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Growth strategy | Advisory | Force multiplier

Management

A Bias to Action (MFGSD!)

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“Plans are only good intentions unless they immediately degenerate into hard work” —Peter Drucker

For much of my career I have focused on helping organizations grow. This focus on growth has allowed me to sit at the interesting intersection of strategy, innovation, marketing, sales, and customer success in a number of leadership roles across a few industries.

With the benefit of this experience and perspective, I can clearly see that there are two consistent ingredients required for success: Strategy and execution.

I have written extensively about how important it is for organizations to develop agile and flexible strategic plans designed to achieve long-term goals in a hostile VUCA business environment.

However, a plan by itself is useless. There is something even more important to success than having a plan. What could that ingredient be?

A bias to action.

Most Plans Just Gather Dust

Despite the enormous investment of time and resources that leaders of organizations put into developing their strategic plans for the future, most fail. Why?

There are many common reasons why organizations don’t achieve the results they define in their strategic plans. These can include a bad strategy, flawed situational awareness, unrealistic goals, unforeseen (VUCA!) scenarios, weak teams, and even poor leadership. However, by far the biggest culprit is bad or non-existent execution.

Strategy without execution is a complete waste of time.

Business leaders know that nothing good happens in business until someone does something. The alternative to this proactive approach is simply to wait for the universe (or your competitors) to take action. In my experience, this reactive approach never ends up well. Unfortunately, too many people wait for things to happen instead of proactively making them happen. With this approach, you don’t make forward progress. You don’t learn anything.

Mary Kay Ash, they dynamic founder of Mary Kay Cosmetics said it best: “There are four kinds of people in this world: Those who make things happen, those who watch things happen, those who wonder what happened, and those who don’t know that anything happened!”

A bias to action is what makes things happen.

Focus on Execution

A common ingredient to every successful startup or highly functioning executive team that I’ve been involved with in my career has been a simple operating philosophy that I like to call “Move Fast and Get S#!T Done.” Over the years I’ve shortened it and made it a little more politically correct by referring to it by the acronym: “MFGSD”.

It boils down to a laser-like focus on execution.

Effective leaders make sure their teams know the vision and strategy of the strategic plan, ensure they have the support and resources they need to execute, and then get out of the way.

MFGSD!

How do you create this bias for action? It starts with effective leadership and developing your team. The goal is to move your people up what I call the “action ladder”:

  • Level 0 – Ignorant of opportunity or threat, therefore no action
  • Level 1 – Can identify there is an opportunity or threat
  • Level 2 – Proposes a viable solution for opportunity or threat
  • Level 3 – Can develop a plan of action to address opportunity or threat
  • Level 4 – Can develop a plan of action for opportunity or threat, and it is feasible
  • Level 5 – Solving the opportunity or threat by executing the plan of action

If you have ever had a “star” employee on your team, you will recognize how valuable (and rare!) Level 5 players are. They make sure important things get done.

Most execution problems are easy to fix. Start with your people. You have two basic options: Get the people in your organization motivated to perform at a higher level than they are today, or get higher-level people into your organization.

Go Forth, MFGSD!

The late Herb Kelleher, co-founder and former CEO of Southwest Airlines, said something that in my opinion perfectly sums up the concept of being strategic, having a bias to action and the MFGSD ethos: “We have a strategic plan. It’s called doing things.”

The important lesson for leaders – there is a very long list of things in the world you cannot control. Execution is not one of them. You can control your actions.

Pick a direction. Create a plan. Execute. React to what you learn. Keep going.

MFGSD!

That’s it. A very simple concept, and extremely powerful if you (and your team) practice it.

-Onward

Disrupt Your Organization Today!

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“Innovation is the ability to see change as an opportunity – not a threat.” – Steve Jobs

In January 2020, the World Economic Forum published a survey revealing the top five predicted major risks for economic disruption this year:

1. Extreme weather
2. Climate action failure
3. Major natural disasters
4. Biodiversity loss
5. Human made environmental damage

With the benefit of hindsight, it is now terribly obvious that they might have forgotten one!

We are just past the halfway mark of 2020, and have to acknowledge that a global pandemic can do an unbelievably effective job of disrupting pretty much everything and bringing the world to a near standstill. In just a few months, we’ve witnessed unprecedented challenges to our global supply chains, along with economic and social disruption across every industry.

Despite all this negativity, I’m beginning to think there might be something positive in it as well. For those leaders who are paying attention and willing to do some hard work, now is an excellent time to be thinking about how to innovate and transform your organization for the future.

In effect, disrupt your organization before someone (or something) does it for you.

