How business leaders evaluate the landscape, make sense of the environment, proactively shape the opportunities they see and then decide on which course of action to take – in other words, Strategic Planning – deserves far closer attention than it has received so far.
There is a strong argument to be made for a more balanced approach – which has proven to produce superior results over time. The dilemma for most executives, of course, is in finding a balance that will produce the economic benefits they seek in a timeline beneficial to their careers.
Exploration rather than exploitation
Our company has studied the growth policies and strategic practices of some of the largest organizations in North America and we have come to believe that success is best achieved when core strategies are framed by a mindset of “exploration” rather than “exploitation”.
A strategy based on exploiting a particular product, market segment, customer group or type of technology, etc., we believe, is, I believe, fatally flawed.
One fuelled by curiosity and discovery, however, will produce a higher rate of opportunity creation than will ever be possible through exploitation.
It has been said that strategy is art and execution is science. Unfortunately, in most organizations, the creeping tentacles of “science” soon overtake the entire process. Once again, it is an example of balance being destroyed by extreme over-compensation.
To put a not so subtle point on it, you simply cannot plan for what you do not know, and what you do not know is a whole heck of a lot more than what you do know. You can’t improve the outcome by working harder to put things into even tighter, smaller, more organized boxes and over-analysing possible outcomes.
Fortunately, such a traditional Strategic Planning process may have run its course. If this is true, we need to shift the balance back towards an approach that is more appropriate to the conditions and circumstances we face.
Great strategy comes from great thinking – not more planning. So far, organizations have actually been short-changing their future while only creating an illusion of being in control, which is not possible. The more balanced and sensible thing to do is to put the majority of our effort, both physical and cerebral, into improving the Strategic Thinking process, not trying to lock down the perfect Strategic Plan that, at the end of the day, will only be as good as the thinking that goes into it anyway.
It was almost twenty years ago that Andy Grove of Intel wrote a controversial, but popular, book entitled Only the Paranoid Survive. In the book he coined the phrase “strategic inflection points” to explain how successful leaders seem to have a certain sense of timing and a knack for being able to spot just the right moment to shift position.
In fact, what Grove was talking about was the willingness and courage a leader needed to know exactly when to move on, when to leave things behind and when to take a bold step forward. Grove knew the advantage created when a leader has the confidence to shift to a new frontier right at the apex of success, rather than ride the downward curve of diminishing influence, profitability and relevance. In more recent times, Steve Jobs at Apple has taken this approach to new and braver heights and, in so doing, has become the poster boy for serial exploration.
These leaders understand the benefits of exploration and the limits of exploitation. They know that planning for an unpredictable future can only ever be the second best approach to building an organization that constantly improves its ability to sense the future.
In their recent book Deep Smarts, Dorothy Leonard and Walter Swap filled in a bit more of the emerging puzzle as to why some leaders and organizations outperform others in making choices and strategic decisions.
Just common sense
In some ways, it’s just common sense but the idea that a person’s strategic thinking ability is enhanced by the “experience repertoire” they bring with them was a revelation in clarity. It suggests that the greater the variety of experiences (not just work experience) a leader has is directly linked to the quality of the insight and thinking they bring to the table.
But if improved strategic thinking ability is the key lever to unlocking an organization’s business performance potential and if a leader’s experience repertoire enhances that ability and sharpens it to a fine point, there must be a certain set of smarts that allow it to be activated. An intellectual catalyst, if you like.
One of the things that sets the accomplished Strategic Thinker apart from the rest of us is the ability to gauge the sometimes subtle shifts in context and meaning that are the precursor to change and, therefore, emerging opportunity. This, in turn, helps the leader create the vivid image of the future that is necessary to galvanize change, overcome hurdles and shift an organization onto a new path.
Many years ago, in a different life, but in a similar period of economic turmoil (Britain during the late 1970’s), I became exposed to Royal Dutch Shell and its strong belief in the benefits of Scenario Planning as a means to guide strategic decision making. I remember being struck by how much sense it made to envisage multiple futures rather than just one and then think deeply about each in order to prepare for different eventualities. As it turns out, the good folks at Shell were way ahead of their time and have been using strategic thinking techniques since the mid 1960’s. They would argue it has been a major factor in helping them weather the vagaries and risks of the global energy markets.
A shift in the pendulum
Scenario Planning is both a process and a mental model. It is founded on a belief there simply is no certainty and, therefore, no possible way of predicting outcomes in the future. However, by having the rigour or discipline to pursue multiple possibilities at the same time, to hold multiple futures in your mind simultaneously, you achieve perspectives or clues that would otherwise be missed.
It is time for a major shift in the way leaders and their organizations go about the process of creating their business strategy. This will require a new set of tools, techniques, practices and mindsets that are better suited to the world we live in – rather than the one we thought we had before we were so rudely and dramatically inconvenienced by the shock to our system.
Truth be told, if we had practiced more of what I have tried to argue for here, we would not have been so surprised and, perhaps, would have actually seen the inevitability of the need for a shift in the pendulum, before it was too late.
About the author:
Doug Williamson is president and CEO of The Beacon Group. He leads the company’s associates in their activities to support clients and provide customized state of the art Organizational Transformation and Effectiveness Programs as well as Talent Identification and Leadership Development throughout North America and around the world.