Which of the 8 policy definitions do you use?
Despite all that is written about the strategy and how much money is spent on it, academics and consultants continue to report chronic failures in practicing the strategy:
I argue that one of the reasons for the failures is that the strategy is not yet fully defined. I have collected 75 strategy concepts and definitions from authorities in several fields (see emergentapproach.com/supplement). The opinions of the authors vary considerably, but the majority of what they offer as a definition of strategy can be summarized in eight concepts:
- What is long term, big or important?
- Master plans (frameworks)
- Defined by requirements
- Models and actual results
- Rules and policies
Aspirations, the first category, including goals, visions, or missions, cannot be strategies because strategy serves to achieve aspirations. However, many strategies consist of lists of sub-goals organized into “strategic themes:”
Such lists are seductive because they give the illusion of improving all aspects of the business. But the granularization of the general objectives in sub-objectives does not inform the organization on how to make coherent decisions in relation to the global aspirations.
In many definitions, strategic is equated with something long-term, big Where important. But your aspiration, not your strategy, determines the time horizon, size and importance of your business. If you aspire to achieve something in 10 months, your strategic horizon is 10 months. Defining the strategy as “long-term” can mislead people into believing that the strategy is irrelevant in turbulent times. Yet turbulent times are precisely when a steering strategy is needed.
The third definition is strategy as plans. A plan is a planned set of actions; do something on a specific date. Plans are valuable for coordination and synchronization, roadmap and actual testing of a strategic framework, but they cannot be strategies because they do not give enough real-time guidance to the organization to take consistent decisions. Strategy as plans also implies that you know in advance how to move from your current state to your future state. Yet military wisdom says that a plan never lasts longer than the first engagement with the enemy – a strategy should last longer than the first engagement. These are plans that are not useful in turbulent times.
The fourth definition is a broader sense of “plan” which means the collection not only of plans as future actions, but also of tactics, scenarios, value propositions, organization and budgets, metrics and even of aspirations – collectively describing “what the organization wants”. to be and how to get there. It’s a strategic frameworkalso called a master plan or one strategic plan. Often the only element missing from the “strategic plan” is the strategy.
Michael Porter presented the fifth definition of strategy in his groundbreaking 1996 article What is Strategy? Yet he never really defines the strategy. He never says a strategy is a ________. He states that strategy is what gives a company a unique competitive position and that it must create a match between the various functions of an organization and other requirements. But the requirements, as important as they are, do not define the strategy. An automotive engine may need to be efficient, easy to manufacture, and weather-resistant, but that doesn’t define an engine. There may also be requirements for the car’s air conditioner. The strategy is defined by its function.
The sixth definition of strategy is the idea of choice or the act of making choices. Certainly, deciding on a strategy that meets important requirements, such as those established by Porter, is a choice, a difficult choice with difficult trade-offs. But every element of your framework (goals, missions, metrics, tactics, budgets, plans, organizational structure, vendors, etc.) is also an important choice. So there must be something more than a “choice” to define the strategic element. Also, a strategy must be a tangible concept that the organization can internalize, and not an act.
Strategist Henry Mintzberg established the seventh definition of strategy. In his frustration that leaders don’t see the disconnect between what people say about their strategy and what actually happens, he defined strategy as a pattern or actions taken. Mintzberg has been a leading voice in demanding an adaptive view of innovation. However, a strategy guides decisions and actions to achieve aspirations; they are not future models or the choices themselves. For a strategy to have value, you must state it before the results are available, even if the strategy changes frequently. Also, just because employees don’t buy into a strategy doesn’t mean it isn’t a strategy.
The eighth of the concepts proposed in the literature leads to the true definition of strategy. A strategy is a rule, or more precisely (closely aligned with Richard Rumelt’s “central policy”) a strategy is the central rule of a framework, designed to unify all decisions and actions aimed at removing the bottleneck to achieving aspirations. If the strategy rule is met, the probability of fulfilling aspirations increases.
Rules may seem the opposite of what would lead to creativity and innovation. They can evoke bureaucracy. How could the rules lead to innovation, diversity, growth and novelty? Yet rules are powerful catalysts for adaptation and freedom, as they provide real-time guidance for decision-making without undue constraint. Plans and sub-goals indicate what needs to happen; rules can specify the limits of what cannot or must not happen. Plans are prescriptive, rigid, requiring forecasts and details. The rules leave people free to discover the future.
So instead of lists of sub-goals and blueprints, designing a real strategy rule will force you to face what is stopping you from making progress against your overall aspirations – the bottleneck. If your aspiration is to expand into new regions and the bottleneck is that your product line has become too complicated and bloated and therefore expensive, your policy rule may require you to stop serving customers, applications or specific regions. If the bottleneck is that you don’t have the right products or the right presence in the new target region, your rule may require you to donate equity to secure a partnership. If your bottleneck is a lack of staff with digital capabilities and you need to implement digital in existing and new regions, you may need to create a strategy that limits the number of people you are willing to pay and how many programs you can authorize. in R&D, manufacturing and other functions.
Either way, a true policy rule will have painful trade-offs. If not, it’s not a strategy. And a real strategy may not look interesting to someone looking from the outside if they don’t see what you’re up against. Generating a list of sub-goals avoids the pain of trade-offs and dilutes focus on the bottleneck. When everything counts, nothing really matters.
Of course, the design of a strategic framework and all its components goes far beyond this, but the diagnosis of the bottleneck and a central rule to fix it are essential to focus resources.
Written by Pierre Compo.
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