Be the Fire and Wish For the Wind

Disrupting your organization is not an easy concept to embrace. It is a bit like cutting off the proverbial limb you are sitting on!

The opening section of the exceptional book, Antifragile: Things That Gain from Disorder by Nassim Nicholas Taleb, is titled “How to love the wind.” It begins by comparing our desire for stability to that of a candle. We want to protect the candle’s flame from the wind, to prevent it from being extinguished. Yet, a fire uses the same wind to fan its flames and grow stronger in the process.

“Wind extinguishes a candle and energizes fire.”

He then makes an analogy to VUCA forces, “Likewise with randomness, uncertainty, chaos; you want to use them, not hide from them. You want to be the fire and wish for the wind. This summarizes this author’s non-meek attitude to randomness and uncertainty.”

So what is the takeaway?

The immediate, pragmatic, and safe response to getting hit with a crisis like the global pandemic, is to protect the candle. Our natural inclination is to save ourselves, our loved ones, our organizations, from the overwhelming risk and danger.

However, the VUCA forces in the environment are not going away. Not today. Not ever. If anything, they are only going to become stronger. Therefore, it makes logical sense to embrace the uncertainty and volatility, to make it the new telescope that we view the world through, and use it to sharpen our strategic plans for the future of the organization.

Embracing Change

In the business world, change is the only constant.

Strategic leaders must be receptive to change. Look for it. Embrace it.

Whether it is AI and machine learning, or robotics, or the gig economy, or the pandemic…almost every organization in every industry faces severely disruptive, if not existential, threats every day.

The dynamic forces of free markets don’t grant immunity to any individual, or any organization. Therefore, the best solution is to embrace it.

Here is a great data point that demonstrate the level of market disruption, churning, and creative destruction in the global economy: Only 52 of the original Fortune 500 companies are still in existence today. Driven by technology, innovative new business models, and VUCA market forces nearly 9 out of every 10 Fortune 500 companies that were on the list in 1955 are gone, merged, or contracted.

If you need some extra motivation, here’s a great example from recent business history: Kodak.

Kodak was at one time the dominant global provider of camera film, photo paper, and cameras with over a 90% market share. Then complacency (and a healthy dose of corporate hubris) set it. Their leadership refused to acknowledge the existential threat of digital photography. After seeking bankruptcy protection in 2012, the company has had to go down a long and painful road of reinventing itself in the face of the digital revolution. Today it is a mere shell of its former self.

The kicker to this story? Kodak actually invented the digital camera in 1975 but did not commercialize it out of fear of cannibalizing their core business. Ouch!

Strategic Suggestions

Are you a leader of an organization facing disruption from marketplace competitors and contemplating the potential impact of VUCA forces in your business environment?

Here are a few strategic suggestions for how best to navigate through it:

  • Focus on the customer. At the end of the day, if you don’t have a customer, then you don’t have a business. Therefore, it makes a lot of sense to listen to them. Understand their needs, wants, desires. Get to know customers so well that you can begin to anticipate the future and provide them what they don’t even know they need, want, or desire yet!
  • Study the market. Markets for every industry are crowded and complex. Technology innovation is only making it more cloudy and confusing for buyers and sellers in the ecosystem. The solution is two-fold: Get crystal clarity on your ideal client, so that you truly understand their wants and needs. Then, you need to nail your positioning and value proposition so that your organization is so clearly differentiated that only you can provide the solution they need.
  • Think like a startup. Startups usually begin with nothing but an idea. They have no clients or products to protect. No corporate hierarchy or political backstabbing to battle. Just a blank sheet of paper and a passion for developing something new or improved, and then bringing it to the market. This mindset, and way of working, is something that established organizations would benefit from.
  • Question everything. This suggestion is closely related to the previous bullet on thinking like a startup. Many organizations are not willing to revisit their business models, operating assumptions, or other “sacred cows.” This myopic thinking creates huge strategic blind spots. The answer? Be inquisitive. Question everything. Don’t assume history will repeat, or that you know all the answers. Most big companies are often good at fostering “sustaining” innovations – ones that incrementally improve their positions in established markets – yet they are incapable of dealing with innovations that completely disrupt those very same markets. Why? They are too focused on protecting what they have today, instead of building something new for tomorrow. A bird in the hand is worth two in the bush!
  • Open communication channels. To enable the suggestions listed above you need to make sure you have open, honest, and collaborative communications channels across your organization. This is not only vital for establishing robust Situational Awareness, but also for making sure you have a diverse set of ideas and experiences to consider in your strategic decision-making.Don’t stop with just listening to your customers. Listen to your prospects. Listen to your employees. Listen to your partners. Listen to your critics. Not everything they say will be accurate, or strategically relevant, but the truth is always in the middle – some of it will be useful!
  • Build resilience. I’ve written before that I think many organizations are guilty of “swimming naked”, or over-optimizing their businesses, thereby reducing their ability to quickly pivot and change direction when confronted with adversity. The pandemic crisis has exposed just how fragile many supply chains and manufacturing processes are, and the vulnerability of huge global industries like airlines, retail, and hospitality to VUCA shocks. Leaders should seek to build more resilience into their organizations, which could manifest itself in many ways: flexible workforce, more technology, redundancy, better analytics, extra inventory, etc.
  • Become more agile. This global crisis should inspire more leaders to re-think the balance between efficiency and the need for resilience. Those leaders, and organizations, who embrace the VUCA Strategic planning process, will gain agility. By thinking through and planning for alternative scenarios, and taking a portfolio approach to managing the organization, they will be able to act quickly, and decisively, when confronted with new disruptions.

