Strategy is probably one of the most mystical and mystified words in the corporate vocabulary. There’s many facts (and myths) contributing to this image. Such as: that the success or failure of a product or company depends solely on the strategy used. Or that, in corporate settings, strategy is done only by selected few – usually senior in age and hierarchical position. Or that strategy development is a tedious process eating up countless hours.
Essentially strategy is (just) macro-level problem solving. And, as with any ‘new product’ aimed at solving a problem, strategy can be thought of as a series of assumptions-to-be-tested.
Other fields such as product development or new business development have long reaped the fruits of working iteratively. The benefits of shipping small batches that can be easily tested are undebatable.
However, on the strategy side, things are still stiff and done in a linear fashion. Flying in the face of the fact that 98% of executives are sure that, only 20% of their strategic objectives will be achieved in the agreed time frame.
Choosing to accept the parallel between new product development and strategy can trigger a change in the way strategy is developed and deployed. In a previous article I’ve put forward the idea of using a lean manufacturing feedback loop when formulating new strategies. But this is just half of the story.
The implementation of the new strategy is an important component on the way to success. Thus, this needs to follow the same iterative approach if the results are to match the expectations.
Iterative strategy deployment – exactly what it says on the tin
Simplifying, in iterative product development, a new prototype is produced and tested in real conditions. Following the test the results are used to make improvements or corrections. Then the modified product version is launched in full production and commercialization. Profit follows.
Extrapolating from the parallel between product development and strategy, strategy can be developed iteratively too.
A new set of strategic options are put forward and deployed as ‘probes’ for the new strategy. The ‘probes’ will be tested with a specific market segment. Which, for risk reasons, might not even be the company’s core market. Then, based on the results and feedback, improvements or corrections will be made.
If the ‘probes’ turn up successful the company will then double down on that particular strategy. If not, all that was lost was the investment in ‘the probes’ – while at the same time keeping ‘the residual benefit’ of the lessons learned. On top of the investment saved from not committing the entire corporation to an unsuccessful cause.
As trivial as this process sounds it’s quite complicated to put into play. Hurdles such as: ‘re-education’, process re-design and the associated ‘diplomatic work’ make full scale adoption slow.
On top of that the technology clock speed can hold a company back from launching ‘new probes’ as often as it likes. Because, unless the ‘strategy probes’ are based on an entirely new assumptions they would not differ enough from the previous ones. Making conclusion drawing difficult.
For the process to succeed the company also needs a high degree of discipline. This will serve in following up with the probes, monitoring them and examining external trends.
The strategy owners needs to observe when the assumptions upon which the strategy probes were based are invalidated. The reasons behind that will serve as a starting point for new probes. Basically, whenever the context changes so drastically that the current strategic positioning can no longer be sustained it’s time to start a new loop.
A new competitive edge
With uncertainty being the only certainty, an iterative (product-like) approach to strategy has the potential of offering a competitive edge to any company fully committed to this path. In a VUCA world the traditional competitive advantages are fast dying out. Hence companies need to focus their efforts on velocity. In the not so distant future, the speed at which new strategies can be formulated, tested and deployed will make the difference between leaders and followers.