Overview on the Evolution of Strategy
What is this “strategy” that we hear so often in business jargon? Does it refer to corporate or business? Marketing or product design? Does it matter? Defining the term might be simple, but “figuring it out” is not easy. First, let’s see what this modern buzzword definitely is not.
It's not an arcane concept described with an awe-inspiring script that only a few select can fathom. Nor is it a grant desire or a set of smart goals expressed in inspiring language.
It’s not a call to action, a call to “determination” or anything adequately ambiguous to elicit real objections, but somehow, magically, will produce miracles (like unsupported, above industry average numbers). Strategy is not impracticable objectives or solutions to vague problems and undefined challenges.
A good strategy breeds success.
It’s a simple and obvious statement, but also surprisingly misleading.
Defining Success
Formulating a strategy without having a clear vision of its successful implementation is fruitless. If the first step of a successful strategy is accurately diagnosing the challenge, then we need to distinguish between two kinds of challenges based on the time horizon they address: the finite and the infinite.
The notion of success of a strategy aspiring to overcome a challenge in an infinite time horizon we’ll call a “Just Cause”. The successful implementation of a strategy addressing a challenge in a finite time horizon we’ll simply call it a “success”.
In a finite time horizon, a challenge is the temporary shift of the environment that forces action.
The strategy must respect and correspond to the same time period. Thus, defining the results of a successful strategy includes an end date by which the results will have been materialized.
An accurate diagnosis of the challenge is crucial at this point. You wish to bring a change. What is it that needs changing? State the challenge with concise, simple words. Then state what success looks like.
The former informs the latter. If you can’t articulate with simple and concise language what success looks like, revisit the diagnosis. Reality is messy, it’s your responsibility to simplify it.
The COVID-19 pandemic, for example, has introduced new ways to empower employees. Work-from-home policies were a new experience for everybody. Returning to the old way might not be so simple. What changes do your people want to see?
Wording plays a key role in the process. It has to be simple enough for a five year old to understand. Clear language reflects clear thinking. Put your definition of success into a clear, straightforward sentence.
This is important. “Overcoming the adversity and emerging stronger” is not a strategy, nor a definition for success. Make it specific to the challenge and put a time stamp on it. Imagine the state of your company thanks to having overcome the challenge. What will it look like?
The result of this process is illuminating. You’ll find it much easier to assign metrics and indicators that will inform you of the progress of the strategy with the end goal in mind. A distinct definition of success ranks priorities.
Explicitly ranked priorities guide decisions. When you can envision what success looks like, you know what matters most. You’ll know which metrics and KPIs you’ll monitor and what their respective values will be.
Defining success is a decision that eliminates or makes irrelevant ten, a hundred, or a thousand other decisions. Decision fatigue is real, don’t underestimate it. Jeff Bezos said in an interview “Why do I need to make a hundred decisions a day? If I make, like, three good decisions a day, that's enough, and they should just be as high quality as I can make them”.
That’s the goal. Fewer, but higher quality decisions. Our mental capacity is limited and even small decisions over a small time interval can be painfully draining. When depleted, our judgment is compromised and we’re extremely prone to mistakes. Limit the decisions and make the most important ones early.
Attempting to formulate a strategy without a clear vision of success is like navigating in a cornfield without a compass. If you don't know where you're going, you'll surely end up somewhere, but it might be quite far away from the other side.
A vague destination leads to wandering and incoherent action. Envisioning success is equivalent to holding a compass that points to the other side of the field.
How you get to the other side matters a lot, too. To figure that out you’ll have to consider the values of your current culture and your desired culture. The successful implementation of the strategy depends on this.
If leadership encounters resistance each time it tries to implement a new strategy, then either the organization lacks alignment in a more fundamental level or the challenges the leadership chooses to confront are disjointed, and not aligned.
Not every new “toy” is worth the fuss, nor is every challenge worth the confrontation. Indiscriminately reacting to environmental changes and excessive focus on the finite lead to resource waste and questionable ethics.
Choosing the right field to navigate through and whether the destination matters has a great impact on the long-term survival of the organization. But we digress, we’ll discuss it when we refer to the Just Cause later.
Defining Failure
Explicitly described success educates the decision-making process. Defining failure is equally informative. It’s like having a secret compass when navigating through the field. Except that this one points directly to the other side. It tells you when you get closer and instructs you on which direction you should NOT take.
When formulating the strategy, describe with painstaking detail what failure of the strategy entails. Start from the total failure and work backward. Identify the metrics and the indications that will inform you of the failure of the strategy.
What would the numbers be? Put a timestamp next to each. Identify the worst-case scenario and figure out exactly what it looks like in various time periods. How will the KPIs and other metrics be progressing (or most likely decreasing) in any meaningful time period?
The whole purpose of describing the worst-case scenario is to make the next step easier. The identification of the “marginal scenario”. This is the set of indicators and their corresponding timestamps that will ultimately determine whether you ought to continue following this strategy. It'll be your way of distinguishing the dead-end from a big obstacle.
The marginal scenario should be identified BEFORE the execution of the strategy. When numbers run low and reputations, careers or the company are at stake, don’t expect anyone to be levelheaded. Emotions will run high.
