The Art of Action: How Leaders Close the Gaps between Plans, Actions, and Results

by Stephen Bungay

QUICK RECAP The Prussian Army developed an operating model called Auftragstaktik which enabled it to consistently overcome the three gaps. This development began in 1806 and the first step was to change its culture by creating a meritocratic officer corps which valued independent thinking and initiative. The leader who turned the culture into a system was Helmuth von Moltke the elder, who fostered high levels of autonomy and worked out how to simultaneously achieve high alignment. His answer to the knowledge gap was to limit direction to defining and expressing the essential intent; he closed the alignment gap by allowing each level to define what it would achieve to realize the intent; and he dealt with the effects gap by giving individuals freedom to adjust their actions in line with intent. The result is to make strategy and execution a distinction without a difference, as the organization no longer plans and implements but goes through a “thinking–doing cycle” of learning and adapting. Such a model will only work if people are competent and share basic values. Von Moltke invested considerable resources, including his personal time, in developing people, an activity centered on the War Academy. The principles of Auftragstaktik have since been adopted by armed forces across the world, particularly those of NATO, under the name “mission command.” The model is scaleable and transferable, and it is robust because it is not a new idea but a set of practices which evolved ove...

Strategy is a framework for decision making, a guide to thoughtful, purposive action

Why does a business need a strategy in the first place? As a collective enterprise, a business organization needs to act cohesively.

A business is a collective enterprise that has to prosper in a competitive environment.

The fundamental purpose of most businesses is to create value, often measured by – and sometimes identified with – the value created for shareholders.

The first task of the strategist is to make resources available and deploy them.

Things are different, however, in the next main task of strategy: the use of these resources on operations.

No plan of operations can extend with any degree of certainty beyond the first encounter with the enemy’s main body.1 Only a layman could imagine that in following the course of a campaign he is watching the logical unfolding of an initial idea conceived in advance, thought out in every detail and pursued through to its conclusion.

From the point at which his forces meet the enemy, the strategist meets an independent will and is engaged in Clausewitz’s wrestling match. The outcome of his actions depends on the reactions of his enemy – even if the enemy chooses to do nothing – and those reactions cannot be predicted with any degree of certainty.

During the campaign of 1870, the French hardly ever did what von Moltke expected. His pragmatic rule of thumb was to work out what his opponent’s best option was and to assume they would do that until proved otherwise. Once he was convinced that they were doing something else, he adapted his own moves accordingly. He remained calm and unruffled because he never expected his predictions to be correct.

In strategy there are no general rules or theorems of any practical value, von Moltke observes. It is not a science, and a good strategy is not enough to guarantee success:

Strategy is a system of expedients. It is more than science, it is the application of knowledge to practical life, the evolution of an original guiding idea under constantly changing circumstances, the art of taking action under the pressure of the most difficult conditions.

Von Moltke effectively rejects the notion, so well established that it is often taken as a given, that strategy is a long-range plan, standing in contrast to “operations” which are short-term actions.

Von Moltke clearly rates the value of strategy very highly, as the articulation of an “aim” which the organization’s leaders must always keep clearly in mind, and stick to whatever happens. It is not a path, but a direction. A direction could be set by giving a destination or simply a compass heading.

Doing strategy is a craft which, like all practical skills, can only be mastered through practice, by learning from our own and others’ experience.

Strategy is about fighting the right battles, the important ones you are likely to win. Operations are about winning them.

Rather than a plan, a strategy is a framework for decision making. It is an original choice about direction, which enables subsequent choices about action. It prepares the organization to make those choices.

Simpson concludes that the keys to success are “an overall sense of direction and an ability to be flexible.”

Many of the best-known strategy development tools – such as Porter’s five forces and value chain models, the matrices for displaying competitive position used by BCG or McKinsey, cost analysis, supply curves, market segmentation, and so on – are in fact tools for analyzing the situation and trying to work out what drives success. Useful though they are, they do not produce strategies. They help to sort out information, simplify the complexities of reality, and focus attention on the essentials of the situation, internal or external.

Psychologist Gary Klein has made a study of intuitive decision making. By observing experts in a given field in situations in which they made decisions, Klein realized that they did not follow the conventional “rational model” of developing and evaluating options before choosing between them. They seemed to go straight to the answer, using what appeared to nonexperts, and indeed often to themselves, to be a “sixth sense.” On analysis, the sixth sense turned out to be perfectly rational. It was based on pattern recognition. Through years of experience in their field, experts build up patterns of expectation, and notice immediately when something unusual occurs which breaks the pattern. These signals make the “right” decision obvious to them. It looks to others and feels to them to be intuitive, but the intuition is schooled, and rational. Clausewitz gives it the French name coup d’oeil, the glance of a practiced eye. Germans more usually refer to Fingerspitzengefühl, the “feeling in your fingertips.” In the Anglo-Saxon world things take place more viscerally – it is “gut feeling.” Whatever the language, schooled intuition is the basis of insight.22 It was this discipline which von Moltke mastered in his domain of military strategy.