The Time to Act is Now

This is a perilous and uncertain time for business leaders. We are truly in uncharted waters. We know that most industries are likely going to experience significant fundamental changes as we emerge from the initial tactical responses to the pandemic. We also know that organizations will need to change their strategies to prepare for the new environment.

However, most won’t act. Why?

Most organizations don’t innovate very well or attempt to disrupt their own business. Driven by the desire to show the public markets consistent quarterly growth they are trapped in the historical way of doing business and searching for “safe” incremental gains.

There are a few notable exceptions to this type of thinking: Amazon, Alphabet (Google), and Tesla come to mind. They have mastered a delicate balance to optimize for maximizing short-term gains, while also building strength and resiliency, and innovating to capture long-term growth and profit from new markets.

In times past, leaders would be very reluctant to shift their direction or strategy out of fear of alienating the market, or shareholders, or employees. Ironically, the unprecedented current level of VUCA uncertainty and fear in the global economy has given leaders a huge and rare gift. It is not quite a clean slate, but it is a once-in-a-lifetime opportunity to make transformational changes with less risk.

Most organizations, regardless of their industry or current strategy, will likely find themselves in a new industry structure and competitive landscape post-pandemic. If they don’t make significant adjustments today, they will likely lose market share to more agile competitors. They will also find themselves with even fewer strategic options in the future as shareholders seek to recoup losses and workers move on to organizations with better growth opportunities.

Strategic leaders should consider that the best use of their limited time and organizational resources might not be in fixing the current business, but rather inventing the future one. By leveraging some of the suggestions above, strategic leaders will listen carefully to the market, build resiliency and agility, and develop new strategies.

Even though now is the perfect time to disrupt your organization and begin a transformation, most leaders won’t dare to do it.

That’s a huge missed opportunity. Perhaps a fatal one…

Conclusion

Although the timing is still uncertain, I have confidence that the public/private partnership will be successful, and that we will find successful treatments and a vaccine for COVID-19. When this pandemic crisis is over, I believe we will witness one of the greatest periods of innovation and business acceleration in the history of humankind.

This means that right now, today, is a once-in-a-lifetime opportunity for progressive leaders to take a step backwards, pause, and think about how their organization should transform in order to be better positioned in the future.

Seek out the opportunities to disrupt and disintermediate your organization in the market. When you find them, embrace them, and figure out how to make them part of your VUCA Strategic Plan.

If you don’t take these steps and act with some urgency, then some other company likely will. In fact, they are probably already making plans to do so…

-Onward

Creating Your VUCA Strategic Plan

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“Without goals and plans to reach them, you are like a ship that has set sail with no destination.” – Fitzhugh Dodson

Introduction

The first half of 2020 has certainly proven that we live in a fast-moving and extremely unpredictable world. For leaders of organizations it important to note that these characteristics are not going away, in fact they seem to be accelerating.

I have adopted the military term “VUCA” as the best description for this new operating environment – It is an acronym, standing for: Volatile, Uncertain, Complex, and Ambiguous. It is also the philosophical foundation for the VUCA Strategic Planning framework, which is designed to be an agile approach for strategic planning that not only accommodates uncertainty, but also embraces it.

In the context of managing organizations, leaders need to consider these uncertain VUCA internal and external factors when they set long-term goals and develop strategies to achieve them. This process culminates in the creation of a VUCA Strategic Plan for the organization.

Definition of a Strategic Plan

In simple terms, a plan can be defined as a diagram or list of steps, with details of timing and resources, that will be used to achieve an objective, overcome a challenge, or accomplish some specific task.

