Strategy’s Crux?
I recently finished reading Richard Rumelt’s latest book, The Crux, how leaders become strategists, published mid-2022.
The Crux comes a decade after Richard’s last book, Good Strategy Bad Strategy, which I heard him talk about at a conference in late 2012.
The Crux is an excellent read if you have what Richard describes as a gnarly strategy problem — too many complex issues to deal with — so how do you decide which ones to tackel first? In The Crux, he sets out a process by which you can identify which challenges to focus on first and provides a useful method to follow — what he calls a Strategy Foundry.
In The Crux, Richard also devotes some time to commenting on various weaknesses in strategy as a management discipline, a common theme with his earlier book.
One comment which caught my eye was a Richards reference to a 1997 Fortune magazine article by Gary Hamel, another leading thinker in the field of strategy. The article is available online if you search for “Killer strategies that make shareholders rich the top companies thrive” (sic).
In that article, Gary observed that:
“Of course, everyone knows a strategy once they see one — be it Microsoft’s, Nucor’s, or Virgin Atlantic’s. Anyone can recognize a great strategy after the fact. We also understand planning as a ‘process.’ The only problem is that process doesn’t produce strategy — it produces plans. The dirty little secret of the strategy industry is that it doesn’t have any theory of strategy creation.”
Fast forward 25 years, and in The Crux, Richard described this issue of the development of a theory of strategy creation as “the great missing piece in the foundation of almost all writings and teachings about strategy”.
Richard offers his view that “[The] process of diagnosing the challenge and then creating a response is the best theory we have for strategy creation”.
Richard typically works on gnarly problems, so this theory of strategy creation seems to fit very well for such situations, given the number of challenges faced. Richard also clarifies that he uses the term challenges to apply to potential opportunities in addition to threats or obstacles to overcome.
The maturity of strategy as a discipline
I’d argue that this lack of a formal theory of strategy creation is just one of several structural issues that are the crux of why many people struggle with strategy.
Strategy as a management discipline has been around since the 1960s, but it has not yet matured into the formal, robust discipline you see in other professions.
For example, I originally trained and qualified as a Chartered Engineer and gained certifications in Project Management and Systems Architecture. These disciplines all developed initially through the sharing best practices, formalizing this work into a “body of knowledge” and then establishing standards, qualifications and certifications.
Engineering institutions have been around for hundreds of years. Project management, which started its path to maturity in the 1960s alongside strategy, seems to have progressed much further than strategy during the last 60 years.
Take a course in project management today, and it will guide you through a flexible, scalable step-by-step methodology. Look at the writings on strategy and the process you should follow is far less clear.
If you put strategy on a line of increasing maturity, where would it sit compared to other disciplines? If you have also qualified in other disciplines, where would they be on this line? I’ve added my thought to the diagram below. Where would you put strategy?
If this diagram reflects strategy’s maturity as a formal management discipline, it starts to answer why so many people struggle with strategy — with its creation, communication and execution.
Strategy is still more of an art and practice than a formal discipline, and you need to put a lot of effort into figuring out a path through it unless you are with someone with more experience to guide the way.
Definitions of strategy:
Another issue is the wide range of definitions of what actually constitutes a strategy. Not having a shared understanding of what a strategy is can often trip people up at the first step.
When an individual or group wanted a definition of strategy, I used to give them Rumelts “Kernel” described in his book Good Strategy, Bad Strategy, and even then, I occasionally got told, “that’s not a strategy!”
In 2015, Andrea Ovans, a senior editor at the Harvard Business Review, published an excellent article entitled What is Strategy Again? She revisits a famous article from twenty years earlier by Professor Michael Porter, entitled What is Strategy? and then looks at all the other useful articles published on that theme over the last 50+ years.
Andrea boils down all the various definitions to just:
· Doing something new.
· Building on what you already do.
· Reacting opportunistically to emerging possibilities.
Although these definitions are helpful, they and all the other definitions seem only to cover part of what is needed to describe a strategy fully.
Getting to a holistic definition of strategy is like the parable of the blind men describing an elephant for the first time. Everyone is correct to some degree, but it has not yet led to a holistic definition.
In reviewing a range of definitions of strategy for my work as a coach and consultant, I recently applied a technique from the field of systems architecture, whereby you decompose a system into its form, function, and resulting behaviour.
Applying this approach to strategy yields:
Form = the elements or components which make up a strategy
Function = the process steps taken to create a strategy
Resulting behaviour = the intended outcome or theme of the strategy
The picture becomes a little clearer by applying a simple subjective 0–3 rating approach over the various definitions of strategy. See the table below.
Different definitions have different emphases on these three aspects of strategy. Some just focus on one aspect, while others are more balanced across all three.
Is this useful? For some of you, one of the existing definitions may be all you need to get going — “The Kernel” or “Where to play, how to win” from Roger Martin & AG Lafley.
However, suppose these definitions don’t seem to fully suite your needs. In that case, this Form, Function, and Properties perspective may allow you to create your own customized definition from the constituent parts of the other available definitions.
When explaining what strategy is now, I build up my definition from the simple A to B explanation using a diagram, overlay the insights from Porter/Ovans, and then review the other definitions. I find that this more holistic approach gives us a better shared understanding of what a strategy is before the real work of creating a strategy begins.
