Bridging the gap Part 1: Effective transition from strategy development to strategy execution
This is the first part of an article which was initially published in PM World Journal (PMWJ) in November 2016. PMWJ is a non-refereed online publication devoted to knowledge creation and sharing, and continuous learning in the field of modern program and project management.
Bridging the gap
Overview
There is fairly consistent survey evidence that current approaches to strategy development fail to deliver the planned strategic change in the majority of cases and we argue this shows they are intrinsically broken. There is a trend in the strategy literature and amongst strategists to blame this failure not on strategy itself, which could feel rather close to home, but instead to blame the failure on ’execution.’ From this viewpoint, the strategy itself is clear and adequate and it was just the projects to implement change that failed and, by implication, so did their project managers.
In this article we take a different viewpoint. We argue that what destabilises strategy execution projects is often the flawed strategy that feeds into them. Specifically, the strategy can be flawed in that it fails to take into account changes in the strategic environment that renders the strategy defunct. Conventional strategy also fails to take into account the direction and momentum the organisation is already locked into. We highlight some of the reasons for that and then go on to present a radically new model for developing strategy, and for managing its execution: a key challenge for the project and programme managers who are charged with this. The Patterns of Strategy approach is different from existing approaches at both conceptual and practical levels. It gives a much richer way to explore strategic options at the strategy development stage, and it generates a very precise implementation plan to inform the execution stage, as well as metrics which can be used to measure the effectiveness of the deployed strategy. So the use of a very different paradigm of what strategy is, and how it is defined, drives and enables a different paradigm for managing its execution.
How Patterns of Strategy is different
Most conventional strategy approaches fail to recognise other organisations as actors. When they are described in strategies – and that’s not often – they are positioned as static and passive. They are seen as static in that that their current position is a given, rather than simply being a point in time, and passive in that there is little or no consideration given to their potential to act, and to act with implications for us. In game theoretic terms, these approaches fail to recognise that other organisations have independent will, which they can and do exercise, and that in reality the interactions between organisations are complex and dynamic, unfolding like a drama or dance. Since these approaches don’t recognise the agency of other organisations, they define strategy as what we want our organisation to become, based on the assumptions that we can define what we want, and that we can get there without let or hindrance from others. This second assumption is wrong. Other organisations are actors; they have options in what they do and how they do it, and their choice and execution of option defines the strategic space in which we operate and affects what we can accomplish. Once it is written down in this way, it is of course apparent that it is critical to model and understand the possible decisions and actions of others in our environment, but conventional strategy approaches don’t do this. The interventions and actions of those other actors can impact or totally derail the strategy execution itself. In these circumstances, strategy execution can get the blame for inadequate strategy definition, a real problem for programme or project managers. A range of studies and surveys suggest that, conservatively, more than 90% of strategic plans generated by conventional strategy approaches are not implemented. While there is considerable variation in the assumptions about what constitutes a strategy and what constitutes implementation failure, even the most sanguine indicate failure levels around 70%, and that makes the levels of failure very significant indeed.
Patterns of Strategy is a new approach to strategy development developed by Patrick Hoverstadt and Lucy Loh. In this approach, it is fundamental to treat actors as having independent will. In game theory, an actor is an individual or organisation with decision making capability, including the ability to create and execute a range of different options in any particular context or situation. Game theory examines what happens when my option A interacts with your option B, or my option A triggers a response from you of option C. It’s the interaction between my actions and your actions which creates the game, a constant dynamic as each actor seeks advantage for themselves. Patterns of Strategy models how we interact with key actors around us, explores what options each actor has, and how the situation plays out, depending on which options are chosen by each actor. So instead of just analysing some factors (strengths, threats, resource, market position, etc.), it looks at the relationships between the organisations acting in the relevant strategic arena. It’s the interaction between organisations which is the underpinning driver of strategy, as significant changes on the part of one actor will have an impact on the others. It looks at strategy as the orchestration of a dance: I move, you move, I move. And once the mechanism by which these interactions drive each actor are understood, then they can be managed in a purposeful way, and this is at the heart of this way of thinking.
