Why strategy is important and what does it mean?
Strategy is one of the most powerful tools for change-leadership. Yet it is heavily misunderstood, underutilized and abused. How can a tool be used properly if it’s not well-understood?
If there was a survey of abused professional words, “strategy” would be right at the top along with “agile”, “AI” and “platform”. It is broadly used as a fancy substitute for goals, visions, decisions, tactics, policies or even fluffy dreams. In the absence of a formal definition, anything can pass as strategy.
Here’s a short list of words that are often confused with strategy:
Vision is the long-term future state an organization hopes to achieve. It is a statement of the organization's aspirations and what it hopes to achieve long term. The vision is often more focused on the future and provides a sense of direction for the organization's activities.
Mission of an organization is its overall purpose or reason for existing. It is a statement of the organization's values and the impact it hopes to have on the world. The mission is often more focused on the present and provides the framework for the organization's activities and operations.
Goals are specific, measurable targets that an organization aims to achieve in order to fulfill its mission and vision. They are the intermediate steps (usually for 1-5 years)
Objectives are specific, measurable targets that an organization sets in order to achieve its goals (usually for 1-4 quarters). Many companies use OKRs (objectives and key results) with clear metrics that can tell how the objective is doing. Different teams may have different objectives that support one overall goal.
Roadmap outlines the steps an organization will take to achieve its goals and objectives
Plan is a more concrete version of the roadmap with the time and resources
Milestones are key events or achievements that mark significant progress towards the completion of goals or objectives
Policies are fixed guidelines that direct smaller decisions on a day to day basis and establish a process
Tactics are concrete actions to fix a problem or achieve a short term objective (more on this later)
The strategy glossary digs into those definitions with some examples.
At a very high level, strategy is a tool of alignment and change leadership. Usually there are some large and long term problems without a straightforward path forward due to obstacles.
For strategy to deliver its full potential, it has to meet a certain shape and criteria.
Strategy is a big gun for big problems.
As we will see, it takes a lot of time, research, collaboration thinking and deliberate effort to create an effective strategy. In fact most things flying in the name of “strategy” don’t pass the mark and inevitably fail.
This article is the first in a series about strategy and change leadership. If you are interested in this topic, make sure to subscribe to get the latest article directly to your mailbox for free.
The polar opposite of a strategic approach is usually considered to be tactical:
Tactical approach is reactive toward an immediate problem that’s bleeding. Strategic approach proactively identifies problems to prevent bleeding from happening in the first place.
Tactical is relatively shallow, strategy takes deliberate thought and digs deep into causality and dependencies.
Tactic is concerned with short term objectives, strategy is concerned with making the best choices for the long term implications.
In panic mode, tactical reactions from different individuals/teams/departments may pull in different directions. Strategic plans align the strength of individuals, teams and departments to push against the same direction.
The difference is beautifully illustrated by the famous Ants & Grasshopper story. The grasshopper acts tactical, the ant acts strategic.
An organization that primarily runs in tactical mode can show any of these symptoms:
Heroic culture rewarding hard work to save the day
Organizational fatigue and individual burn out
Moody leadership in constant firefighting
Knee jerk overreaction to problems
Politics, lack of transparency and misalignment due to unclear goals
Short sightedness, territorialism, fake deadlines, tech debt, poor quality, unreliable systems, lack of metrics, poor SLA
You get the picture: Tactical, bad. Strategic, good!
Not so fast! 😄 Actually a good strategy aligns tactical actions as steps to reach a higher objective. The problem is when tactical is the only thing that exists and there’s no alignment. Like everything else in life, it’s about striking a balance between pragmatism and proactivity.
Our definition of strategy is based on the top seller book Good Strategy Bad Strategy: The Difference and Why It Matters. In this book, Richard Rumelt identifies 3 key elements as the kernel of a good strategy:
Diagnosis is the result of researching the problem space and identifying the key issues to solve as well as their reasoning. It answers WHY a strategy should exist? What are the symptoms and root causes? How are those root causes validated? And why are those root causes important now? This part is often missing from a bad strategy or at best is limited to an account of the status quo. A good diagnosis requires a detective hat and objective research. It is hard work but it pays back multifold. To utilize the collective “parallel processing” power of the organization, we first need to be on the same page about WHY.