People will have to battle with fear, regret, and doubts. Avoid these conflicts entirely by pre-deciding when you'll quit the strategy. It's better to abandon a failing strategy and lose some resources than sticking to it and lose even more while accomplishing nothing.
This is called escalation of commitment, which is essentially when an individual or group facing increasingly negative outcomes from a decision, action, or investment continues with it rather than pivoting. It's doubling down because you're denying the warning signs.
False and unfounded belief in the original plan, even when it doesn’t seem to work, blinds even the best leaders. Identifying what failure looks like beforehand works as a failsafe against the escalation of commitment.
Connecting Vision with Decision Making (The Infinite game Theory)
In his book The Infinite Game, where we have borrowed some terminology, Simon Sinek talks about the game of business and its infinite nature. In infinite games there are known and unknown players, no exact or agreed-upon rules and their time horizon is infinite.
The goal is to keep playing. The game of business is, by its very nature, an infinite game. However, finite components within it do exist.
Confronting a challenge is like playing a finite game. “Winning” in this context is the successful implementation of an effective strategy. In infinite games, however, there is no “winning” or “losing”, only “ahead” and “behind”. When leaders play the game of business with an exclusively finite mindset, problems arise.
Culture suffers, innovation suffers and long-term goals are obsessively sacrificed for short-term benefits. Recognizing that business requires an infinite mindset to be played, opens the door to transformational changes and benefits.
The author also introduces the concept of the Just Cause as a “specific vision of the future” that provides direction. It’s the golden compass that makes great founders create organizations that can withstand the test of time and great environmental changes. It’s a vision so far ahead, that long-term doesn’t cut it. It’s a vision about the next generations.
According to Simon, a Just Cause must be:
- For something—affirmative and optimistic
- Inclusive—open to all those who would like to contribute
- Service-oriented—for the primary benefit of others
- Resilient—able to endure political, technological, and cultural change
- Idealistic—big, bold, and ultimately unachievable
We won’t discuss these criteria in depth; that is not our goal here. Besides the author does outstanding work in his book. However, we do wish to discuss the implications of a vision statement such as the Just Cause.
The Just Cause is the ultimate approach to identify an organization’s life purpose in the broadest possible way, identifying its role and potential impact in the world’s current state. It simultaneously determines the problem the company aims to tackle and the change it aspires to bring.
The context surrounding every decision and strategy is distinctly determined, aligning them with the greater vision. It goes beyond the current challenges and traditional timelines. Its Resilience lies in its scope being in the infinite horizon, its Idealistic vision of the future, where there are no winners and losers, only players that are “ahead” or “behind”. The Just Cause is what an organization’s current strategy should align with.
Such a vision works as a third, golden compass (the last one, we promise) when navigating the world in its broadest sense. It points to the right goal and determines the field that is worthy of getting through. It’s a tool to distinguish between the challenges that matter and those that don’t.
Which changes in the environment affect the company? Is it in any way meaningful? For example, when a competitor launches a new product that becomes a success, a Just Cause will answer the questions “Is this relevant to us?", "Do we have to answer?" It keeps the organization focused and breeds confidence.
Organizations that serve a Just Cause have clear priorities and they are always the same. The top priority is consistently taking care of their people. They value their employees and create a culture of trust and empowerment that produces spectacular results.
That becomes evident not only in the benefits that employees receive in good times but in how they handle the tough times, too. They are willing to sacrifice the numbers in the short term instead of sacrificing people, which will hurt the company in the long term.
The successful implementation of a strategy is entirely dependent on the conflict with the currently established culture. Imagine an organization that has a powerful culture, consistent with the principles deriving from its Just Cause, and chooses the challenges it will confront with a clear sense of direction.
Is there a chance the strategy that will be formulated to face the challenge to clash with that culture? Maybe, but it will be highly unlikely.
Under the context of the infinite game theory, “success” translates to “generating the necessary resources to keep playing the game so we can pursue our Just Cause, protect our people and the places in which we operate”. On the other hand, “failure” translates to dropping out of the game.
Perfect organizations don't exist and so there will be a divergence from that notion of success. Just as in life, the struggle to improve is more important than the missteps along the way.
Takeaway
Rightly or not, “success” is an overused word. If it is not well defined internally, it is mandated externally. This brings confusion and urges unhealthy comparison. Measuring your organization’s success according to arbitrary external standards creates immense levels of anxiety and stress.
It’s just not viable. Find your internal drive, the footprint you wish to leave to the world as an organization.
We are long past the antiquated notion that a business responsibility is solely to make money. Money is but a resource, necessary but not the purpose. It's not even a good measure of success or a long lifespan.
Culture and the will of the people must be factored in and complement the way we measure a company’s impact. Only then can we formulate good strategies that are consistent with the infinite nature of the game of business and have a positive impact on the world. That’s the best measure of success.
Find your Just Cause. Transform your organization and its culture and watch it thrive along with its people, its customers, and every other stakeholder. Offer a place where people can work and participate in a cause bigger than them.
Talent, innovation, creativity, and a sense of belonging are welcomed and celebrated in these cultures. Find your just cause and you’ll find the courage to lead in uncharted waters and overcome even the biggest existential crisis. Mistakes will be made, we do not live in a perfect world, but the journey is worth it.
