Tuesday, May 26, 2020

Is Your Strategy Bad? A Simple Checklist

Is Your Strategy Bad? A Simple Checklist
Recognizing good strategy is hard. 

You need to understand the organization, the market(s) it is operating in, its competitors, its strengths, and its challenges.

On the other hand, recognizing bad strategy is easy.

Richard Rumlet coined the term “bad strategy” in 2007 at a short Washington, D.C., seminar on national security strategy. He later explained the concept in detail in his must read book “Good Strategy Bad Strategy”. He is one of the world’s most influential thinkers on strategy and management and has always challenged dominant thinking.

Bad strategy is not the same thing as no strategy or strategy that fails rather than succeeds. It is an identifiable way of thinking and writing about strategy that is, unfortunately, still practised at many organizations. 

Bad strategy is long on goals and short on policy or action. It assumes that goals are all you need. It puts forward strategic objectives that are incoherent and, sometimes, totally impracticable. It uses buzzwords and phrases to hide these failings.

Once you develop the ability to detect bad strategy, you will dramatically improve your effectiveness at judging, influencing, and creating strategy. 

To detect a bad strategy, look for one or more of its four major signs:

1) Bullshit bingo

Rumlet calls it fluff, which is a nicer way of saying the same. Fluff is a restatement of the obvious, combined with a generous sprinkling of buzzwords that masquerade as expertise to create the illusion of high-level thinking. 

Guy Kawasaki has written extensively about this in his excellent book on startups “The Art of the Start” and brings the illustrative example of Wendy’s.

“The mission of Wendy’s is to deliver superior quality products and services for our customers and communities through leadership, innovation, and partnerships.”

Don’t get me wrong. I love Wendy’s, but I’ve never thought I was participating in “leadership, innovation, and partnerships” when I ordered a hamburger there.

2) Failure to face the challenge

A strategy is a way through a difficulty, an approach to overcoming an obstacle, a response to a challenge. If the challenge is not defined, it is difficult or impossible to assess the quality of the strategy. And, if you cannot assess that, you cannot reject a bad strategy or improve a good one.

For example when a leader characterizes the challenge as underperformance, it sets the stage for bad strategy. Underperformance is a result. The true challenges are the reasons for the underperformance.

If you fail to identify and analyze the obstacles, you don’t have a strategy. Instead, you have either a stretch goal, a budget, or a list of things you wish would happen.

3) Mistaking goals for strategy

Many so-called strategies are in fact goals. “We want to be the number one or number two in all the markets in which we operate” is one of those. 

It does not tell you what you are going to do; all it does is tell you what you hope the outcome will be. But you’ll still need a strategy to achieve it.

Many bad strategies are just statements of desire rather than plans for overcoming obstacles.

4) Bad strategic objectives

A strategic objective is set by a leader as a means to an end. Strategic objectives are “bad” when they fail to address critical issues or when they are impracticable.

A long list of “things to do,” often mislabeled as “strategies” or “objectives,” is not a strategy. It is just a list of things to do. Such lists usually grow out of planning meetings in which a wide variety of stakeholders make suggestions as to things they would like to see done.

Rather than focus on a few important items, the group sweeps the whole day’s collection into the “strategic plan.” Then, in recognition that it is just a big pile of random objectives, the label “long-term” is added so that none of them need be done today.

Others may represent a couple of the firm’s priorities and choices, but they do not form a coherent strategy when considered in conjunction. For example, consider “We want to increase operational efficiency; we will target Europe, the Middle East, and Africa; and we will divest business X.” These may be excellent decisions and priorities, but together they do not form a strategy.

Good strategy, in contrast, works by focusing energy and resources on one, or a very few, pivotal objectives whose accomplishment will lead to a cascade of favorable outcomes. It also builds a bridge between the critical challenge at the heart of the strategy and action—between desire and immediate objectives that lie within grasp. 

Thus, the objectives that a good strategy sets stand a good chance of being accomplished, given existing resources and competencies.

Why do we see so much bad strategy?

Bad strategy is everywhere around us. Rummelt offers three reasons for this.

Unwillingness or inability to choose

Any strategy that has universal buy-in signals the absence of choice. Because strategy focuses resources, energy, and attention on some objectives rather than others, a change in strategy will make some people worse off and there will be powerful forces opposed to almost any change in strategy. 

For example a department head who faces losing people, funding, support, etc., as a result of a change in strategy will most likely be opposed to the change. 

Therefore, strategy that has universal buy-in often indicates a leader who was unwilling to make a difficult choice as to the guiding policy and actions to take to overcome the obstacles.

Template-style “Strategic Planning” 

Many strategies are developed by following a template of what a “strategy” should look like. Since strategy is somewhat nebulous, leaders are quick to adopt a template they can fill in since they have no other frame of reference for what goes into a strategy.

These templates usually take this form:

> The Vision: Fill in your vision of what the school/business/nation will be like in the future. Currently popular visions are to be the best or the leading or the best known.

> The Mission: Fill in a high-sounding, politically correct statement of the purpose of the school/business/nation. Innovation, human progress, and sustainable solutions are popular elements of a mission statement.

> The Values: Fill in a statement that describes the company’s values. Make sure they are noncontroversial. Keywords include “integrity,” “respect,” and “excellence.”

> The Strategies: Fill in some aspirations/goals but call them strategies. For example, “to invest in a portfolio of performance businesses that create value for our shareholders and growth for our customers.”

This template-style planning has been enthusiastically adopted by corporations, school boards, university presidents, and government agencies. Scan through such documents and you will find pious statements of the obvious presented as if they were decisive insights. The enormous problem all this creates is that someone who actually wishes to conceive and implement an effective strategy is surrounded by empty rhetoric and bad examples.

New Thought

The New Thought movement is a movement that developed in the United States in the 19th century, considered by many to have been derived from the unpublished writings of Phineas Quimby. 

It is the belief that you only need to envision success to achieve it, and that thinking about failure will lead to failure. The problem with this belief is that strategy requires you to analyze the situation to understand the problem to be solved, as well as anticipating the actions/reactions of customers and competitors, which requires considering both positive and negative outcomes. 

Ignoring negative outcomes does not set you up for success or prepare you for the unthinkable to happen. It crowds out critical thinking.

In a nutshell: Bad strategy is not simply the absence of good strategy. 
Posted on Tuesday, May 26, 2020 by Henrico Dolfing