Guiding policy is the high level approach to solving the identified and validated problems. The policy makes choices and gives focus to the solution and aligns the organization. It liberates the organization from going back to the drawing board for every single tactical manusia. Bad strategy fails to connect the policy (HOW) to the diagnosis (WHY).
Coherent actions lay a roadmap for implementing the solution in compliance with the guiding policy to tackle the diagnosis. It lists WHAT steps should be taken by WHO and WHEN. The keyword here is “coherent” as in: different teams and individuals take actions that fit together so we can all push in the same direction.
In reality, those three elements don’t get the same amount of attention. Bad strategy is heavy on actions (tacticals) while starving the diagnosis.
If you have limited time, energy and resources, spend them on the diagnosis. A well researched and well argued WHY encourages the organization to come up with the right actions and pack their commonalities to a guiding policy.
The following venn diagram identifies bad strategies missing one or two of those elements.
There’s actually more ways that a strategy can go wrong. Here are some examples of Pseudo-strategy:
“Fluff is a form of gibberish masquerading as strategic concepts or arguments. It uses “sunday words (words that are infrared and unnecessarily abstruse) and apparently esoteric concepts to create the illusion of high-level thinking” Richard Rumelt, Good Strategy Bad Strategy
This is common when the diagnosis homework is skipped and mere vision is sold as strategy. A good strategy is crisp and clear. If the strategy is filled with idioms, abbreviations, jargon and abstract concepts it cannot rely on everyone reading it to understand and be aligned with it.
If you can't explain it simply, you don't understand it well enough.
The effectiveness of the strategy depends on how easy it is to digest. Remember: strategy is a tool of alignment. Clear communication is the key to achieve this purpose.
A plan is not a strategy! The most important part of the strategy is the diagnosis and a plan usually doesn’t have it.
If the guiding policies section shies away from making decisions, it creates more confusion and misalignment than the strategy sets out to solve.
“Strategies focus resources, energy, and attention on some objectives rather than others. Unless collective ruin is imminent, a change in strategy will make some people worse off. Hence, there will be powerful forces opposed to almost any change in strategy. This is the fate of many strategy initiatives in large organizations. There may be talk about focusing on this or pushing on that, but at the end of the day no one wants to change what they are doing very much. When organizations are unable to make new strategies–when people evade the work of choosing among different paths into the future– then you get vague mom-and-apple-pie goals that everyone can agree on. Such goals are direct evidence of leadership's inefficient will or political power to make or enforce hard choices. Put differently, Universal buying usually signals the absence of choice.” –Richard P. Rumelt, Good Strategy Bad Strategy
The coherent actions are meant to support each other and build towards the same goal. If they don’t, the strategy fundamentally fails as a tool of building alignment.
It doesn’t matter how much time is spent on the strategy and how great it is, if it is not communicated to everyone it concerns, it is wasted effort.
A strategy is as good as it penetrates the org it impacts.
And the best time to penetrate is while the strategy is in the making. People are more likely to execute a strategy if they had a role in shaping it. Good strategy is developed transparently and collaboratively together with the people who are responsible for executing it. Alignment starts from the moment a strategy is conceived. The more participatory the process, the more likely it is to succeed.
This article is primarily about WHY and WHAT of a strategy. In the next one we’ll dig into HOW to create a strategy and use it as a tool of alignment. Here’s a sneak peek:
Kick start: how to research the potential and manifested problems and document them, assess risks, identify decisions to be made?
Rev up: how to verify the assumptions and distill the root causes collaboratively?
Pick a road: how to make the hard choices to solidify the guiding policy?
Plan the trip: how to identify coherent actions and what to measure?
Drive: how to communicate and monitor progress while correcting course to adjust to the environment?
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A plan is not a strategy.
Diagnosis is the most important part of the strategy because it answers WHY.
Strategy should make choices, no matter how tough they are.
Strategy is a tool of alignment. It is only as effective as it penetrates the organization it tries to align.
Strategy a big gun for big problems. It is concerned with long term goals.
Bad strategy can cause more harm than no strategy.
A great strategy that is hidden or poorly communicated is not different from no strategy at all.
An organization without a strategy is condemned to firefighting and tactical reactive work exhausting its energy and resources.
A good strategy aligns tactical actions as steps to reach a higher level long-term objective.
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I love your article.
The formal definition of fluffy dreams is wishful thinking, whish by the way is also a big problem in this kind of subjects, you should include it on the definitions.
Thanks so much sir, I learn a lot.