The Association Renewal Blog

Quote of the Day

"Traditional approaches to strategic planning work fine—if you make decisions in simple strategic contexts that have only a few possible outcomes."

Jeff Cares and Jim Miskel
“Take Your Third Move First”
Harvard Business Review, March 2007, p. 20.

When you find one of those simple strategic contexts, let me know!

Simplicity and Systemic Change

One of the most consistently inspirational authors I’ve read is Peter Senge (if you haven’t read the classic, The Fifth Discipline, by now, you really should). He has an article in the MIT Sloan Management Review that is no exception. It is an article titled “Collaborating for Systemic Change,” and it looks at the challenges involved when many different organizations or stakeholders need to collaborate in order to change something really big (like a move towards sustainability in business).

He found that in order to achieve “systemic change,” the stakeholders needed to engage in three different types of work:

• Conceptual
• Relational, and
• Action driven

These three together built a healthy “learning ecology” for systemic change. I like this for a couple of reasons. First, because it is simple. I just read of a leadership framework that Senge and others developed that is also simple, and I think simplicity is critical these days (read about it on my other blog). I also like it because it resonates with the work Jeff and I have been doing around strategy (strategic thinking, strategic conversations, and strategic action).

Senge had two lessons that he drew from conceptual work that he and others were doing on sustainability. First, build community through thinking together and sharing.

When faced with difficult conceptual tasks, it is faster and easier to leave the work to small groups of experts or to outsource it to consultants or academics. But doing so bypasses the collective intelligence embedded in diverse organizations and industries and can result in output for which there is neither deep understanding nor commitment.

This is also something we confront in our strategy work. Clients often want to pare down the group that does the critical strategic thinking, and Jeff and I are pushing for expanding it. It feels more messy, but you need that understanding and commitment for the strategy to be effective.

The second lesson was to achieve simplicity without reduction.

Clarity must not come at the expense of oversimplification and trivialization of complex issues. Conceptual working groups can sometimes produce rousing action agendas that include little penetrating insight; similarly, turgid analyses of complex issues can leave people better informed, but no more able to take action.

Simplicity without reduction is a critical concept, particularly in the work of strategy. Jeff and are pleased with the strategy work we’ve been doing, but we don’t think we have been able to simplify it enough, and that is what we are working on. It is so critical to achieve BOTH the insight and the actionability. Jeff just wrote an article about simplicity in Associations Now, but look for more from us that integrates that concept into the work of strategy.

The Strategy Paradox

I posted on the Always Done It That Way blog about an column by Jeffrey Pfeffer in Business 2.0 about the “competency trap.” Related to that is a blog post by Guy Kawasaki, in which he interviews Michael Raynor, author of The Strategy Paradox: Why Committing to Success Leads to Failure (and What To Do About It). It’s a great interview (although it gets pretty deep—my brain still hurts a little), and like Pfeffer, he warns against sticking with a winning strategy.

Trying harder to craft the perfect strategic moves won’t work; companies need to more effectively manage the uncertainty that necessarily colours every strategic decision.

He argues that the essence of a winning strategy is also the essence of a great strategic failure (hence the paradox). He compares it to a broken clock—it’s technically telling you the time, but it is only doing so correctly twice a day.

Like a broken clock, a strategy that never changes gets it right sometimes, though statistically it is wrong more often than not. The iPod is Apple’s latest hit, and it’s more of the same: a cool device built around a proprietary architecture. Apple’s clock hasn’t changed; it still reads twelve o’clock. It’s just that it happens to be noon again.

It’s a good teaser, though, because there’s not enough for me to really get it. Now I want the book!

Strategy and Conflict

Late last year, Jeff sent me a white paper about strategy by Aneel Karnani at the University of Michigan, titled “The Essence of Strategy: Controversial Choices.” Knowing Jeff, I was not surprised that he had managed to find something that tied the work of strategy to being controversial!

But this really is an outstanding paper, and it is available online, for free. It touches on many different points that I think are critical to presenting a new face on strategy work in organizations (one that abandons traditional strategic planning). There are so many good quotes in it—I’ll likely do quite a few posts about it.

First, I noticed that his thesis was quite consistent with the excellent article in HBR that Lisa Junker and I have been blogging about:

Strategy consists of a set of integrated choices: the domain in which the firm will compete, the sources of its competitive advantage, the value proposition it offers to its customers, and the organizational design required to execute its strategy.  All of these choices are complicated and controversial; equally smart managers may have different opinions on these choices.  Analyses alone do not yield the answers; managers have to make difficult judgments, often in the context of considerable uncertainty.