A VUCA Strategic Plan is a complete contingent plan of action that an organization uses to achieve its long-term goals in the market. It lists out the various possible situations a business is likely to find itself in and specifies the strategy and set of actions that it should take in each of the situations in order to achieve success.

I have heard it said that a strategic plan can be thought of as a very structured approach to problem solving. At a macro level, there are three vital components: (1) Thoughtful diagnosis that defines or explains the challenge or opportunity; (2) A guiding policy, or strategy, for dealing with the defined challenge; and (3) An action plan designed to carry out the strategy.

When done well, the strategic plan serves as a blueprint, which codifies the planning foundation and strategy decisions made by the leaders of the organization, and the roadmap for moving forward. In addition to summarizing the Core Ideology, Envisioned Future, Situational Awareness, and Strategy, it should detail a comprehensive action plan for the team that brings the organization closer to achieving its long-term goals. It is essentially articulating the “who” and “what” and “where” and “when” for the organization to take action.

It also serves as a vital decision-making framework for business leaders to evaluate options, consider alternatives, and select the best approach. These decisions, which occur daily throughout any organization, include everything from capital investments to operational priorities to marketing to hiring to sales approaches to how each individual manages their day. Without a strategic framework to guide these decisions, the organization will be unfocused and runs the risk of not achieving the desired results and creating confusion and dissention amongst the team.

It is important to call out that a VUCA Strategic Plan is not focused on choosing specific goals (that is the purview of leaders and boards of directors as part of the planning process) but only with how to achieve those goals once they have been identified.

VUCA Strategic Planning Framework

Here is a quick overview of the VUCA Strategic Planning framework: The Core Ideology of the organization is the planning filter that any strategy can be evaluated against, and the Envisioned Future is the definition for the desired future state. When combined with robust Situational Awareness, detailing the current state of the organization and its operating environment, your Core Ideology and Envisioned Future create the springboard for strategy development. Previous articles have described these three planning elements in much greater detail:

  • Core Ideology – Defining the mission, values, and purpose of the organization. These elements describe why the organization exists and what it stands for. They form the “true North” guideposts for making strategic decisions and are the foundation for any VUCA plan.
  • Envisioned Future – Defining a clear vision of what the organization aspires to become or achieve and your long-term goals. These elements explain the desired “future state” of the organization, and the long-term goals you and your team are working towards achieving in order to get there.
  • Situational Awareness – A thorough analysis of the environment in which the organization operates. Situational awareness involves knowing where you are (“current state”) and being aware of what is happening in your environment (internal and external perspective), in order to better understand how information, events, and one’s own actions will impact both immediate and future outcomes.

With this planning foundation in place, leaders are then ready to consider strategic options that will enable the organization to bridge the gap between the current state and the desired future state while factoring in the operating environment as revealed by the situational analysis. This is where strategy comes into play.

  • Strategy – Defining the approach that will guide individuals and teams on “how” to achieve the short-term objectives that move the organization from its starting point towards achieving its long-term goals. Strategy plays a vital role in VUCA strategic planning. It is quite literally the vehicle that will help the organization bridge the “gap” between where it is today (its current state) and where it wants to be in the future (desired future state).
  • Strategy Decision – Once a strategy has been formulated, leaders must then decide: Is it the right strategy to help the organization achieve its long-term goals? If the decision is to move ahead with executing a chosen strategy then it is time to commit, and proceed with creating a complete Strategic Plan designed to ensure the successful execution of it.

In its simplest form, a well-crafted strategy should bridge the gap between “current state” and “future state” for the organization. The strategic planning process therefore culminates in the creation of a VUCA Strategic Plan.

  • VUCA Strategic Plan – A clear time and resource based plan, that details the strategy and actions by which the organization intends to reach its Envisioned Future.

Key Elements of a VUCA Strategic Plan

Developing a logical and realistic action plan is critical for success. It should detail the high-level actions the organization is capable of taking, and the required resources, that will result in overcoming the defined challenge or achieving the desired outcome.

