Making the Strategy Process Work

In a large scale research project of over 1300 organizations in the UK, Hodgkinson et al (2006, Long Range Planning) found that the majority of strategy workshops relied on discursive rather than analytical approaches to discussion and did not involve middle managers, reinforcing the elitist approach to strategy so often seen in many organizations. The very essence of the idea that strategy can be developed by a few at the top has been questioned in this paper but to think this can be done over the course of a few retreats or sessions is in direct opposition to the concept of strategy being emergent and coming from within the business. Something Robert Grant (author of Contemporary Strategy Analysis) calls planned emergence. British cybernetician, Ross Ashby, states that variety must be met with equal variety (The law of requisite variety). Given the nature of variety and complexity in VUCA environments, how is it feasible that the collective knowledge of a few senior leaders can match the collective wisdom of the crowd? That is the collective intelligence of the whole organization – the simple answer is it cannot!

Perhaps this quote (by one of the individuals interviewed from the study of Hodgkinson and colleagues) may sum up the frustrations of many involved in such processes:

‘‘Strategy in my organisation is conceived as top-down command and control in a highly centralised organisation. As such the strategy process is a charade that does more to alienate colleagues than involve them. Consequently, I consider my organisation to be a very poor one that is going nowhere. The strategic incompetence of senior managers is staggering.’’

This does not necessarily mean workshops are of no value but perhaps the way they are envisaged and used needs rethinking. Organizations must also think how they will avoid the ‘effectivity paradox’ where the very separation that workshops foster inhibits the transfer of ideas and plans back to everyday work situations (Macintosh et al, 2010).

Some ideas for improving workshop outcomes:

• Involve more stakeholders but determine the right point of entry
• Use an external facilitator who can set guidelines, rules of engagement and can also provide some objectivity
• Use workshops to bring together emergent strategy perspectives rather than trying to ‘formulate’ strategy once a year in a vacuum
• Use ad hoc strategy discussions as needed based on industry changes
• Use a broader range of analytic techniques beyond typical SWOT or industry analysis frameworks such as those with a learning or cultural lens
• Use them for building relationships and communicating with middle managers
• Use visualization techniques and tools
• Plan thoroughly in advance and set clear objectives for the process and outcome
• Create and ensure psychological safety to surface divergent views
• Avoid death by PowerPoint and think of more creative data sharing and codification
• Get the size and composition of the group right
• Ensure normally dominant voices are not permitted to dominate proceedings
• Do not let politics and vested interests divert the objectives
• Distance the workshop from every day organisational rituals/norms both physically and metaphorically but balance that with being able to implement
• Be willing to iterate on the spot if the process does not seem to be working
• Ensure formulation and execution are discussed in tandem
• Get the cadence, length and total time period right

In a McKinsey article from 2014 (Rethinking the Role of the Strategist), the authors suggest that strategy processes and the role of the strategist must change. They found that organizations which deemed themselves as very effective developers of strategy and had higher levels of profit than their peers were twice as likely to review strategy on an ongoing basis. This fits in with another McKinsey piece from 2012 (The Social Side of Strategy) that effective organizations seem to be transforming strategy development into an ongoing process of ad hoc, topic-specific leadership conversations and budget-reallocation meetings conducted periodically throughout the year. Some organizations have even instituted a more broadly democratic process that pulls in company-wide participation through social-technology and game-based strategy development.

What is Strategy (Source: authors own analysis)

In a Sloan Management Review article from 2003 (The Real Value of Strategic Planning), the authors suggest that strategic planning is one of the most important tasks for senior corporate and business-unit executives. Companies whose processes look more like tribal rituals waste valuable executive time at a minimum; more seriously, they may leave corporate leaders unprepared to respond properly when the inevitable moments of truth arise. When repositioned as a learning process, formal strategic planning can help managers make solidly grounded strategic decisions in a world of turbulence and uncertainty.

One of the key areas they highlight is how strategic conversations should be conducted. This is central to the success of strategy processes because communication and conversation determine what is actually discussed and what is ‘acceptable’ in terms of surfacing assumptions and challenging mental models. There is a growing body of evidence that decision processes have a major impact on the outcomes of strategy making. In the case for behavioral strategy, Dan Lovallo and Olivier Sibony (McKinsey Quarterly, 2010) discuss ways that organizations can de-bias decision making. They highlight some very insightful biases and ways these can be addressed to minimize their impact such as pattern recognition biases (where an execs previous experience boosts the odds they rely on analogy that is misleading) and action oriented biases that can be addressed by distinguishing between decision meetings and implementation meetings. The authors go on to describe 4 steps to implementing behavioral strategy:

1. Decide which decisions warrant the effort in surfacing and managing biases
2. Identify the biases most likely to affect crucial decisions
3. Select practices and tools to counter the most relevant biases such as using data to combat pattern recognition bias
4. Embed practices in formal processes such as capital investment approval processes or R&D reviews

These ideas and discussions are part of broader movement in strategy known as strategy as practice which is concerned with the micro level social interactions and processes that characterize strategizing.