took Komatsu some 20 years to attain an end-state which it memorably enshrined in the motto “Maru-C,” meaning to encircle – and crush – Caterpillar, the world leader in 1971 when Komatsu embarked on its journey. While the ambition seemed fantastic at the time, it was not chosen at random. In the long run, unless it were to match and overtake Caterpillar, Komatsu could not survive. Its analysis of the situation concluded that even if it stayed in Japan, Komatsu could not avoid direct competition with the world leader and that it would be heavily disadvantaged unless it faced and overcame the challenge head on. Caterpillar’s formidable capabilities specified the end-state Komatsu had to achieve. In creating it, Komatsu worked backward from there to create a series of decisive points, which Hay and Williamson characterize as the steps making up a staircase, each resting on the previous one, as in Figure 13.

QUICK RECAP A business strategy sets direction by considering both the ends to be achieved and the means of achieving them in a competitive environment. Means include execution. Strategy development and strategy execution stand in a reciprocal relationship and co-determine each other. A strategy is not in itself a plan, but prepares the organization for the future by providing it with a framework for decision making, based on some basic choices about how to compete. It is “the evolution of an original guiding idea under constantly changing circumstances.” Depending on the nature of the uncertainties in the environment, a strategy can set direction by giving a compass heading or a destination, or both. A robust strategy does not guarantee success, but shifts the odds in one’s favor. Thinking strategically involves “going round the loop” to establish coherence between aims, opportunities, and capabilities. It is a rational activity involving analysis, experience, and pattern recognition to generate insight into the basis of competition, the center of gravity of the business. Good strategies involve risk, but they are realistic, not heroic. A strategy is fundamentally an intent: a decision to achieve something now in order to realize an outcome; that is, a “what” and a “why.” Even if our destination is unclear, we need some sense of the end-state to be achieved which gives our current actions a purpose. And even if the current situation is volatile, we need to decide what to ...

In war, von Moltke wrote in his account of the campaign, one is usually only reckoning on probabilities and the balance of probability is usually that the enemy will do the right thing.6

It is a measure of von Moltke’s authority and the trust placed in him that the subordinates to whom he is issuing instructions are heirs to the thrones of Prussia and Saxony respectively. This was an age when the right of a ruler to do as he pleased was still widely accepted. Von Moltke issued his directives on the authority of the Supreme Commander – the King – but he signed them himself.

von Moltke might reasonably have wanted to find out what had been going on. He could have asked his subordinates to report immediately on the position and state of their forces, demanded casualty returns, enquired about ammunition stocks, and asked for information about the enemy. Had he done so, his armies would have stopped, turned their focus inward, and devoted their energies to information gathering. He could have effectively paralyzed his own forces by demanding more information.

He then covers another contingency. Knowing of Bismarck’s message to the Belgians, he simply states that if French forces do cross the border without being disarmed, they are to be pursued. He does not explain the diplomatic situation, he restricts himself to a clear statement of what action his commanders are to take.

Finally, in line with the disciplines he preached, he makes sure his commanders know where his headquarters will be the following day, and when it will move, so that they can backbrief before then.

von Moltke’s tactical and operational moves were informed by his strategy. But because his strategy was an intent, not a plan, its realization was the result of tactical and operational developments which were entirely unforeseen.

“Drafting orders was taken to a high art form in the Prussian Army,” writes historian Arden Bucholz, “beginning right at the start of an officer’s career at the War Academy.” The instructors, who after 1872 were led by von Moltke himself, regarded it as a specific skill which needed constant practice, and, recognizing that clarity of thinking and clarity of expression go hand in hand, they taught their students how to write with a rigor only occasionally matched and never surpassed in the Humanities departments of today’s best universities: Orders were to be clear: logically arranged, short sentences, using universally understood expressions and railroad designations – 0700 for 7 a.m. and 1900 for 7 p.m. Orders were to be precise: subordinates were to be made acquainted with the intentions of their superior. Orders were to be complete – distinguishing the part that each unit was asked to perform. Orders were to be short. The rule was that they should never contain a single word by the omission of which their meaning would not be suddenly and completely affected.

In fact, it is a skill. Nobody is born with it. Unless you deliberately practice giving direction, you are unlikely to be much good at it, no matter how talented you are.

Had Tracy been working for BA in 1995, she would have had some guidance, because the then Chairman, Colin Marshall, had a clear intent. The company had a mission statement: “To ensure that British Airways is the customer’s first choice through the delivery of an unbeatable travel experience.”

“People on the front line are the ones who ultimately create value since they are the ones who determine the kinds of experience that the company generates for its customers.”