Key elements of a VUCA Strategic Plan include:

  • Planning Foundation – It is important to document and reinforce the Core Ideology and Envisioned Future of the organization, and clearly identify the strategic gap. Also, document the key Situational Awareness elements and analysis, covering both the internal and external perspectives, and clearly articulate the chosen strategy.
  • Objectives – One of the key components of a VUCA Strategic Plan is to create short-term objectives which contribute and drive towards the attainment of the long-term goals articulated in the Envisioned Future of the organization. Objectives are delegated and resourced, and become key drivers of activity for the team. For maximum effectiveness, objectives should be defined using the SMARTER framework.
  • Resources – In the context of strategic planning, resources are the people, money, and assets required to execute each element of the plan. Effective resource planning not only ensures the successful execution of the plan, but also establishes ownership of each task.
  • Timelines – It is important to have an estimate of how long each element of the plan should take to complete. In addition, the plan should have anticipated starting points and deadlines, and often have interim check-points identified. This will help load balance and sequence the work, but also serves as a vital management KPI to ensure plan execution is on track.

Having all of this information documented in one coherent and easily shareable plan will not only help leaders to manage the activity, but also significantly improves the chances of gaining support and adoption from employees and stakeholders. This is a critical component of successfully executing your plan.

Next Steps

Once your core VUCA Strategic Plan is developed, there are three final elements in the VUCA Strategic Planning framework designed to ensure successful execution and the achievement of the defined long-term objectives for the organization:

  • Scenarios – As the COVID-19 pandemic has so clearly demonstrated, we should always prepare for the unexpected. In the Scenarios phase of the VUCA Strategic Planning process, we seek to do that by asking “what if” questions in order to identify potential VUCA impacts that could derail the strategy or impede our ability to achieve the defined objectives. Documenting these scenarios and your potential response(s) is a vital component of every VUCA Strategic Plan.
  • Portfolio – In addition to Scenario planning, there is another important risk mitigation mechanism built in the VUCA Strategic Planning framework. The concept of Portfolio management is often deployed by large organizations who want to reduce their risk exposure by making several competing strategic bets. It is also common to find it in the startup world where organizations sometimes run multiple simultaneous experiments to see what gets the most traction. The goal is to mitigate risk of primary plan failure. The basic concept is to have a fall back position in case the primary strategy and plan blows up.
  • Management Cycle – This is the final element of the VUCA Strategic Planning framework, and the most important. I like to call it the “action phase” of strategic planning, because once the plan has been delegated to the responsible individuals and teams, this is when they take action. Once execution begins, it is also where the leaders of the organization and their teams will spend most of their time monitoring progress and making important decisions and course corrections including the continuous loop of: deciding whether to start/continue, taking action, evaluating results/feedback/inputs, and deciding whether to pivot, or stop.

Much more on these final three elements in future articles.

-Onward

Making the Strategy Decision

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“The inability to make decisions is one of the principal reasons executives fail. Deficiency in decision making ability ranks much higher than lack of specific knowledge or technical know-how as an indicator of leadership failure.” – John C. Maxwell

Leaders and their teams must make strategic decisions throughout the VUCA Strategic Planning process. Aside from the ultimate “go/no-go” execution decision, perhaps no decision is more important that the one made after a strategy has been formulated: Is it the right strategy to help the organization achieve its long-term goals, and should a strategic plan be created in order to execute the chosen strategy?

Decision-Making Defined

In psychology, decision-making is defined as a cognitive process, which results in the selection of a belief or a course of action among several possible alternative options. In a business context, decision-making is the process of identifying and evaluating alternatives to pick one best option based on the knowledge, experience, values, preferences and beliefs of the decision-maker. 

Research suggests that each of us make thousands of decisions every day, many of them sub-consciously. These decisions range from the mundane, which generally do not require much thought (for example, “White shirt or blue shirt?” or, “Do I want another cup of coffee?”) to the more complex (ex. “Should I look for a new job?” or, “Where do I want to live?”) which can be significantly more difficult to decide.

It is the same with organizations. Leaders and their teams are making decisions every day and at every level. Decision-making within the organization can range from routine operational decisions, to more complex managerial decisions, all the way up to challenging strategic decisions, which can shape the future trajectory of the organization.

The Peril of Making Strategic Decisions

The most important and difficult decisions – the strategic decisions with significant consequences for the performance of the team or the future success and viability of the organization – carry the most risk for leaders. Strategic decisions call for a thoughtful approach.

Strategic decisions are risky, and never easy. They often cause leaders the most angst because they are decisions that are both high in potential impact, but also high in terms of investment of scarce company resources. Furthermore, strategic decisions are not transactional (like a consumer selecting a box of cereal at the grocery store) but instead are complex and dynamic situations where the leader can influence the outcome by how they lead and manage the team. Adding even more complexity, their organization is likely competing with others – where picking the right strategy and doing better than rivals could mean the difference between winning and losing, between growth and bankruptcy. Adding in the additional uncertainty of a VUCA (volatile, uncertain, complex, ambiguous) environment just intensifies the risk.