Strategy is about choice, and you can’t separate strategy formulation from implementation. Managers “in the trenches” are faced with strategic choices along the way, so strategy is evolutionary.

But Karnani’s main point is about the controversy and the uncertainty. Equally smart people, as he notes, will come to different conclusions about what to do, because of the uncertainty. We have a tendency to turn away from those differences, or smooth them over. Disagreement about strategy reflects a “house divided,” right? Wrong:

Confronting differences is the key.  We need to bring conflict out into the open.  This is how wise trade-offs among competing alternatives can be made.  Intellectual debate among managers with divergent views is a vital source of creative and innovative solutions within the company.  Conflict is the source of creativity; dissent is the source of learning.  We learn by talking with someone with whom we disagree.  Managers must confront conflict rather than avoid it.  Conflict, of course, needs to be managed such that it is constructive and intellectual.

I might take the “and intellectual” part off the last line. The rest of his article makes clear that Karnani views the conflict as a purely rational exercise, and I think that is a mistake. It’s fine to manage emotional expression in conflict situations, but to pretend that conflict is all rational will push people to ignore the emotional component of conflict, which quickly devolves into general avoidance of conflict, which is not what Karnani is asking for (I wrote about that recently on the getmejamienotter blog).

And all of this is impacted by process. Traditional processes make two big mistakes. First, they plan based on the calendar, rather than the real-life strategic choices they are facing (there was a good HBR article a while back on this as well). This diffuses your attention. When the reason you’ve come together to discuss strategy is “It’s June,” you’re less likely to quickly identify the right issues to discuss. Second, traditional processes overemphasize analysis of the environment:

In the traditional strategic planning process, much effort is expended on analyzing the environment (political, economic, social and technological), the industry, the competitors, the customers, and the company.  Several different frameworks may be used for these analyses: Porter’s Five-Forces, SWOT, McKinsey’s 7-S’s, generic strategies, core competencies, balanced scorecard, and EVA (economic value added.)  Yet, the problem is that these analyses are not tied to a specific strategic choice the company faces and hence, the time and effort spent is scattershot and wasteful.  Many of the analyses produced have no impact on the actual choices the company makes.  No wonder that many firms are disillusioned with their strategic planning.

The “scattershot” approach doesn’t focus on the real choices you face, so you are less likely to pinpoint those key conflicts that need to be discussed.

Comments and Llamas

One of the downsides of RSS feeds, or even email subscriptions to blogs, is that it is easy to miss the comments. I often forget to actually check out the sites in the blogs I read in order to read the comments, because they are often very good.

For example, if you haven't read the comments to my last post, you will have missed a good one and, more importantly, you will have missed the connection between strategic planning and raising llamas!

Oy...

...my creaking bones. 

What's next?  Joining AARP?  Oh wait, I already did that.

It's really all downhill from here.

Strategy as Decision and Choice

Lisa Junker on the Acronym blog points to a great article in the February HBR about strategy. The authors (Bower and Gilbert) point out that in large organizations, the decisions of large numbers of middle managers (particularly as they allocate resources) are collectively more powerful in driving strategy than the corporate leaders are when they write up their strategic plans.

Amen.

Junker quotes the authors who point out that “how business really gets done has little connection to the strategy developed at corporate headquarters.” This is an easy quote. It is guaranteed to make the strategic planners squirm.

But I like the quote just before it that she didn’t mention:

Senior executives, divisional mangers, and operational managers all play a role in deciding which opportunities a company will pursue and which it will pass by (a reasonable definition of “strategy” in the real world).

This is huge to me, and hugely missing in associations. Strategy is not about plans. Strategy is about decisions and choice, not all of which are made by the CEO or the Board. Plans, however, do not offer choice. In strategic planning, a small group of people makes all the choices, and then you’re done for the year.

Yes, senior leadership must make choices, but strategy evolves over time and (as the article states) it is shaped by choices made by many different people along the way (even people outside of your organizational structure). The goal should not be a plan. The goal should be increased capacity to make strategic choices well (including at the top), and to base those choices on high-quality strategic conversations at every level of the organization.

And I can’t stress this enough: strategic plans inhibit that goal. Whether they are intended to or not, strategic plans shut down conversation and remove choice. They effectively REDUCE strategic capacity in the organization.

I know the community is starting to evolve strategic planning to be more iterative and to make the plans “living documents” and the like, but personally I am not confident that those well-intended changes to strategic planning are going to get that process over this hump. I am afraid you’ll still end up short of the mark. Still missing important opportunities because the plan hadn’t considered them. You won't die if you do a strategic plan, but I'm skeptical that you'll reach your potential.

Jeff and I don’t say, “strategic planning is dead” just to be provocative. We’re serious. The association community can do better.