Thinking differently about strategy Part 2
Let’s look at some of the main aspects of thinking about strategy in terms of key strategic relationships, and the practical applications of those.
Focus on the relationships
Every organisation sits in a web of strategic couplings. In thinking differently, we don’t look at individual organisations (the competitor, the partner, and so on) but shift focus to look at the relationship between them, their structural coupling. An organisation is affected by, and affects, the other actors to which it is coupled. Some couplings will provide value the organisation wants, others will detract from the value the organisation wants.
Thinking this way, strategy is about managing the organisation’s set of couplings, such that they deliver the overall (net) value which the organisation wants. A coupling can be added or removed or, more usually, the characteristics of an existing coupling can be changed, to be more to the organisation’s advantage. One of our clients looked at all its couplings and discovered that the one they really cared about, that could have a substantial impact on future profitability, was talked about in the organisation, but wasn’t actually there: in reality, the organisation hadn’t built a coupling to this key external actor.
Multiple independent agents
It can be seductively easy to set strategy as though the organisation is operating on a blank canvas, as though it can define a direction, and travel there without let or hindrance from anyone else. But any organisation typically has 2-5 important couplings, sometimes more. The other actors each have their own independent will, and their conscious or unconscious actions may get in your way, as well as other actors which don’t currently have a coupling with the organisation. These multiple independent agents are all manoeuvring in the same space, and collisions between them can and will happen. Considering the other actors in this way enriches strategic thinking by mapping out the environment or ecosystem of which the organisation is a part, and the effects of its couplings. Imagine trying to drive down the road, the way an organisation conventionally does strategic planning and assuming that other actors will clear out of its way. The organisation wouldn’t get very far without crashing and the “crash rate” of organisations tells the same story.
Momentum: the default direction
A coupling has its own dynamic and direction, and unless one of the actors in the coupling (or the environment itself) intervenes to alter the speed and direction of travel of the coupling, the relationship will continue on its default track. Of course, it may be that the default speed and direction of a coupling suits both actors, although it’s important to say that riding the momentum could be an unconscious choice, or each organisation has consciously chosen to continue with the coupling’s momentum. Mostly, it’s unconscious, which highlights the importance of being able to identify momentum at work in a coupling. A client in the IT sector stayed coupled to Microsoft as a platform for many years, mostly an unconscious strategic choice, and realised only just in time some of the risks of that.
Rate of change
Clearly, an organisation needs to change at least as fast as its environment, and ideally as fast or faster than its competitors as well. One of our clients expressed a feeling of ‘change fatigue’. Perhaps so, but the reality was that they were lagging behind the change rate in their environment and, change fatigue or not, they needed to crack on.
One of the challenges of being carried by momentum in one coupling is that it can be very comfortable, and it’s very easy to take one’s eye off the ball, to stop looking for changes in the environment which could be of significance. It’s critical to look not just at change, but at rate of change. More than that, it’s about relative rate of change. It’s about being obsessively interested in an organisation’s rate of change relative to that of its environment and its competitors.
Being able to up the change rate requires good foresight, sensing and making sense of changes in the environment, to know when and how to change. It often requires high agility, the ability to switch resources rapidly from one activity to another. And it nearly always requires speeding up the strategy cadence, the frequency at which strategy is developed, reviewed and revised, and the elapsed time it takes to do that, since this is one of the easiest ways to improve your strategic agility.
In the field of military strategy, to quote Wellington: “speed is everything”. It is equally important in business strategy – strategic threats and opportunities typically come in windows in time, and if you miss the window, then it’s too late. So it’s particularly odd that speed hardly figures in much of conventional strategy.
If relative tempo is important then the set of strategy thinking styles need to include an assessment of speed. In some couplings, it can be important to be synchronised, to have no speed differential between the two actors in the coupling. Collaboratively, the two actors may need to be synchronised, perhaps to make a shared process or governance cycle work. Competitively, one actor may choose to track or synchronise to another in terms of a particular offer. In other couplings, relative speed is critical – being first to market usually requires being faster than other actors, for example. And there are also times when being slower can be helpful, to force another’s hand, or to create differentiation. Thinking about relative speed in a coupling can yield many insights, generating options to feed into strategy development.
The manoeuvring of each actor is important. Strategy can be developed as a mental construct: ‘the plan’, a roadmap. But strategy is about the organisation manoeuvring within its strategic environment to change its position relative to other actors. That shift in thinking is huge, from thinking about strategy as something purely mental – something distinct from action – to thinking about it as what really happens on the ground, about who changed, in what way and with what effect. Think about it as the military do. In business contexts, strategy is a set of manoeuvres that organisations execute, while considering what actions ‘they’ (the other actors) take, and the implications of those actions, and strategy also deals with feedback from the real world. It’s about the organisation making itself fit for its environment, or making its environment fit for it. A manoeuvre is a change in the disposition of resources in focus and time: real people and real resources being deployed in real actions and activities. Manoeuvres become very precise, not just a vague “be more agile” but instead “be this fast, in that business operation.” And that specificity of manoeuvres makes it very easy to shift from strategy development to strategic planning.
Henry Mintzberg writes about emergent strategy, the actual strategy that emerges from the decisions and actions of an organisation, as contrasted with the strategic plans that hardly ever get implemented. Emergent strategy is that which the organisation really follows, with structural coupling as the driver of emergent strategy. If you think about strategic direction as being largely driven by the nature and dynamics of sets of structural couplings the organisation is in with their own momentum, then emergent strategy appears as a natural and inevitable consequence. Emergent strategy explains that 70+ % failure rate of strategies that ignore structural coupling: the effects of the structural couplings totally overwhelm the organisation’s strategic plans. Each relationship exerts pressure or tension on the organisation to move in particular directions, and some will have a greater effect than others. The overall strategic direction is the product of all of these. So, when Henry Mintzberg talks about emergent strategy, this is how it emerges, and it is structural coupling that drives it.
These are very different ways of thinking about a strategic situation and developing strategy. In practice, they are ‘sticky’ – the ways of thinking are easy to grasp and apply, and they bring a coherence and focus to strategy discussions. They also highlight where specific information or detailed analysis is needed. Using couplings as a thinking framework means that strategy development can be applied in competitive and collaborative situations, and those which are a bit of both. Critically, it’s very fast, at least an order of magnitude faster, to develop strategy by thinking in these ways. And in today’s world, speed of strategy development can be a critical strategic differentiator.