Designing, Testing, and Adjusting Strategy (Part 1)

Alright so remember last week we focused on guiding conversations to generate strategy. This week we’ll be exploring how to design, test, and adjust strategies. We use the term design purposefully because strategy work looks a lot more like a potter shaping a piece of clay than an accountant plugging formulas into a spreadsheet. A strategy begins to emerge when we focus on answering those four questions of strategic doing the questions we introduced to you last time. What could we do? What should we do? What will we do? And what’s are 30/30? But that’s just the beginning. We’ve incorporated a lot of design thinking into this agile approach to strategy and one of the fundamentals is that design is never done.

Similarly a strategy is never done. In this approach the first strategic action plan, those initial steps taken in the first 30 days, becomes version 1.0 of the strategy. Thirty days later it is updated and that becomes strategic action plan version 1.0 and then 1.2 and so on. The strategy emerges as you shape it. Consider a company like Amazon which celebrated 20 years in business just a little while ago. Way back in 1995 CEO and founder Jeff Bezos, his original strategy was to sell books more quickly and efficiently than bricks and mortar traditional bookstores. Today the company is producing original TV programs and movies they’re providing cloud computing AI platforms that others can build upon.

That’s a strategy that emerged as it was being shaped. As tempting as it is to develop long term strategies, the reality is that there are just too many variables completely out of our control for us to be able to predict the future. Lowell Catlett is an economist, a futurist, and a professor at New Mexico State University. He often starts his talks about the future with a confession you might not expect. He can’t really predict the future. Catlett points to research on the accuracy of economists forecasts on stock prices, on unemployment rates and the like. One study looked at seven thousand different economic predictions and found only forty seven percent of them were correct.

In other words flip a coin and you can beat the economists by 3 percent. Catlett’s take home message is that although you can’t predict the future you can prepare for it and the preparation is what helps us be adaptable when an uncertain future unfolds right before us. Our civic and business leaders do a great deal of thinking about the future, often setting ambitious long term goals. Perhaps your own company or your own community has a set of these big goals for the future. I know one large metropolitan region that set a goal over 20 years ago to build a light rail public transit system.

I know of several rural communities that set their sights on luring large auto manufacturing plants that promise hundreds of jobs. And I know more than one urban neighborhood that worked diligently to attract large foundation grants they were sure would reverse years of decline. Watch a few episodes of Shark Tank and you will see all sorts of people with big plans for both emerging and even established businesses. But what about that metro region? Still no light rail. Those communities looking for the big employer? Never happened. The neighborhoods eyeing those grant dollars? Not a dime. 99 of every 100 that show up for Shark Tank auditions, their plans just don’t pan out.

The people in these communities and organizations, those trying to take their businesses their communities to the next level looked ahead to the horizon, set big goals, but a recession knocked the props out. The tax revenue is expected to fund that light rail system never materialized. Some other community landed those auto jobs. And as for that big grant for the neighborhood, the foundation’s change their funding priorities. What about those fledgling entrepreneurs? Most will never make it. Big goals like the future itself are dependent on too many factors out of our control. Teresa Amabile a professor at Harvard offers a different perspective. Her area of expertise is in the power of small wins.

She notes that doubt and dwindling motivation comes on quickly when a big goal is missed. She advises business leaders to focus on small wins that lead to what she calls the Progress Principle, which is more confidence more high performance and more motivation to keep moving forward. Another researcher, John Bryson, from the University of Minnesota says that this same principle holds true for communities. He defines small wins for a community as, “…concrete, completed, implemented outcomes of moderate importance”. To get to the big payoff Bryson says communities need to set a progressive series of small win goals informed by a sense of strategic direction. Some of our own research confirms this notion.

We looked at over 300 community strategic planning efforts and found that those focused primarily on a progressive series of modest, near-time, easy win goals were more likely to be successful than those that focus primarily on bigger, more transformational, longer term goals. Although Amabile and Bryson talk about goals a more agile approach to strategy focuses more on strategic outcomes. Converting strategic opportunities to strategic outcomes is another important skill to be mastered. Having measurable strategic outcomes help us learn as we go. In Agile Strategy and Strategic Doing we are coming up with a set of hypotheses and establishing measurable strategic outcomes to help us know whether or not our hypotheses were correct. Former Proctor & Gamble CEO A.G.

Lafley recognized this more scientific approach to strategy, forming hypotheses and then testing them as a missing component of traditional strategic planning. He notes conventional strategic planning is not actually scientific. Integral to the scientific method are the creation of novel hypotheses and the careful generation of custom tailored tests of those hypotheses, two elements that conventional strategic planning typically lacks. So as this video comes to an end we hope you’ve been challenged to try a more experimental, agile, and iterative approach to strategy. Also when you identify a strategic opportunity begin translating it into a measurable strategic outcome. See you again soon.