Many traditional strategy approaches treat strategy as a mental construct, a document or some models or a plan, as a set of thoughts and decisions, and Mintzberg described: “Strategy is a pattern in a stream of decisions.” This is necessary but insufficient – strategy is what is realised, what actually happens with real people and real organisations: which actors take which decisions and act in which ways and with what impact. It’s about the drama which actually unfolds. This is much closer to Mintzberg’s revised definition: “Strategy is a pattern in a stream of actions” – and this is much closer to the clarity and specificity which is needed by the programme manager who is drawing together threads of strategy execution. This approach treats strategy as a sequence of manoeuvres which each actor executes, where a manoeuvre is about deployment of actual resource to different points of focus at different time points and speeds, not just a line in the plan but in reality. It has three core dimensions: fit, time and power, and strategic manoeuvres alter each of these dimensions to create and sustain advantage. The manoeuvres chain together in a sequence to make a pattern – a pattern of strategy.
There’s another important aspect of the approach. Your overall strategy is likely to affect multiple actors because you have multiple strategic relationships, with customers, partners, competitors, regulators, markets, and so on. All organisations depend on cooperation and collaboration in some part of their activity. No organisation is purely competing, no organisation is purely collaborating. So it’s vital to have a strategy approach which can deal effectively and equivalently with the challenges and opportunities of both collaboration and competition. In many strategic situations, the actors have to collaborate in some way and you need ways to think about these situations in strategic terms. The approach looks at strategy through a frame of strategic relationships, which can be competitive, collaborative or a combination of the two, and is equally applicable to all of these.
Patterns of Strategy: informing strategy execution
Once we see strategy as being a set of manoeuvres being played out between real actors with real resources, then identifying what is required in the implementation plan becomes very concrete and straightforward. So too does monitoring strategy execution and measuring its performance, because you define metrics against each of the manoeuvres: have you changed yourself as you intended, has that had an impact on the other actor or actors, and has that in turn brought you the advantage you wanted? We define strategy as changing your fit with the environment to your advantage by differential use of power and time. The critical focus of strategy is to improve your fit, either by changing yourselves to better fit our environment or by changing your environment to be a better fit for you. You assess the interactions between you and the other actors, and also the interactions between other actors which don’t involve you, and in this way get rapid and direct feedback through the defined metrics on whether the strategy is working as intended and improving your degree of fit.
Patterns of Strategy has three dimensions of fit, power and time.
Fit
The nature and attractiveness of our couplings with other actors in our environment
Power
Differentials in our resource and capability, and their deployment, relative to others
Time
Differentials in our speed and rate of change relative to others
These dimensions break down into 6 elements, which we use to define manoeuvres.
To change your fit, you develop a sequence of strategic manoeuvres, and each strategic manoeuvre requires a change in capability to deliver it. Defining these manoeuvres makes it clear on what exactly in your organisation you need to change and by how much. The approach is systemic, and assesses the differentials between the actors against six different elements, within the core dimensions of fit, time and power. As it uses differentials between the actors, it requires you to define exactly what needs to change, to change your fit with the environment to your advantage. So the development of manoeuvres comes with a high degree of precision: not just a vague “be more agile” type of statement, but instead: “be this fast, in that business operation” and have “x amount of resource deployed to Operation A which could also deliver Operation B and be moved there with y days’ notice.” In addition, the manoeuvres have an inherent sequence, which informs the strategy execution plan.
If you need a faster cycle time, for example, the precision of what change and in what cycle, and by how much and by when is detailed enough to define the key features of an implementation plan. If we see organisations as a set of capabilities, then the strategic plan is to develop and improve the performance of one or more capabilities. Some manoeuvres can simply be executed without any organisational change, but many will need some sort of change in the organisation – a redirection of existing capabilities, increasing or decreasing some existing capabilities or the building of new capabilities, and here we are in the heart of programme or project management, defining a strategic implementation plan to bring these capability shifts about.
The articulation of strategy is two-fold, both its definition and also the order in which things are chained together. The strategy directly and easily generates the strategy execution plan as a sequence of changes in capability, with clear metrics on which capabilities need to change, by how much, and when. This gives early validation of the strategic option which has been chosen, testing whether we are capable of delivering the strategy, given the degree and rate of change it requires.