstacles.
describing a destination is no substitute for developing a comprehensive roadmap for how the country will achieve its stated goals.”
Fluff is superficial restatement of the obvious combined with a generous sprinkling of buzzwords.
A strategy is a way through a difficulty, an approach to overcoming an obstacle, a response to a challenge.
If you fail to identify and analyze the obstacles, you don’t have a strategy. Instead, you have either a stretch goal, a budget, or a list of things you wish would happen.
A strategy is like a lever that magnifies force. Yes, you might be able to drag a giant block of rock across the ground with muscles, ropes, and motivation. But it is wiser to build levers and wheels and then move the rock.
When a leader characterizes the challenge as underperformance, it sets the stage for bad strategy. Underperformance is a result. The true challenges are the reasons for the underperformance. Unless leadership offers a theory of why things haven’t worked in the past, or why the challenge is difficult, it is hard to generate good strategy.
Why not forgo the arguments and do all three? There were two reasons. First, if one has a policy of resolving conflict by adopting all the options on the table, there will be no incentive for anyone to develop and sharpen their arguments in the first place. Only the prospect of choice inspires peoples’ best arguments about the pluses of their own proposals and the negatives of others’. As in the law, disciplined conflict calls forth stronger evidence and reasoning.
When a strategy works, we tend to remember what was accomplished, not the possibilities that were painfully set aside.
The transformational leader, they argued, unlocks human energy by creating a vision of a different reality and connecting that vision to people’s values and needs.
Strategy is the craft of figuring out which purposes are both worth pursuing and capable of being accomplished.
The mission of the Department of Defense is to “deter conflict—but should deterrence fail, to fight and win the nation’s wars.” It would be hard to find anyone who would argue with this, but it would also be equally hard to find anyone informed by it. A waste of print.
It is difficult to see any actionable element in this fluffy admonition. By contrast, the more specific “strategy” to (somehow) push the graduation rate up from 57 to 62 percent is clearly achievable.
A great deal of strategy work is trying to figure out what is going on.
At a minimum, a diagnosis names or classifies the situation, linking facts into patterns and suggesting that more attention be paid to some issues and less to others.
A diagnosis is generally denoted by metaphor, analogy, or reference to a diagnosis or framework that has already gained acceptance.
In business, most deep strategic changes are brought about by a change in diagnosis—a change in the definition of the company’s situation.
Strategy is visible as coordinated action imposed on a system. When I say strategy is “imposed,” I mean just that. It is an exercise in centralized power, used to overcome the natural workings of a system.
Folly
One of a leader’s most powerful tools is the creation of a good proximate objective—one that is close enough at hand to be feasible. A proximate objective names a target that the organization can reasonably be expected to hit, even overwhelm.
every organization faces a situation where the full complexity and ambiguity of the situation is daunting. An important duty of any leader is to absorb a large part of that complexity and ambiguity, passing on to the organization a simpler problem—one that is solvable.
Many leaders fail badly at this responsibility, announcing ambitious goals without resolving a good chunk of ambiguity about the specific obstacles to be overcome.
What one single feasible objective, when accomplished, would make the biggest difference?
“To fly a helicopter you’ve got to constantly coordinate the controls: the collective, the cyclic, and the pedals, not to mention the throttle. It is not easy to learn, but you’ve got to get on top of it. You’ve got to make it automatic if you’re going to do more than just take off and land. After you can fly, then you can learn to fly at night—but not before! After you can fly at night with ease, maybe then you’re ready to learn to fly in formation, and then in combat.”
To concentrate on an objective—to make it a priority—necessarily assumes that many other important things will be taken care of. PJ was able to concentrate on the coordination between his helicopter and the rescue vessel because he already possessed layer upon layer of competences at flying that had become routine.
After this discussion, I came to see skills at coordination as if they were rungs on a ladder, with higher rungs in reach only when the lower rungs had been attained. Indeed, PJ’s concept of a layering of skills explains why some organizations can concentrate on issues that others cannot.
presented in their purest and most essential forms—premeditation, the anticipation of others’ behavior, and the purposeful design of coordinated actions.
adroit
In the case at hand, Hannibal was certainly not briefed by a staff presenting four options arranged on a PowerPoint slide. Rather, he faced a challenge and he designed a novel response. Today, as then, many effective strategies are more designs than decisions—are more constructed than chosen.
When someone says “Managers are decision makers,” they are not talking about master strategists, for a master strategist is a designer.
Many more interactions must be considered to find the sweet spot that gives the largest smile per dollar.
A design-type strategy is an adroit configuration of resources and actions that yields an advantage in a challenging situation. Given a set bundle of resources, the greater the competitive challenge, the greater the need for the clever, tight integration of resources and actions. Given a set level of challenge, higher-quality resources lessen the need for the tight integration of resources and actions.
Own the original patent on the plain-paper photocopier, or own the Hershey’s brand name, or the Windows operating system franchise, or the patent on Lipitor, and there will be many years during which profits will roll in almost regardless of how you arrange your business logic.
When the profits roll in, leaders will point to their every action with pride.
To see effective design-type strategy, you must usually look away from the long-successful incumbent toward the company that effectively invades its market space.
Good strategy is design, and design is about fitting various pieces together so they work as a coherent whole.