This means strategic decision-makers need two vital, yet often contradictory skills: clear analysis, and the ability to take swift and bold action in the face of uncertainty.

Great Leaders are Decisive

Great leaders are decisive – they understand how to balance emotion with logic, and then effectively make decisions that positively impact their organizations and all their constituents.

Making good strategic decisions in challenging situations is always difficult because these types of decisions involve change, uncertainty, anxiety, stress, and sometimes the unfavorable or less than enthusiastic reactions of others.

Great leaders also have great situational awareness – they instinctively know when to move quickly and proceed with decision-making using whatever information is available, versus when they need to take more time and gather additional information.

Avoiding Paralysis by Analysis

Uncertainty creates an uncomfortable decision-making platform for leaders, and can lead to a phenomenon called analysis paralysis.

This is a common dynamic where decision-makers try to eliminate the uncertainty they are facing by over-analyzing the situation. Often to no avail.

The challenge with delaying a decision in order to gather more information is knowing when to stop. Many leaders mistakenly believe you cannot have too much information, but data gathering takes time and having too much data to consider can be paralyzing, and a distraction from taking a big picture view or focusing on the most important data points.

The reality is most decisions, especially the strategic ones, are made with less than perfect information. The pressure of trying to craft strategy that overcomes the uncertainty caused by a VUCA environment just ends up wasting valuable time and energy – scarce resources better spent on planning and execution.

Getting to Done

Effective strategic decision-making has another vital element: It is not just about selecting the alternative that best satisfies the business objective, it is also about making sure it is something that is implemented and actually gets done.

An unfortunate by-product of focusing too hard (and too long!) on selecting the ideal option is neglecting the opportunity cost of not taking action sooner.

Scott McNealy, co-founder of Sun Microsystems and its CEO for 22 years, was asked how he made difficult decisions and responded by saying, “It’s important to make good decisions. But I spend much less time and energy worrying about ‘making the right decision’ and much more time and energy ensuring that any decision I make turns out right.”

Merely deciding on the “best” option does not guarantee a successful outcome, just as making a poor choice does not necessarily doom the initiative to failure. It is what happens next, which determines your success.

As the immortal management theorist, Peter Drucker said, “Unless a decision has ‘degenerated into work’, it is not a decision. It is at best a good intention.”

This is the connection of decision-making into the VUCA Strategic Planning framework.

Where Does Decision Making Fit into VUCA Strategic Planning?

As a quick refresher, the Core Ideology of the organization is the planning filter that any strategy will be evaluated against, and the Envisioned Future is the definition for the desired future state. When combined with robust Situational Awareness, detailing the current state of the organization and its operating environment, your Core Ideology and Envisioned Future create the springboard for strategy development. Previous articles have described these three planning elements in detail:

  • Core Ideology – defining the mission, values, and purpose of the organization. These elements describe why the organization exists and what it stands for. They form the “true North” guideposts for making strategic decisions and are the foundation for any VUCA plan.
  • Envisioned Future – defining a clear vision of what the organization aspires to become or achieve and your long-term goals. These elements explain the desired “future state” of the organization, and the long-term goals you and your team are working towards achieving in order to get there.
  • Situational Awareness – a thorough analysis of the environment in which the organization operates. Situational awareness involves knowing where you are (“current state”) and being aware of what is happening in your environment (internal and external perspective), in order to better understand how information, events, and one’s own actions will impact both immediate and future outcomes.

With this solid planning foundation, leaders are ready to consider strategic options that will enable the organization to bridge the gap between the current state and the desired future state while factoring in the operating environment as revealed by the Situational analysis. This is where strategy comes into play:

  • Strategy – defining the approach that will guide individuals and teams on “how” to achieve the short-term objectives that move the organization from its starting point towards achieving its long-term goals. Strategy plays a vital role in VUCA strategic planning. It is quite literally the vehicle that will help the organization bridge the “gap” between where it is today (its current state) and where it wants to be in the future (desired future state).

Formulating strategy is not easy. Unfortunately, for leaders it only signals the beginning of the next phase of the VUCA Strategic Planning process – making a strategy decision:

  • Strategy Decision – once a strategy has been formulated, leaders face a significant decision: Is it the right strategy to help the organization achieve its long-term goals? If the decision is to move ahead with executing a chosen strategy then it is time to commit, and proceed with creating a complete Strategic Plan designed to ensure the successful execution of it.

