Category: strategy

Reflections on The Crux

What do most organisations miss when doing strategic work? In my experience it’s not recognising and addressing the most significant challenge.

I recently read The Crux, by Richard Rumelt, which states strategy work involves focusing on the crux of the problem. The crux is the most important part of a set of challenges that can be addressed and solved by coherent actions.

Strategy should start with the challenge itself, rather than goals, financial targets, a roadmap of technical solutions, org design or some lofty vision.

Let’s consider Netflix. Of all its challenges, its most significant (the crux) is likely to be it facing increased competition and needing to expand globally.

Therefore it’s reasonable to presume its guiding policies would include 1) Invest in producing original content 2) Expand services into new markets 3) Use data to understand viewer preferences

Consequently, its coherent actions are likely to include 1) Creating and releasing original content 2) Target specific countries with tailored content 3) Using data to inform content production and marketing

This example shows how understanding the crux aligns its people on tackling the most significant challenge. It creates shared intent and aligned autonomy. Any supposed strategic activities that do not address the crux, or falls outside of this mix of policies and actions should be questioned.

The Crux makes a distinction between management and strategic activities. For example, it says Balanced Scorecards are useful for managing the current business, not for strategic change. They do not help redefine a business; they are a useful management tool for driving results in the existing business (i.e. the status quo).

In conclusion, when it comes to strategy, I find too many firms do not align on recognising and addressing the most significant challenge, and so lack shared intent and coordination. Consequently they will be wasteful, frustrated and less competitive. The Crux is a superb read which articulates and addresses this all too common challenge.

Practitioner’s insights

Here are three practical steps to consider when advising businesses doing genuine strategy work:

  • Identify the crux: Focus on finding the most critical and addressable part of a challenge. This involves judging which issues are most important, assessing the difficulty of addressing them, and concentrating resources. The ‘crux’ is the point where focused action has the best chance of overcoming the most significant obstacles.
  • Adopt a challenge-based approach: Strategy should be a continuous process of addressing critical challenges, rather than pursuing long-term goals or a fixed vision. Start by diagnosing the challenge, understanding its structure, and the forces at work.
  • Differentiate strategy and management: Strategy work is about defining goals and objectives by understanding the difficulties of overcoming a challenge, whereas management focuses on driving results within the existing business. Strategy is not about simply setting performance goals or using management tools. Avoid confusing the two, as good strategy work is not the same as management work.

Patterns for Strategic Execution

I’m often asked by leaders to support their organisation to execute their strategies. So over the years, I’ve come to recognise common anti-patterns which hamper organisations from delivering upon their strategies.

In my last article, I shared those anti-patterns to strategic execution. In this article, I’ll share the patterns which support the mindset, ways of working and conditions for effective strategic execution.

But first, let’s remind ourselves of what is a strategy and how it relates to organisational transformation?

Strategy and Organisational Transformation

“A strategy is something which gives consistency over time and contains the essence of how you’re going to be different”

Gary Hamel

An organisation is likely to be employing multiple strategies. Each strategy is a vehicle for organisational transformation and value creation. They can fall into these categories:

  • Business – In a rapidly changing world, what’s right for the business and the colleagues? Yesterday’s success may not be tomorrow’s.
  • Competitive market – How should the company differentiate itself? What privileged insights or capabilities does it want to bring to bear?
  • Customers/stakeholders – What new or existing wants, needs and desires does the company want to address? Which ones should it stop serving?

Uncertainty means an organisation should test & learn which strategies will fit the organisation’s vision. A vision describes what the organisation wants to become; it’s an aspirational and motivational indeterminate future goal.

To move with velocity to drive profitable growth and become an even better McDonald’s serving more customers delicious food each day around the world.

McDonald’s Vision Statement

Now, onto the common patterns which I’ve come to recognise as conducive to strategic execution…

Patterns for Strategic Execution

Shared Vision

Co-develop a unifying vision statement which is both aspirational and motivational for leaders, innovators and the wider business. This serves as a North Star which all strategies coherently work towards, judged by a common set of success criteria.

Strategies as hypotheses

Create a safe-to-learn environment. Then rapidly test which strategies fit the organisation’s vision. Use MVPs to test a strategy’s worthiness where the minimum is done to maximise learning. If you haven’t nailed it, don’t scale it.

Protect Innovators

Appoint a leader who creates time and support for innovators to test, learn and recover from failure without being impeded by the status quo. Leaders must free-up their own time to remove organisational impediments and understand when to encourage teams to push on.

Metered Finance

Like venture capital investment, metered finance is the incremental release of funding judged on the evidence of successful outcomes. Such governance helps innovators know when to persevere, pivot or pull-the-plug on their strategies.

High ambiguity

Handpick individuals to form highly supported innovation teams. Such individuals are able to deal with constant change and novelty. They can cope well with failure, experimentation and can rapidly test their gut feelings.

Social Capital

Once they’ve found early success, innovators will need the support of operators. Operators have the access to capital and scale. Support individuals who have, as Mary Uhl-Bien describes, the Social Capital to bring those two worlds together.

Anti-patterns to Strategic Execution

I’m often asked by leaders to support their organisation to execute their strategies. So over the years, I’ve come to recognise common anti-patterns which hamper organisations from delivering upon their strategies.

In this article, I introduce the main anti-patterns I’ve come across. In the next article, I’ll share the patterns which create the mindset, ways of working and conditions for more effective strategic execution.

But first what is a strategy and how does it relate to organisational transformation?

