Back to the Future: Rethinking Strategy
Jamie Dimon, CEO of J.P. Morgan Chase was quoted in Fortune (January 26, 2009) as saying, “I am shocked at the number of people who are still worrying about their strategic plan for 2009. We cancelled all that stuff – all of it”. That this is precisely the problem with strategic planning – due to the investment, in every sense, to the plan, we are reluctant to jettison it when required to do so. The response to situations that cry out for the abandonment of ‘the plan’ is to tweak, adjust and double our efforts. Invariably this merely results in digger our hole deeper and faster than ever. The global economic meltdown demanded a rethink of how we go about securing a competitive advantage, how we measure ourselves, what it is we need to be doing and why. Overnight the old rules of the game simply imploded and many were left clinging the ‘plan’, formulated in the context of the ‘old rules’ but now rendered as helpful as a toothpick in a gun fight.
The problem is, we have forgotten how to think. Reliance on our ability to plan, and specifically on Porter’s conventional wisdom as to how best to go about the formulation of that plan, has produced ‘lazy thinking’ habits within executive teams and amongst leaders. We have been so used to marching to a known tune, that when the tune changes, or the music stops altogether, we simply keep on marching in-step. The signs have been there for some time we merely ignored them: Inquisitiveness, questioning, learning, experimenting, reflecting, embracing diversity and paradox and conversations have all been neglected or worst still, intentionally sacrificed on the alter of expediency, efficiency, standard practice, tradition, conventional wisdom and known methodology.
An over-dependence on the ‘Porter’ way to strategic planning has dulled the senses and when things changed, leaders and organisations were poorly equipped to respond. “When the tide of growth goes out, you see who has been swimming naked” said Warren Buffett, and he is right. The problem with the way in which we have gone about strategic planning is that the plan is formulated by a few (at the top) and then given to the many to implement. Few large corporations have meaningful ways to engage the hearts and minds of all and whilst there are possibly technical and logistic challenges to pursuing this path, the main obstacle is one of mindset. Lacking conviction when considering the effort involved coupled with questioning whether any significant insights would emerge present formidable roadblocks to this direction being pursued. If it is true that less that 10% of strategic plans formulated get implemented, then serious questions have to be asked concerning the mindset and practice underpinning conventional wisdom in this important area of business. I suspect we know something is wrong but, for a variety of reasons, we fail to address the issue.
Someone who provides some real insight into this strategic challenge is William Duggan, a professor at Columbia University in the United States. Duggan’s ten-year engagement with this dilemma resulted in his book, Strategic Intuition in which he contrasts strategic planning with strategic thinking. In part Duggan provides a history lesson as to why it is we have build the models of strategic planning in the way we have but he also points to the way forward.
And the ‘way forward’? It is to go back in time and reclaim Carl von Clausewitz’s understanding of strategy as articulated in his book, On War, published in 1832. Had we adopted von Clausewitz’s approach to strategy we might not be in this predicament today but that of course is a moot point. The reality is we adopted Baron Antoine Jomini’s model articulated in his book, Summary of the Art of War, published in 1838. Jomini’s model provided a simple three-point plan: (1) Work out where you are – point A; (2) Work out where it is you are going – point B; (3) Work out how you will get from A to B. Current strategic planning methodology is founded on Jomini’s approach to strategy which is reliant on thorough planning based on detailed information. It makes sense, provides a sense of security and certainty… and is after all, a plan. We like to have plans! In a world where tomorrow resembled today, planning made sense but this is no longer the case, or at least not to the same extent that it once was the situation.
What is needed today is the ability to think strategically. Furthermore, it is not just a select few within the organisation that get to do the ‘thinking’, but rather the challenge is to get everybody thinking strategically. When all understand what is the overarching purpose and their role in achieving that purpose, coupled with an ability to take appropriate action (or what we might term ‘a sense of empowerment’) we have the necessary organisational DNA to undertake strategic thinking. It is not impossible but this approach to strategy will require a complete rethink as to what leadership within the organisation looks like. Exploring this terrain is not for the timid but to thrive in turbulent times organisations are going to require dynamic strategy that is adaptable. Implementing that strategy will require everyone’s buy-in and so things will need to shift.
I don’t plan to explain von Clausewitz’s points as to what we need to do in order to think strategically. These will be the subjects of further exploration in subsequent ezine articles. If you simply have to know now, then get hold of Duggan’s excellent book, Strategic Intuition and continue the journey! Hopefully this brief thought piece will engage your thinking and we will get to continue the conversation as to what it means to think strategically and how to do it – at both an individual as well as a corporate level.