Shaping the future

Strategy is about shaping the future. Corporate strategy is about shaping the future for an organisation. You use strategy to figure out how to achieve your purpose and ambitions. You move between where you want to go (ends) and what you need to do to get there (means). Great strategy is the quickest route from available means to desirable ends to shape your future.

Frequency: Every problem, every opportunity! Key participants: The whole organisation.

Strategy rating: Strategy6

The Cheesecake Factory has grown into a billion dollar corporation. Its recipe for success is based on a small number of strategic ingredients. The founder created a ‘unique concept with the broadest, deepest menu in casual dining’ and the best cheesecake he could make. They spend $2000 per employee just on training to make sure people deliver the best customer experience.

They open new restaurants when they find wonderful new locations, rather than just because they have money to spend or bonuses to earn. They focus improvement efforts on increasing taste, with quality homemade cooking and fast preparation, rather than reducing cost. This patience and discipline is about doing what makes long-term sense.

These are strategic decisions. They are not accidental, although they did not all come from planning. They are part of a strategic package. They shape the competitive environment. They stop copycats. And they shape the future in ways that are desirable and believable to customers, investors, managers and employees.

Objective

Shaping the future of an organisation involves every part and everyone. Strategy considers things inside and outside the organ-isation that will make a difference to its success. The strategist also

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5Shaping the future

looks for opportunities and threats to the future of the organis-ation. Ideally these are explored with imagination, ambition and a creative understanding of customers, products and resources.

To shape the future requires a combination of thinking, planning and reacting to events that emerge along the way. These provide key strategy questions:

■ What do we want to do?

■ What do we think is possible?

■ What do we need to do to achieve our goals?

■ When should we react to new opportunities and adapt plans?

What do we want to do?This establishes a sense of what is desirable. Organisations tend to have an overall purpose. Sometimes the purpose is very precise and deliberately agreed. Sometimes the purpose of the organisation is very ambiguous. There may be many different opinions about what the organisation is for and what it should do. These opinions may conflict and compete with each other. This is all of interest to the strategic thinker.

What do we think is possible?This introduces some sense of practicality. You look at oppor-tunities in the world contrasted with the resources that the or-ganisation either has or can obtain. But looking at opportunities can also expand a sense of what is possible beyond what has been done in the past. What do the achievements of others and trends in technology and consumer desires allow your company to do next?

What do we need to do to achieve our goals?This includes the necessary strategic moves to achieve the overall goals of the organisation. It includes the style of leadership, the structures and processes of the organisation. And the projects, tasks, roles, products and services that have to be done to achieve organisational aspirations. Ideally these actions work together in some – more or less – harmonious way so that the sum of actions is greater than their parts.

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Your strategic self6

When should we react to new opportunities and adapt plans?Our views of the future are incomplete. When we write our plans or decide on an overall purpose we don’t really know what is going to happen next. Small and big events will happen that challenge the existing strategy. New opportunities will emerge that are big-ger, better or just different from those we thought of the first time.

Context

Shaping the future depends on context. You can’t control the waves of human desire and endeavour with strategy, but you can create strategy that surfs those human waves, contributing to them or benefiting from them. It follows that you need to under-stand the context for any attempt to create strategy.

There are probably some low competition, high stability places in the world. But it is safer to assume that the external context your strategy will face will be high competition, low stability. So this book will make the same assumption and give advice on strategy that can be effective in such a world.

Each section answers questions that are needed to create a strategy that can be used to shape the future. There are sections that explain how to create strategy, think like a strategist, win with strategy, make your strategy work, build a strategic organisation and troubleshoot your strategy whenever it stops working.

Challenge

A lot of organisations still set in motion grand plans to a better future. The larger the organisation, even now, the more likely it is that they have a strategic planning team who produce strategy documents as a result of lengthy financial analysis.

This plan is then ‘cascaded’ or passed down the hierarchy until it reaches middle management, at which point it often disappears. The front line may have to work in structures, processes or role descriptions that were designed as part of the plan. This planning,

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7Shaping the future

command and control approach often leads to out-of-date strat-egy and out-of-touch leaders.

Some people argue it isn’t even possible to plan because events are so unpredictable. They claim it is better to just organise as effi-ciently as possible. Then you just hope evolutionary market forces (what people want interacting with what people sell) will be a natural fit to whatever you are doing.

The trouble with this evolutionary approach is that it doesn’t really address what you need to try to do to make it more likely that your company is a natural fit. And that’s why clever strategy is somewhere between the extremes. It does try to plan deliber-ate actions to shape the future, but also tries to stay close to local events and to react to them. In this way, strategy is transformed into a learning process that becomes – at its best – smarter through experimentation.

Success

Progress is made when the organisation moves towards strategy that learns its lessons and adapts to new opportunities. In this way, you can benefit from strategic thinking that is clever rather than one-size-fits-all strategy. You will also see people at all levels more involved because managers are interested in what is really happening at the front line.

Your strategy efforts will use strategic principles and tools to better prepare the organisation for shaping the future. Your strategy will craft a response to external waves, needs of customers and actions of competitors. Your strategy will consider the nature of the business (its purpose, style and products) and the ways that it organises internal resources, processes and people.

Strategists’ measures of success

Understand (and apply) the main strategy questions.

Use the differences between planning, coping, adapting and shaping covered throughout this book.

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Your strategic self8

Pitfalls

It’s important that efforts to introduce more strategy don’t lead to less strategic thinking (or worse results). There are lots of naturally strategic people who see opportunities, see new patterns and adjust the work of the organisation to take advantage of these. It’s also important not to simply replace one set of words with another. The idea of strategic thinking is to improve results.

Strategists’ checklist

■ Remember that inward-looking planning is not sufficient because of the high levels of external change and competition.

■ Work your way through the strategy questions (see page 165) and answer them for your business. This provides a valuable template for developing creative strategy that is straightforward enough for all sizes of business.

■ Understand the importance of a learning approach to strategy. This means that as many people as possible are engaged with strategy so that they can adapt what they do to support the purpose of the organisation. And so that they can feed back valuable information to their leadership team in order to adapt the official strategy.

Related ideasFor Professors Howard Thomas and Taïeb Hafsi, strategy is a mixture of rules of thumb and creative methods. It helps people understand and transform reality. This means that strategy tools

Consider a wide range of internal and external aspects.

Accept the need to build a strategic organisation to achieve shared purpose.

Establish a flexible, continuous approach to strategy.

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9Shaping the future

are only valuable if they stay close to reality. Some techniques are useful only for making specific decisions. The most powerful tools will help people navigate the process of shaping the future. Without this, strategy is nothing. It’s worth remembering that the actions of people in organisations can be the result of habits, hypothesis or heuristics. Any of these actions can have strategic consequences. This is particularly true for deep patterns of actions that shape what – and how – an organisation behaves.

As an example, research by Bingham and Eisenhardt, professors at North Carolina and Stanford, introduces the idea that organi-sations develop a ‘portfolio of heuristics’. These are lessons, help-ful and unhelpful, that come from experience that shape actions. Some of these lessons become an embedded and unquestioned part of culture. Hypothesis can help challenge both habits and heuristics where necessary.

For similar reasons, Richard Rumelt argues, in his best-selling book Good Strategy, Bad Strategy, that the key thing is to have a diagnosis and guiding policy connected to a set of coherent (real world) actions. He concludes that bad strategy is fluff, while good strategy is logic – although you should note that smart strategy is often ultimately a form of fuzzy logic that must adapt to messy, real world situations.

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