The Missing Ingredient in Choosing Your Strategy
Strategy is about choosing, but no one advises you on HOW TO choose
In this week’s article, I’ll discuss how strategy is all about making choices, but the hardest part is often choosing between the possible options. This is the first of several articles where I’ll share some tips on how to do that.
If you break it down to the most fundamental level; what is strategy?
Simply put, despite the complicated definitions by academics, it’s about making choices. In fact there are many choices that you need to make.
In the well regarded strategy book, ‘Playing to Win’ AG Lafley and Roger Martin make the case to say there are five key questions that need to be answered by a strategy:
- “What is your winning aspiration?
- Where to play?
- How will you win?
- What capabilities must be put in place?
- What management systems are required?”
Richard Rumelt, in ‘Good Strategy Bad Strategy’ says that a good strategy needs:
- To define a problem. Something that the business is trying to overcome.
- A guiding policy for dealing with the problem.
- A set of coherent actions, or an action plan.
While Rumelt doesn’t say it as clearly as Lafley and Martin, you can see how making choices underlies his three points.
It’s strange then, how seldom any strategy book, or training gives you advice on how to actually make decisions, just how to get to the options. Yet, often the picking is the most difficult part of it all.
For advice on how to choose, you need to look elsewhere. One of my favourite books on the subject is “Decisive” by Chip and Dan Heath. Their books are chock full of advice on how to make good decisions. I’ll give you a few of those tips.
Decision making tips (thanks Chip & Dan)
Their book explains their W.R.A.P process:
- W: Widen Your Options.
- R: Reality Test Your Assumptions.
- A: Attain Some Distance
- P: Prepare To Be Wrong
I’ll share two of the tips in the “W” now, so that you have something to start working with, and I’ll share more detailed advice on the whole process over several follow up articles in the coming weeks.
Widen Your Option (a brief taste of some of the advice to come)
- Don’t fall into the trap of “Whether or Not” problems.
“Should we open an office in Asia or not?” These types of questions do not actually look at options. They force you into a very narrow frame and cut off all the possible other options available to you. “Should we open an office in Asia?” should be one of multiple options. Step number one is to increase the number of options available to you to consider.
- Consider opportunity cost.
Ask, “What are we giving up by making this choice? What else could we do with the same time and money?”. If you open the office in Asia, maybe you won’t be able to consolidate the gains in your Australian expansion, because you don’t have enough budget to do both. Maybe you could instead spend more energy on R/D to develop another product that your current customers are clamouring for and have already said they would buy if you had it. Considering the opportunity cost of an option is an important step in finding MORE options to consider.