Basic 5-step Decision Making Process

Making the strategy selection decision can be simplified by following a proven 5-step process:

  1. Identify the decision: The first step in making the best decision for the organization is to recognize the problem or opportunity, and decide to address it. At this stage in the VUCA Strategic Planning process, that should be straightforward to answer! Clearly, the objective is to pick a strategy.
  2. Gather information: Next, you want to gather the information you need in order to make a decision based on facts and data. If you’ve been following the VUCA Strategic Planning framework so far, this should also be in your hands at this point. You and your team will have gained solid Situational Awareness of the salient factors present in your operating environment. The Core Ideology and Envisioned Future of the organization should provide the context you need to make a decision.
  3. Identify alternatives: As part of the strategy formulation process, your team likely identified several potentially viable alternative strategies with one emerging as the preferred approach. By identifying these potential alternatives, you are ready for the next step.
  4. Weigh the evidence:In this step, you need to evaluate the feasibility, acceptability, and desirability of each alternative option. There are many sophisticated techniques to do this, but the simplest is just to consider the pros and cons of each option. Which leads us to the final step.
  5. Choose among alternatives:In this final step, you want to choose the strategy option that has the highest probability of success. When it is time to make your decision, be sure that you understand the risks involved with your chosen strategy. Sometimes a new strategy will emerge at this stage, formed by combining elements of alternative strategies.

Criteria for Evaluating Your Strategy Decision

Once you have selected your strategy, it is a good idea to do a quick evaluation before proceeding. Here are some key elements to consider:

  1. Core Ideology: The chosen strategy does not contradict the Mission and Values of the organization, and supports or enables your Purpose.
  2. Situational Awareness: You have clarity on the starting position (current state), and have considered all of the environmental (internal and external) factors that could influence the successful execution of the chosen strategy.
  3. Envisioned Future: You (and your team) still believe in the long-term goal (future state) for the organization, and that it can be achieved, or enabled by, the successful execution of the strategy.
  4. Diagnosis: The diagnosis of the challenge is reasonable, and you can defend it. This is the logical and fact-based explanation for the reason(s) behind the challenge that the organization is facing.
  5. Hypothesis: A clear and simple hypothesis on the solution to the challenge, one that the strategy could reasonably be expected to solve.
  6. Bias: A cognitive bias is a type of error in thinking that can affect our decision-making and judgement. There are many to consider, but you obviously want to avoid them when choosing your preferred strategy.

These elements provide helpful criteria for leaders to use when evaluating any considered strategy.

If, and only if, these conditions are satisfied, then you are in a good position to make the final decision and proceed with developing a VUCA Plan.

Next Steps

Once a leader has made the strategic decision on strategy, it is time to make the decision tangible by developing a plan that details the execution of the strategy leading to the achievement of your defined objective(s).

Upcoming articles will cover the details of creating a VUCA Strategic Plan, the importance of scenario analysis in strategic planning, and the value of taking a portfolio approach to managing your strategic initiatives.

-Onward

What is Your Strategy

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“Strategy can be defined as the determination of the long-term goals and objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals.” – Alfred D Chandler, Jr.

Introduction

Formulating the strategy that an organization or team will use to achieve its envisioned future is a key component of the VUCA Strategic Planning process.

The word “strategy” has as many different meanings and interpretations as there are leaders of organizations who want to have a strategic plan. This is unfortunate because this lack of clarity and confusion often leads to disappointment and has given strategic planning an undeserved bad reputation.

The rest of this article will present a simple definition of strategy and how it fits into the VUCA strategic planning process.

Strategy Defined

In the realm of VUCA Strategic Planning, “strategy” has a central and extremely important role to play. To ensure the highest probability of success, the leaders of an organization must choose and articulate a clear strategy to follow. It will define the approach, or the “how”, that individual contributors and teams use to do their work and achieve their short-term objectives. The complete VUCA Strategic Plan is then built around the execution of the chosen strategy. Ultimately, successful execution of the strategy will propel the organization towards achieving its long-term goals.

This leads us to a simple VUCA Strategy definition: The approach that will guide the team on “how” to achieve the short-term objectives that move the organization from its current state towards achieving its long-term goals.

Where Does Strategy Fit Into VUCA Strategic Planning?

Strategy plays a vital role in VUCA Strategic Planning. It is quite literally the vehicle that will help the organization bridge the “gap” between where it is today (its current state, or sometimes referred to “as-is”) and it wants to be in the future (desired future state).

