The Problems with Traditional Strategy Formulation Approaches
I think the supporting evidence for my findings lies in the fact that most companies either:
- Don’t undertake strategy formulation initiatives unless they feel they have to (e.g., 5 or more years have passed since they last conducted a strategy session, or the current strategy is clearly not working!)
- Do undertake strategy formulation regularly and rigorously (typically annual), with a detailed process spanning many weeks and taking lots of time. When they are through the effort, everyone breaths a big sigh of relief, and gets back to work – and to executing against the original strategy!
Those in camp 1 above often engage strategy consulting firms. Nothing inherently wrong in that, except that it can be a high cost route that ends in a good strategy that either:
- Does not fit the firm’s capabilities particularly well, or…
- Does not get sufficient engagement with those in the firm who must understand, buy into and execute against the new strategy.
Those in camp 2 above usually have a full time strategy organization – a small, but expensive group of bright folk who need to justify their existence. Nothing inherently wrong in that, either, except that:
- The results are often less than inspiring. They do a good job going through the motions, but the thinking isn’t really very strategic, nor the goals very ambitious.
- The results typically do not get sufficient engagement with those in the firm who must understand, buy into and execute against the new strategy.
Strategy Formulation as a Continuous Process
I believe much better results can be achieved if strategy formulation becomes:
- A continuous process.
- A firmwide capability – a strength, even!
- A collaborative process.
We are living in unprecedented times. Uncertainty and change are everywhere. Market conditions can change overnight. The globally interconnectedness of everything creates a complex environment that behaves in unpredictable ways.
New Possibilities Enable Continuous Strategy
At the same time complexity has increased and predictability decreased, information technologies create new possibilities for a very different approach to strategy formulation:
- From an event to a continuous process enabled by the Internet
- From a “canned” exercise for the select few to a “social” exercise for the many – employees, customers, suppliers, partners
- From lengthy “big bets” with high uncertainty to rapid “business experiments” with low risk
- From a dearth of data to help evaluate strategic options to a plethora of powerful business analytics, predictive modeling and simulation tools to help bring strategy formulation and execution together into a rapid learning model
Some of today’s fastest growing companies have figured this out and are quietly, but aggressively honing their continuous strategic capabilities. Meanwhile, the large majority of companies are stuck in the old paradigm – afraid to open up the strategy process – just when the need for a shot of innovation and fresh thinking are matters of survival!
What do you think? Are you in a company that is successfully moving to a more continuous approach to strategy? Should your company be doing more to make strategy continuous? How can you help achieve this?
- Why do well-formulated strategies fail so often? (normanmarks.wordpress.com)
- Top Ten Management on Strategy-focused Organizations: An Overview of How a Focus on Strategy Can Lead to Corporate Success (bizcovering.com)
- Accepting and Embracing Uncertainty (collings.co.za)