What does a good strategy look like? How can we recognise the right one when we see it? The problem is, even in retrospect it's hard to recognise a good strategy. As often as not, we end up creating a myth.
Successful organisations often point to a clear strategy underlying their growth. They analysed the market, identified leverage points, focused their resources on those points, and reaped the benefits. Their success is a reward for good strategy and hard work.
Or so they say. I don’t think it really happens that way.
The strategies we describe in case studies are often an illusion. They’re stories we tell ourselves in order to make sense of our chaotic experience.
They probably contain elements of truth, but it’s a retrospective truth, one which can only be determined after the event when we’ve had a little time to think through what really happened. Life, lived forwards, happens differently.
How so? As I see it, the world is divided into two types of situations: ones where we can identify what’s going on, and ones where we can’t.
In the first type of situation, we observe what’s happening. We identify the forces driving the dynamics of the situation. We use this understanding to determine how we can influence things in our favour. So we define and then execute a successful strategy. Action emerges from this strategy.
Unfortunately, most of our competitors can do pretty much the same. If the dynamics are clear to us, then they’re probably clear to many other players. Occasionally we may find ourselves with “clear blue ocean”, but more often we end up in competitive deadlock, fighting over grains of market share.
Fact is, most of these simple situations have already been “solved” – someone has already found a way to exploit the dynamics.
In the second type of situation, strategic analysis is a waste of time. All we can do is experiment. We try something and see what the results teach us, then we refine our approach and iterate. As we learn more, we develop a repertoire of useful interventions. Eventually, with luck, hard work and persistence, a successful strategy emerges from our actions.
However, things look different in retrospect. When we look back on this second type of situation, we understand the underlying dynamics a lot better than we did at the outset.
We can now recognise the forces which apply and the actions needed to exploit them.
We can now see what a successful strategy looks like. So we tell ourselves a story about how we developed this strategy and hence executed it. We create a myth.
Myths are good. They help us make sense of the world. They can be a powerful way to transfer knowledge and inspire people.
They can also be misleading. In order to emphasize key elements of a situation, myths simplify out the chaos that is endemic to the real world. When we focus on myths, we start to believe that simple strategies are possible far more often than is actually the case. This lures us into attempting to define strategy before we really understand what’s going on.
At best, this means that we act on the basis of ill-founded assumptions. Often, it means that teams lose heart when they can’t come up with a clear strategy, or when their simple strategy fails as soon as they begin to execute it.
At worst, our strategy appears to work for a bit and we get ever more committed to a course of action that has no basis in reality.
Most digital initiatives happen in this second type of situation. The technology is changing rapidly. People are still learning how to integrate this technology into their lives. We often need to build a complex web of partnerships in order to succeed. Chaos is everywhere.
How can we deliver useful results within this chaos?
For a start, we shouldn’t throw away all notions of strategy and planning. Random action gives us no way to measure how well we’re doing, and hence no way to learn and improve.
We still need to develop plans as a baseline for assessing progress, but we need to recognise that this baseline is provisional, to be changed as we understand more.
Likewise, we shouldn't throw away our analytical skills. We need them in order to make sense of what’s happened and to refine our strategies accordingly. But we need to recognise that this analysis must be directed retrospectively as much as prospectively. A learning analysis more than a goal-setting one.
Most importantly, we need to abandon the comforting myths of strategy. Instead, we must be clear about the limits of our understanding and be prepared to initiate multiple, small experiments in order to extend those limits.
We need to accept that most of these experiments will “fail”. We need to persist in the face of these failures, learning from them in order to come to an effective strategy.
Success no longer goes to teams with the clearest strategy. It goes to those that fail, learn and keep going.