Strategy should be a creative exercise but companies frequently end up with plans that look very much like their previous ones. Strategy expert Graham Kenny describes a three step process for avoiding this trap: 1) open your mind to ideas from external stakeholders, 2) take a cold, hard look at where your performance is failing, and 3) study companies in other industries that have solved these problems.
Strategy requires our most inspired creative management thinking, as we seek to find ways to respond to changing conditions and leverage our newest competitive advantages. So why does your shiny new strategic plan often look just like the last one?
A guy named Frank summed it up for me perfectly. This was over 20 years ago, but I remember it like it was yesterday. I was facilitating a strategy session with 14 executives. We had a flipchart, white-board and screen, and we were following the agreed agenda. I was taking points from the group. Then suddenly Frank said, “I don’t know why we have these strategy workshops every year. It always turns out to be business-as usual.”
This was the first time I’d heard the term “business-as-usual” in this context. But Frank was right. I’ve watched this scenario play out with other clients on other occasions since — strategic planning turning into same-old, same-old.
Strategy-as-usual is your enemy. Here I’ll show you how to shift your thinking from “strategy development” to “strategy discovery” and illustrating with cases of companies that escaped the strategy-as-usual loop to look outside their industries for ideas.
Step 1: Change your mindset.
The conventional language around strategy, which is reinforced by every textbook, is that strategy needs to be “developed.” But this turns executive teams inwards. Rather than searching for fresh ideas they go back to industry conventions to develop a strategy out of what’s been done in the past.
The first step in shaking this up is to change your thinking and language from “develop” to “discover.” Rather than think that the answers are “in here” (with the executive team) think that the answers are “out there” (with stakeholders).
This simple change has a profound effect on managers’ thinking and behavior. No longer do managers think that they must have all the answers. Nor do they think if they don’t, they’ll lose face. Instead, a new inquiring frame of mind takes over. The message is “it’s okay to say, we don’t know.” Humility rather than hubris becomes a valued trait.
Step 2: Recognize your shortcomings.
While a change of mindset is a useful starting point, you need more in order to open your organization to genuine strategy invention.
Consider this example: Felix is a senior executive in a health insurance company, and in the wake of the pandemic, he sees a once-in-a-generation opportunity to create better client experiences, greater efficiency, and improved health outcomes. The problem is that this requires his company to adopt a wholly new way of looking at its role. New models are also required — the so-called “digital front door” approach to member engagement. It would bring together virtual care, remote patient monitoring, patient navigation, and coaching with price transparency, offering an integrated experience for the consumer.
While the benefits are clear — increased efficiency, reduced waste, and increased consumer satisfaction — the strategic transition will not be an easy one for Felix’s company. That brings us to the next step.
Step 3. Find your partner.
Felix saw an opportunity to look beyond health insurance to companies that had been through a similar journey, i.e., using technology to create true customer value and a competitive edge.
He landed on the market leaders in the Australian banking industry — Commonwealth Bank, Westpac, National Australia Bank, and ANZ. They had gone through a similar revolution to become providers of a digitally driven experience at almost every point of contact. By studying them, Felix learned what had succeeded and, just as importantly, failed.
Their experience showed Felix how he could leverage the power of automation to enhance customer experience and drive innovation through, for instance, the creation of a customer app. He was also able to identify the technical skills his company would need to drive these changes forward.
In another company, one of the world’s largest cosmetics, one of the top executives, Tony, studied Red Bull, the Austrian maker of the famous energy drink. He was impressed by how effectively Red Bull managed its audiences via their media channels. His company and Red Bull even partnered on a men’s grooming and skin care range. This produced a strategy to reach a common target market, the young male audience. They created an “activation” in a large Australian supermarket chain, Woolworths, to jointly promote his business and Red Bull products.
Then there’s Emma, who heads up a social enterprise providing employment for people impacted by the justice system. The business packs and delivers groceries to offices and factories. A lack of proper business strategy has been cited as one shortcoming of social enterprises and Emma needs to lift her organization’s performance to be truly commercial.
Her inspiration is the motor vehicle industry. By studying Toyota, Emma and her team have discovered ways to improve customer service by raising the accuracy of its order fulfillment, the speed of order processing and the promptness of delivery – all factors important to any competitive advantage.
Overcome Your Reluctance
Why don’t more firms do this more often?
Tony suggests that one obstacle is “organization culture.” He says, “How do we get out of our four walls and really start to look outside our industry and outside of what we’re doing?”
And A.G. Lafley describes how, when he was CEO of Proctor & Gamble, he gave far too much attention to internal demands. He had to constantly fight the “gravitational pull” of the inside. This is a wonderfully descriptive metaphor for what most managers experience. Each one plays off the actions and reactions of colleagues.
Another obstacle is that managers think that their problems are unique. Felix labels this a “false uniqueness bias.” While subtle differences certainly exist between industries, its highly likely that broader strategic issues are shared in other industries.
Emma refers to an “illusion of validity.” Managers think they know their business better than anyone else and external input could never be helpful.
. . .
My experience with Frank, in my opening story, was a real wake-up call. I came to realize that strategic thinking and strategy design often comes to a dead end and executive teams simply spew out strategy-as-usual. Keep your eye out for this and jump ship, if you need to, to gather strategy insights from other industries.