Strategy should be aimed at long-term value creation. In the current volatile, uncertain, complex, and ambiguous world, strategy as we have known it is dead! In this VUCA world, there can be no distinction between strategy and execution: there is a need for ongoing trial and error, as well as for experimentation and close observation of customers, business, and market behaviours. A need for strategy-as-learning. Strategy as an ongoing process — strategising.
By Paul Verdin
Strategy is dead
I increasingly believe that strategy has hit a difficult turning point as a field. From an academic point of view, it’s important to analyse the contributions and of course the shortcomings of more traditional concepts.
It has occurred to me that we need to be more aggressive in our approach to strategy, and perhaps even start from the observation that “strategy as we have known it is dead”! We all know that the ‘old’ strategy concepts don’t apply any more, but we’re often not bold enough to ask ourselves what a contemporary strategy should look like.
Strategy-as-learning
Strategy should target long-term value creation. In the current world which is increasingly uncertain, complex, and ambiguous, there is a need for ample trial and error, as well as experimentation and close observation of customers, business, and market behaviours. This means we have to be open; we have to be able to tolerate a significant amount of uncertainty and risk in the process. In our research we see that strategy is typically something that comes from the top down, but it is becoming increasingly important for it to be tested, adapted, and experimented on in the field. For that to happen, we need to practice a whole new notion of strategy.
Our observation is that people in boardrooms and C-suites are still often locked into the mindset of a ‘command and control’ strategy approach. Even those companies that have seen the light and have started to embrace the ‘Spotify approach’ to strategy-as-learning, all too often still manage the process in a ‘command and control’ fashion. Which is, of course, inherently contradictory.
Strategy-as-learning means we must also move away from an over-emphasis on objective targets that are cast in concrete and set out for the next year or budget. We should be setting a sense of direction, providing the resources, and making sure we’ve created the right environment, culture, and leadership that generate the kind of experimentation necessary for value creation.
Executive teams without all the answers - that’s ok
This change in strategy approach may make the CEO and board members uncomfortable, as their roles seem unclear and need to be redefined. Indeed, their role in this process should be to create the kind of environment where experimentation, creation, and learning is supported, encouraged, and rewarded.
Increasingly, we think the job of leadership is to make sure that we have the right culture in place. Their role should shift more towards identifying the relevant questions to answer and establish a framework and direction in which to operate. As opposed to saying “we know what the answers are”, it means we have to be comfortable from the top down to live in uncertainty and to admit that ‘we don’t know’.
Strategising yourself towards success
It’s a well-known fact that most strategies fail due to a lack of implementation and poor execution. Our hypothesis is that the implementation problem is actually one of our own making. We are setting ourselves up for failure if we start from the mindset that strategy is something that is designed first and then executed. Conceptually, this is quite simple, but of course the implications are enormous.
It goes right back to looking at strategy as a process of experimentation— what we call strategising — with a certain direction and framework, in which case we don’t need to make such a distinction between planning and execution. In other words, strategy is not simply something we say, plan, or design — strategy is in the ‘doing’.
The process that we use to develop strategy should involve the people that will actually execute it. We could consider that those who implement the plans should make the plans. If we do that, we have already eliminated a great deal of the implementation problem.
If strategy is influenced by the people executing it, it bridges the gap. Trusting the people in the field to contribute to the answers to big strategic questions requires a high level of trust, empowerment and delegation, moving away from the traditional hierarchical model of doing things.