A smart business strategy stands out. You can almost hear it, like a mosquito buzzing near your ear, as you are dozing off.
Perceptive strategy is likely not the obvious approach. But how do you get to that insightful line of attack, that others did not see?
Start with the problem your business faces. Start with the essence of the dilemma confronting the organisation. Don’t start with goals, like “increasing net profitability by 10 percent”.
And, don’t begin by crafting some glorious dreamy blue sky ‘walk on water’ vision and mission statement.
“A well-defined problem is 90 percent solved,” thought Albert Einstein. The first steps are to delve into the essence of what is happening. What strategist Richard Rumelt calls ‘The Crux’ in his landmark 2022 must- read book, of the same name. The McKinsey Quarterly called Rumelt the ‘strategy’s strategist’ and “a giant in the field of strategy.”
Remember: a strategy is not a plan; a plan is not a strategy. Despite carelessly being lumped together, the two are very different things.
With the aim of being the equivalent of politically correct, managers like to dress up the word ‘problem’, calling it a ‘challenge’.
“A strategy is a mixture of policy and action designed to surmount a high-stakes challenge. It is not a goal or wished-for end state. It is a form of problem-solving, and you cannot solve a problem you do not understand or comprehend. Thus, a challenge-based strategy begins with a broad description of the challenges – problems and opportunities – facing the organisation.
They may be competitive, legal, due to changing social norms, or issues with the organisation itself. As understanding deepens, the strategist seeks the crux – the one challenge that both is critical and appears to be solvable.
This narrowing down is the source of much of the strategist’s power, as focus remains the cornerstone of strategy,” writes Rumelt in The Crux.
In the diagnosis phase of strategy creation, this ability to focus on the key leverage point drivers is like a muscle that becomes stronger with time.
Diagnosis is going to consist of managers crunching the numbers, both for the overall corporate strategy and in their business unit, including looking out at the competition, asking who is doing what? What is working, what is not? What is global best practice?
It pays to be a touch more scientific, applying inductive thinking, making a best guess, saying this is the hypothesis, this is what we think is happening.
Then doing the research, to prove or disprove the hypothesis. Helps to have an outside objective guide in this process, to keep everyone honest.
And, to keep probing, asking difficult questions, that managers may be afraid to raise. Cut out the fluff, the noise. Avoid using high-sounding business jargon, that hides more than it reveals.
Is the strategy diagnosis easy? No, it is tricky, it requires real work. Planning is easy, but crafting a genuine strategy will make anxious managers sweat.
A little workout is not a bad thing. Managers need to exercise what Agatha Christie’s Belgian detective Poirot called “those little grey cells”. In many ways, managers need to be like Poirot, noticing clues that others failed to observe.
As Rumelt mentions, the strategy creation process is an exercise in problem-solving. Helps to make things visual, setting out on a flip chart, a logic tree of what one thinks is happening, mapping the thinking out, following the branches. Yes, there will be some dead ends.
And, some more promising possibilities.
All of this one has to be MECE (mutually exclusive, collectively exhaustive). In other words: the points should be distinct, and cover everything.
While the strategy creation process may appear a touch complicated in the beginning, gradually as managers go through the steps, in an ‘atomic habits’ small steps forward like way, things become clearer, and more simple.
Steve Jobs put it best when he said: "When you first start off trying to solve a problem, the first solutions you come up with are very complex, and most people stop there. But if you keep going, and live with the problem and peel more layers of the onion off, you can often times arrive at some very elegant and simple solutions.”