Strategy and Organisational Transformation

“A strategy is something which gives consistency over time and contains the essence of how you’re going to be different”

Gary Hamel

An organisation is likely to be employing multiple strategies. Each strategy is a vehicle for organisational transformation and value creation. They can fall into these categories:

  • Business – In a rapidly changing world, what’s right for the business and the colleagues? Yesterday’s success may not be tomorrow’s.
  • Competitive market – How should the company differentiate itself? What privileged insights or capabilities does it want to bring to bear?
  • Customers/stakeholders – What new or existing wants, needs and desires does the company want to address? Which ones should it stop serving?

Uncertainty means an organisation should test & learn which strategies will fit the organisation’s vision. A vision describes what the organisation wants to become; it’s an aspirational and motivational indeterminate future goal.

To move with velocity to drive profitable growth and become an even better McDonald’s serving more customers delicious food each day around the world.

McDonald’s Vision Statement

Now, onto the common anti-patterns which I’ve come to recognise as preventing strategic execution…

Anti-patterns to Strategic Execution

Seeking complete agreement upfront

Seeking complete agreement upfront delaying validation

Leaders delay strategic execution by seeking consensus that’s further delayed by overplanning. There’s little appetite to test convictions rapidly by starting small and deciding whether to continue based on validated learning.

No appetite and capability

Over investment and comfort in the status quo results in no genuine appetite for disruption, learning and discovery. This can lead an organisation into what Dave Snowden terms Competency Induced Failure.

Innovation teams not protected

Innovation teams are constrained by previous commitments, ill-fitting governance and sceptics that are vested in maintaining the status quo. Know that the status quo will hinder innovation through apprehension, bureaucracy and claims about tradition.

Conflicting incentives & mindset

Operators are habituated to maintenance and continuous improve what already exists. Operators are incentivised to deliver outcomes built upon a backbone of existing success. Such a mindset and incentives are the antitheses of those of the innovator’s.

Disjointed strategies

Often as the result of misaligned leaders following a merger or consolidation, separate leaders champion separate and ill-fitting strategies. These disjointed strategies don’t roll-up to a common set of success measures and are not faithful to a shared vision.

Uninvolved leaders

Leaders are unable to free-up time so they manage strategic execution at arms-length. They do not have the capacity to truly support and co-discover the emerging journey of the innovation team. Neither do they have the focus to remove organisational impediments.

Patterns to Strategic Execution

In the next article, I’ll share the patterns which create the mindset, ways of working and conditions for effective strategic execution.

Reflections on The Art of Business Value

The Situation

Often teams and leaders don’t work from a common understanding of business value. Without aligning to what is valuable, individuals will have an impaired ability to make trade-off decisions such as “Where should we focus our finite resources and attention”, and “What does good look like? And for whom?”.

Too often we don’t think in business value terms. We’re simply here to get the job done and move onto the next assignment or project. There’s a keenness to show output – the busy work which demonstrates effort and speed.

However, it’s important to pause and ask “Why is this project more important than these other projects? Who is it for? What’s the source of our confidence that it’ll benefit them?”

Business Value is elusive

The Art of Business Value. A 2016 book by Mark Schwartz

The Art of Business Value, by Mark Schwartz, helps overcome the lack of understanding of what business value is. With refreshing wit and insight, Schwartz challenges the assumptions of many, such as those in leadership, financial accounting and within the agile community. He offers sound guidance that’ll help many determine the elusive meaning of business value that’s contextual to their organisation.

The book explains that when we consider business value we often turn to financial accounting measures such as Return On Investment or Net Present Value. Schwartz states such measures tie poorly to strategies and don’t sufficiently factor-in risk and uncertainty. Neither do these short-term measures do well at accounting for the inherent value locked-up in enterprise infrastructure and the business agility that such assets should enable.

Schwartz says that business value can be hidden in an organisation’s rules and processes. So rather than disregard bureaucracy, we should examine it to discover the values held within an organisation. If we consider bureaucracy as a product of institutional memory, its rules and processes can become a rich source to discover what an organisation values.

If we consider bureaucracy as a product of institutional memory, its rules and processes can become a rich source to discover what an organisation values.

The book also unpicks the thorny issue of who should be charged with establishing business value versus those who execute and deliver that value.

What is Business Value

Schwartz defines business value as a hypothesis held by the organization’s leadership as to what will best accomplish the organization’s ultimate goals or desired outcomes.

This definition recognises firstly that business value is not the same for all organisations, secondly that it cannot be boiled down to one measure, and thirdly determining business value necessitates a journey of discovery, dialogue and collaboration across many business areas.

Introducing Business Value thinking

With my support, many of my clients have taken such a journey. This has often started with a leadership envisioning workshop – an approach which sets out the organisation’s vision and which creates an open debate about the worthiness of strategic initiatives.

With such approaches leaders create a mindset and process which shifts the conversation away from endless horse-trading and towards organisational learning through iterative execution and review.

In a dynamic and uncertain world, the approaches I’ve shared and the thinking conveyed in The Art of Business Value will create a common understanding of business value. Doing so enables teams and leaders to align on what’s valuable and create a responsive organisation.

Conclusion

With The Art of Business Value, in a little over a hundred pages, Mark Schwartz has done a fantastic job to help challenge convention and offer guidance that’ll help our organisations and clients define what it values and achieve success.

Workshop: Wardley Mapping

This workshop introduces Wardley Mapping as a technique to understand the chain of components an organisation needs to serve user needs. It creates situational awareness by mapping the maturity of each component, and the visibility of the component to the user. It allowing organisations to better strategise and improve their effectiveness and competitiveness.

The workshop can be delivered in 60 to 120 minutes. It’s team-based and can be run for any number of teams.

  • In this example, mapping helps the CIO communicate the need to embed new activities to increase business agility and innovation.

Slidedeck

photos from workshops

Thank you

Thank you to Philippe Guenet for working with me in developing the workshop.

Wardley Mapping is conceived by and is kindly shared by Simon Wardley.