Beyond the Big Bang: Strategy as Habit

This post is about how Social Enterprise will create competitive advantage through the way organizations approach strategy.  It's going to take a little set-up, so give me a minute.

There are several good strategy frameworks, and at various times in my career I've used them all.  Some of them feel tailored to new-venturing by entrepreneurs, some to big-betting by established firms, some to turnarounds, some to restructuring, etc.  (Almost all of these frameworks feel tailored to big management consulting fees.)  These are the Big Bang incarnations of strategy; they are dramatic, so they grab headlines.  Certainly, a few of these big plays have worked out spectacularly.  But, I would argue that the dramatic, headline-grabbing strategy "events" are some relatively rare and low-probable-yield versions of strategy.  How many mergers succeed, vs. blow up?  How many reorganizations are truly "strategically" transformational 10 years later?  It happens ..., and we all know deep down that those are the exceptions that prove the rule.  Strategy as a once-for-all-time exercise is, well, short-sighted.

Instead of strategy as Big Bang, what about strategy as Habit?  ALL organizations require strategic thinking to succeed, but few organizations actually face the dramatic moment -- ever, or certainly very often.  If that is true, then the sweet spot for strategy is something more routine, more "everyman", more evolutionary, more of a living process.  Strategy as Habit has 2 components, in keeping with the 2 primary definitions of the word "habit":  (1) a regular practice and (2) a long, loose garment worn by a member of a religious order.  (In case you've forgotten that second definition:  picture here).  Strategic thinking is a recurrent, involuntary action.  Our strategy is both a content statement and a style statement, both of which define and identify our team.  Strategy is participative.  Strategy has structure without being overly constrictive.

Ok, so let's get a few things straight.  Strategy as Habit is NOT:

• Hanging corporate mission statement posters all over the office
• Making the staff memorize the elevator pitch
• Giving everyone a copy of the strategy report from the consultants
• Holding an annual executive planning retreat in Sun Valley

Which brings me to my favorite strategy framework for Strategy as Habit:  the Seven Ss.  For a quick primer, see this summary from the Economist.  Or you can just figure it out from the traditional diagram below:

I think this framework captures the essence of internal factors that bear upon strategy.  The popular (in the exec suite anyway) view of these factors is that they are tools for the implementation of the strategy.  Tools and constraints.  Of course, there is some truth to that view.  Whatever strategy exists today in an organization, its ability to execute on that strategy largely depends upon the consonance of its strategy with the other six Ss at the organization.  But, I think the power of the 7S framework emerges when we think of organizational evolution over time -- with strategies morphing to exploit changes in the organization's internal and external setting.  When you begin viewing strategy as a living thing -- adopting the Strategy as Habit view -- then you see TWO important questions:

1. How do we best implement today's strategy?     AND
2. How do we best detect and respond to rationale for strategy evolution in the future?

When we adjust the original diagram a bit, you start to see that the secret to strategy success -- both IMPLEMENTATION and EVOLUTION -- is fundamentally the staff.

The founding strategy may not start with the people, but its implementation and all subsequent strategy evolutions are hugely influenced by the people. They are the ones, after all, who design the business systems, develop their skills, train each other, shape shared values daily, and project the culture's style to thousands of customers every day.  They watch competitors on the street, and they listen to prospects who've declined proposals.  In all but the smallest organizations, the CEO's ability to drive the details of strategy execution in all these areas around the company is practically nil.  There are too many details to master, too many situations to understand, to many disciplines to learn, etc. 

In fact, we all know that the true strategy of any firm is not exactly what the CEO tells the WSJ.  It's not what Corporate Communications writes in the Annual Report.  The true strategy of the firm, the one that actually matters to its future, is the one that's sifted and seasoned and amended and nuanced and enriched in a thousand ways by a thousand people whose names the CEO has never heard.  And, all of those actions today will create tomorrow's strategic landscape for the firm.

(BTW: As a CEO, I love it when someone on our staff adapts our strategy to make us more competitive -- provided I hear about it.  I want to understand; I am a student of my business.  And, I also want to speak truthfully about our strategy with external parties.  Nothing worse than rambling on and on to journalists about a strategy that no one's implementing!)

So, we need to stop talking about Social Enterprise as something that youngsters really want to play with while at work.  Or as something that lets the CEO blog/twitter/etc to get the troops on-board with his strategy.  Instead, we need to realize that the enterprise is already social, and the only people missing that are in the executive suite.  Ironically, those are the very folks who stand to benefit most from harnessing the potential of these technologies: better awareness of what's really going on and earlier detection of opportunities to evolve. 

And, what that translates to is priceless: leaders who look in-touch internally and smarter externally.

Comments

[Steve Christensen]

You are absolutely correct: strategy is a habit.

As you have clearly stated the power of any organization is in the dirty part, where things get done: value is added, inventory is moved, customers are served. These components determine the current operating basis for any "strategy" and also serve as the lab for early opportunity detection.

Presently these thousands of people shaping the operating basis are thwarted in both their ability to increase awareness to reality and to detect opportunities or respond to threats. It isn't because there aren't sufficient tools to aid in communication - people still talk about and solve problems all the time. It is the inability of the systems to evolve and learn at a pace that encourages true gains in strategic advantage.

This has to happen at the execution, or doing, layer of the company so that the operating basis can adapt, adjust and improve systemically. It is where the thousands of workers shape the strategy and achieve the actual results. It is where early detection and response to changing market demand and regulation live.

Enterprise 1.0 (erp, best of breed, homegrown) solutions consolidated reporting and attempted to standardize the operating basis of companies. They accomplished the first goal while at the same time choking the operating basis nearly to death for many companies.

Enterprise 2.0 (not blogs, wiki's or social apps) build upon top of E1.0 systems. They do not interfere with existing cultural and system controls. Instead fostering a platform for continuous improvement of the operating basis of any company as well as an incubator for innovation and strategy development. In less than one week changes can be implemented to the operating basis of any business and the results measured before adjustments to the entire business are made. This agile approach to continuous improvement delivers the very strategy as habit environment you call for so well.