Adventure of Strategy

OK, I’m just going to come right out and say it. Let’s cut to the chase and face up to a few unpalatable truths:

1.   THE FUTURE IS UNKNOWABLE

Any attempt at predicting it is never any better than a half educated guess, with a better than half chance of being wrong.

Anybody disagree? No?

OK, then ….

How do strategists that develop plans based on assumed, fixed futures (and look very carefully at this one; many that say they don’t, really do) sleep at night!

2.   RESULTS ARE OFTEN RANDOM AND UNPREDICTABLE

We still think linearly. It’s like Newtonian physics. “Every action has an equal and opposite reaction.” If people are unhappy with the compensation system, all we need to do is change the compensation system.

Absolute nonsense!

A firm is not a clock, where if a cog breaks then all one has to do is take it out and put in a new one. It is a complex web of dynamic and interlinked systems, processes and structures that influence each other in highly complex and often unforeseeable ways. Not only does every action not have an equal and opposite reaction, but a small action can have unanticipated results that are quite out of proportion to the size of the original action.

Fortunately, the complex systems that professional service firms are, are inherently self correcting and resilient to change. Like the human body, or an ecosystem, imbalances and “injuries” are usually corrected without overt management control needing to be applied.

This is true of functional systems, at any rate. It is not true of dysfunctional systems, which result where too much management control is present, or where trust is absent. Worst, in a fear-driven environment. (Here, the instability that inevitably emerges can be truly frightening!)

3.   NOT EVERYBODY IS, OR WANTS TO BE, AN OLYMPIC ATHLETE

I really am sick and tired of hearing of people developing strategy that the client really hasn’t a prayer of achieving, simply because "the "opportunities" part of the SWOT analysis throws them out as (undeniably attractive) possibilities. But .... the client doesn't have the resources, the skills or the will to make them happen (or any interest in the pain involved in developing them.)

I can also develop a strategy to win a gold medal at the next Olympics. I can put the best nutritionists, fitness coaches and trainers to work developing the optimum diets and training routines together and I can even follow them, as best I can. There’s the rub: “as best I can.” I am 46 years old and am not blessed with an Olympian physique and metabolism. No amount of motivation or enthusiasm or clearly articulated goals will change that. Even if I did have the requisite physical and mental capabilities, I may just not want to get up at 5:00 AM every single morning, come rain or snow, to go running. Those that prefer their beds at this hour are no lesser mortals than those that are prepared to half-kill themselves in pursuit of lofty ambitions.

I recently had the legal administrator of a well reputed, smallish US law firm tell me that they’ve had “ABC” consultants in and they’ve had “XYZ” consultants in, and they really don’t want yet another consulting firm coming in and charging them lots of money to tell them that they need to change fundamentally and become more like bigger firms. It’s not that they don’t want to do better and improve themselves. It’s just that they’d be quite happy to finish the New York Marathon before the cut off time to get a bronze medal, this year and next. They don’t need a gold, to be happy!

WHAT TO DO

If the future truly is unknowable (and yes, it is - get used to it!) then the firm has to base it’s strategy on a far more coarse grained view of the future than has been the norm in strategic planning. There are aspects of the firm's possible futures that its owners can aspire to, irrespective of how that future unfolds. This needs to be the focus. The overarching strategy in the First Gulf War was absolutely clear:  “Get Saddam Hussein out of Kuwait.” Everything else that happened on a day-to-day basis was guided by this. There was no comprehensive battle plan that covered every sortie; every mission. That unfolded as Operation Desert Storm progressed. The coalition forces were well equipped not only the execute their primary mission, but also to deal with contingencies as they arose.

Exactly the same principle needs to apply in our firms. We need clear, unambiguous, clearly communicated overarching goals, and then we need the freedom to start working towards them, each of us in our own daily practice and life. Not in accordance with a grandiose strategic plan, but step by step, persistently over time. (Of course, aligning the firm's performance measurement and reward systems with the goals helps, too.) At the same time, we need to be awake to market changes and get working on developing the dynamic resilience to be able to cope with a whole range of possible futures.

As a general rule, incremental is “good” and huge leaps are “bad” unless there is a really compelling opportunity or threat behind them that justifies them, in which case they should be tackled fearlessly so far as the firm is capable of doing so. Unanticipated consequences need to be expected. The wider the “missions” are communicated and the more transparent they are, the more likely it is that these unanticipated consequences will self-correct.

BUT.....

We need to get beyond the idea that strategy is just a plan. An athlete’s strategy to win gold (or finish the New York Marathon before cut-off) is not just that intent. It includes getting fit. It includes eating right. It includes the discipline of getting out and running at 5:00 AM in the snow.

In our firms, though, we regard things like getting our client satisfaction levels really up to “Wow!” and really looking after the kids that are the lifeblood of our firm and sorting out the 900lb gorilla that may bill a lot himself but he makes the lives of his subordinates (and sometimes even partners) miserable as something separate from strategy. At worst, it is seen as something that is up to the “marketing guys” or the “HR guys.” So we keep our pot bellies and wonder why we bomb out of the marathon at Mile 2!

Strategy rests on the three interlinked pillars of dynamic resilience: a well articulated goal; adequate resources; well honed skills. All three are equally important and all three need specific, ongoing attention during the strategy process!