The Core Ideology of the organization is the planning filter than any strategy should be evaluated against, and the Envisioned Future is the baseline definition for the desired future state. When combined with robust Situational Awareness, which details the current state of the organization and its operating environment, your Core Ideology and Envisioned Future create the springboard for strategy development. Previous articles have described these three planning elements in greater detail:

  • Core Ideology – defining the mission, values, and purpose of the organization. These elements describe why the organization exists and what it stands for. They form the “true North” guideposts for making strategic decisions and are the foundation for any VUCA Plan. With this solid planning foundation, you will have a clear understanding of what your organization stands for and its unique strengths. This understanding provides greater clarity and a useful strategy filter for making critical business decisions that affect the future of your organization.
  • Envisioned Future – defining a clear vision for what the organization aspires to become or achieve, and your long-term goals. These elements explain the desired “future state” of the organization, and the long-term goals you and your team are working towards achieving in order to get there.
  • Situational Awareness – a thorough analysis of the environment in which the organization operates. Situational awareness involves knowing where you are (“current state”) and being aware of what is happening in your environment, in order to better understand how information, events, and one’s own actions will impact both immediate and future outcomes. This typically includes an analysis of internal and external factors with a focus on the organization, its market(s), and its customers.

In the definition of Situational Awareness above, the environment refers to everything that is going on around the individual, team, or organization. The reason we focus on important elements of the environment is to emphasize that situational awareness is ultimately about enabling an individual, team, or organization to get something done. This can be a task, a project, an initiative, or anything else that requires interaction with, and reaction to, relevant elements of the environment.

With this solid planning foundation, leaders are then ready to consider strategic options that will enable the organization to bridge the gap between the current state and the desired future state while factoring in the operating environment as revealed by the Situational analysis. This is where strategy comes into play.

  • Strategy – defining the approach that will guide individuals and teams on “how” to achieve the short-term objectives that move the organization from its starting point towards achieving its long-term goals.

As you can see, in its simplest form, a strategy should bridge the gap between “current state” and “future state” for the organization.

The Value of Strategy Frameworks

Formulating a strategy for the organization to achieve its long-term goals is a complex endeavor because it is highly situational – every organization is unique, more often than not operating in an uncertain VUCA (volatile, uncertain, complex, ambiguous) environment, and their situation is unique. The need for VUCA Strategic Planning has never been greater.

Many leaders find strategy formulation to be extremely challenging, yet intellectually stimulating at the same time. In many respects, defining strategy for the organization is the very essence of leadership!

Strategy formulation is not easy. Depending on the current state of the organization, the envisioned future, a comprehensive situational analysis, and the size/complexity of the “strategy gap” there can be any number of potential strategies and variations to consider.

Given the complexity of operating environments, marketplaces, and competitive forces, this is one of the most challenging tasks for modern business leaders. Fortunately, there are a number of established frameworks that can help us to identify the best strategy for the organization to reach its identified long-term goals.

Perhaps the simplest strategy framework is the basic “gap analysis” – a strategy designed around answering the question: “How will we get from here to where we want to be?”

There are a number of other strategy frameworks, some of these (like SWOT and PESTEL) are quite useful during the Situational Awareness phase of strategic planning. Each of these incorporate different approaches to evaluating the challenge and formulating the resulting strategy. A few of the more well-known strategy frameworks include:

  • SWOT
  • PESTEL
  • Porter’s Competitive Forces
  • McKinsey 7-S Framework
  • Pareto Analysis
  • Constraints Analysis
  • VRIO Analysis
  • BCG Matrix
  • Ansoff Growth Matrix

Future articles will explore each of these, and their application, in greater detail.

The Basic Elements of a Good Strategy

No matter what strategy framework you decide to use (if any!) there are five common elements to any good strategy:

  1. Situational Awareness: You must have clarity on the starting position (current state), and consideration of the environmental factors that could influence your success.
  2. Envisioned Future: A realistic long-term goal (future state) that can be achieved, or enabled by, the successful execution of the strategy.
  3. Diagnosis: A reasonable diagnosis of the challenge. This is the logical, and fact-based, explanation for the reason(s) behind the challenge the organization is facing.
  4. Hypothesis: A simple hypothesis on the solution to the challenge, one that the strategy could reasonably be expected to solve.
  5. Action Plan: A logical and feasible action plan, spelling out the high-level actions the organization is capable of taking that would lead to overcoming the challenge or achieving the objective.

These elements provide helpful criteria for leaders to use when evaluating any considered strategy.

Next Steps

Formulating strategy is not easy. And unfortunately, it only signals the beginning of the next phase of VUCA Strategic Planning because once a leader formulates a strategy they must make the all-important “go or no-go” decision. If the decision is to move ahead with a chosen strategy then it is time to build a complete strategic plan around it.

-Onward