If Peter Drucker first urged managers to manage by objectives, von Moltke could be said to have led with directives. We can take over his principles in formulating strategic intent at the highest level. Such a statement needs to contain the following: An account of the situation, bringing out the essential features which bear on the course of action to be taken. It is useful to cover the state of knowledge, distinguishing what is known, what is probable but uncertain, and what is not known but could be relevant. The description of the situation should make it clear what the implications are for what the organization has to do. It may be appropriate to include an end-state if this is quite distant – for example: “Become the market leader in domestic boilers, generating returns of X percent.” A short statement of the overall intent. This is classically stated as a task plus a purpose. In other words, what we need to achieve now and why – for example: “Strengthen service to the installer in order to gain market share.” This will represent a step toward the overall end-state. Given all the possible goals, objectives, initiatives, and priorities one could and does have, this is the real focus, the thing that lends coherence to all the others. Achieving it defines success. It answers the question everyone in the organization can and should ask of their leaders, the one which is hardest to answer. The question was once succinctly formulated by The Spice Girls: “Tell me what you w...

Each step was broken down into more specific elements, down to the level of projects.

Every organizational structure makes doing some things easy and doing other things difficult. If the structure makes doing some things so difficult that there is a conflict between structure and strategy, the structure will win.

The issue comes down to people. They are both the problem and the answer. Nothing happens unless the key people involved in it want it to, and if the top team does not stand four-squarely behind the strategy, it is doomed.

The German Army retained this ability to change structure rapidly at all levels, forming “battle groups,” often named after their commander, to carry out specific tasks. It also gave them the ability to throw together disparate forces at short notice to act as fire brigades in an emergency. It was an ability their opponents in the Second World War never mastered.

Following van Creveld’s principle, we have to structure the tasks implied by the strategy and the units responsible for carrying out those tasks in such a way that the units can perform the tasks with the available level of information. The bottom line is that organizational structure should make doing the most important things easy. That will inevitably make doing other things difficult. There are ways of compensating for that, but the basic trade-off must be made. No structure is perfect. In the light of that requirement, here are three questions to ask:

1 Can we identify organizational entities which can be made wholly or largely accountable for executing the key elements of the strategy to the extent that controls are in place to measure how well they are doing so?

2 Are the leaders of these units skilled and experienced enough to direct their units on a semi-autonomous basis and are they committed to the strategy?

3 Is there enough, but not too much, hierarchy, and does each level of the hierarchy have the decision rights it needs to play its part?

But the thinking Joe and Tracy did to align their actions with their company’s strategy was the same. The core principle of their thinking was to understand “what” and “why,” and the consequences. If you are a soldier you will call a “what” and a “why” your “mission.” If you are an executive you can call them a “goal” or an “objective,” if that is more in tune with your company’s terminology. The word I have used is “intent.” Up to a point, the words do not matter, as long as everybody knows what they mean. In some companies toward the end of the year everyone does “objective setting,” while in another they do “goal setting.” The best choice of words depends on the local usage. The term I have chosen for the overall process is “strategy briefing” and its basic structure is given in the template on page 249. It is a way of structuring thought so as to concentrate the mind on what matters now, and leave out what does not matter. It looks deceptively simple.

A briefing is not a project plan. Plans come afterward. Moreover, it assumes that some planning, at the strategic level, has already been done. Ideally, there would be a statement of strategic intent. The purpose of briefing is to enable people to act independently.

Briefing is radical in the way in which it unifies effort. The effort is directed toward a desired outcome – everybody has an ultimate goal which is defined in terms of a state of affairs to be attained in the real world. The effort is expressed as action to be taken, a task – something to be done – which will be something which makes a difference.

Before

An important corollary of unity of effort is the emphasis on clarity and simplicity. What matters about creating alignment around a strategy is not the volume of communication, but its quality and precision.

In the backbrief three things happen. The first obvious thing is that the unit being briefed checks its understanding of the direction it has received or worked out. Secondly, and less obviously, the superior gains clarity for the first time about what the implications of their own directions actually are, and may revise them as a result. Thirdly, it provides an opportunity to ensure alignment across the organization as well as up and down it.

. At each level, the starting point is the intent of the level above. Given that context, each unit has to work out its part in the plan, its own “what” and “why.” Joe’s team are typical in first putting down everything they had to do and then thinking it through, giving their activities structure, and working out priorities. They then broke this down further into the tasks it implied: identifying the critical product set; accelerating development; accelerating support and enhancement; and reducing costs. These four implied tasks laid out how they were going to achieve their overall task, and each was made the responsibility of one member of the team.

It is logical, and once one has understood that “what,” “why,” and “how” are not absolute but relative terms which depend on what level you are on, it is conceptually quite

Joe’s main effort was “accelerating development.” The company’s main effort was halting the decline in market share. By identifying this as his main effort, Joe was deciding that this was the single biggest contribution he could make to that overall intention. It meant that if he lost people mid-year because of headcount reductions, he would transfer engineers from working on enhancement and support onto development so that it should not be delayed.