Volume 104: An obscenity of strategy.
1. An obscenity of strategy.
tl;dr: An attempt at greater clarity.
Spend any time among self-labeled strategists, and you’ll quickly realize a fairly disturbing reality: a disproportionately large number are pretty uninformed about what strategy is. Some know they don’t know; some pretend they know; some even think of themselves as masters of the art. But dig a little deeper, and you’ll understand that strategy is little more than a paint-by-numbers exercise for many—something you do before moving on to the next client and doing the same thing all over again.
Thing is, it’s not entirely their fault. Most work within an agency ecosystem that has an institutional allergy to training and full-time hiring, meaning they’re left to figure it out for themselves. Exacerbated by the fact that client organizations often have a less than stellar understanding of strategy too. Part of the problem is that strategy can be hard to pin down. There isn’t a single, easily understood definition of what a “good” strategy looks like compared to a “bad” one. It’s a bit like the famous non-definition of obscenity - I’ll know it when I see it. So, to help us understand strategy better, it isn’t really enough to try and define the term; we should instead consider its hallmarks.
Three hallmarks make strategy unique compared to every other business activity:
It deals solely with the future
It dictates resource allocation choices
Its focus is on how the company can win
Let’s walk through these things in order. First, strategy deals solely with the future. Here’s a very oversimplified view of this. The future is the one aspect of business that’s fundamentally unknowable. We can analyze what happened yesterday and monitor (increasingly in real-time) what’s happening today. But we can’t know what will happen tomorrow; we can only infer what we think will most likely occur, often by analyzing data from the past. However, even though the future is unknowable, businesses must still make decisions that impact their future every day, so to maximize their chances of success, they rely on strategy. (As an aside, this is why I believe strategy is fundamentally a creative exercise. As Roger Martin points out, it requires imagination to picture a business operating along what might be a very different trajectory than it does today).
Now, the above might seem conceptually esoteric, so here are two examples, one of bad strategy and one of good. Something we can only really understand in hindsight.
Kodak famously invented digital photography. However, they chose not to embrace the technology. Their strategic focus was instead placed on film. While this was logical at the time based on an analysis of past data, it ultimately proved to be a bad strategic choice. Rather than consider what might happen if digital photography became the norm, Kodak leadership looked backward at how to maximize its existing investment in film production. (There’s a lot more to this example, apologies for oversimplifying to make a point)
Apple famously did not invent the MP3 player. However, its leaders saw the potential and made a strategic bet on creating the iPod, which they then doubled and tripled down on before using what they learned from building small devices to develop the first iPhone. While many would see this as a product win, it was first a strategic choice to allocate resources to the product. The iPod didn’t magic itself into existence.
These examples also give us insight into the second hallmark - resource allocation. Every business, even the very largest, has resource constraints. As a business school professor taught me many years ago:
“Strategy is resource allocation. If we had infinite resources, there’d be no need for strategy. We’d just try everything and double down on what works. But, since no company has infinite resources, we have to make choices. The sum of these choices is your strategy. [whether you realise it or not]”
In the case of Kodak above, the choice was to allocate resources to the production, innovation, marketing, and sale of film, which meant not allocating resources to digital photography. In the case of Apple, the choice was to allocate resources to the iPod's production, innovation, marketing, and sale. It was in a position to do this because Steve Jobs had previously decided to eliminate 70% of Apple’s products because he did not believe Apple could win in these categories. As an aside, something often missed in strategy formulation are the things you will stop doing to free up resources for the things you intend to do. A lesson I learned years ago from a client whose response to pretty much every idea was, “This sounds awesome. What will we stop doing so that we can do this instead?”
This neatly brings me to my third point: Strategy focuses on how and where the company can win, which is the most important single aspect, and why companies like McKinsey are paid so much money to do what they do. They aren’t being paid solely for data analysis. They’re being paid to help the c-suite figure out how the business will win in the future because that’s what the c-suite is paid the big bucks to do. Never forget that the value of any business is based on expectations for future success and not just current operating performance.
There’s a lot inherent in the question of “how the company can win.” Winning can come in different forms - it might mean being the biggest, most profitable, most valuable, the most salient, the highest quality, etc. It also requires us to consider what the organization is capable of and how it can best leverage its assets interestingly and uniquely. As a result, while I’m giving it short-shrift right now, it’s here that most of the heavy lifting of strategy falls.
So, let’s quickly get back to self-labeled strategists. If this is what you do for a living, the hallmarks of strategy are a great tool to help you think about your work. Irrespective of frameworks, approaches, or outputs, ask yourself:
Am I focusing on the future and not getting dragged into immediate-term concerns?
Which resource allocation choices will my work dictate, and am I making that clear to others?
Am I clear about how the company can win, what it will take to win, and am I articulating this compellingly?
2. Planned, emergent, unconscious, and post-rationalized.
tl;dr: A brief walk through common forms of strategy.
In recent months advertising Twitter discovered the concept of planned versus emergent strategy, presenting it as something profoundly new and groovy in marketing-land. This made me chuckle because it’s a debate that’s been raging since the 1990s.
This long-running battle started when Henry Mintzberg (among others) criticized the scenario planning approach to strategy pioneered by the military and then adopted by major global corporations to plan out multi-year strategies because it turned out that these massively complex multi-year planned scenarios rarely turned out to be accurate in reality, which meant rigid strategic plans established on the basis of inaccurate predictions ended up being highly wasteful. (I’m massively oversimplifying here, apologies)
By contrast, Mintzberg celebrated what’s now referred to as emergent strategy. He observed that, in reality, strategies emerged more often than they were planned. Which meant the key to emergent strategy lay in fluidity, as businesses monitored the environment in which they operated and then quickly synthesized emergent factors - doubling and tripling down on things that work, killing things that didn’t, and pivoting as new and sometimes unexpected opportunities emerged. OODA Loops, another “newly discovered by advertising” strategic framework, is a means of formalizing emergent strategy. Also originating with the military, this time as an approach to air-to-air combat, it’s now being embraced by corporations to rapidly respond to competitive maneuvers in a fast-moving market.
I find the planned versus emergent battle to be of little practical usefulness. In reality, you need a little of both, which I’ll come back to later.
A third form of strategy, which is frighteningly common, is what I refer to as an “unconscious strategy.” In an environment with an unconscious strategy, resource allocation decisions are being made, but nobody can really articulate why they’re being made or the strategic intent they’re meant to support, and often they’re at cross-purposes with each other. Equally, there tends not to be a strategically conscious synthesis of emergent factors; there’s just a reaction. Often, a panicked and highly tactical one. But, just because the strategy is unconscious and the business operates tactically doesn’t mean it won’t be successful. Many are. It’s situation dependent. One observation I’d make is that companies with unconscious strategies tend to be fairly common in stable, predictable categories, and these businesses tend to struggle as volatility increases. They also tend to be exhausting to work with and work for due to their prioritization of tactical action over everything else. Companies with an unconscious strategy love to throw around terms like “agile marketing” to justify acting without thinking.
Finally, we have another common form of strategy you won’t find mentioned in textbooks: the post-rationalized strategy. Here, you look backward, rationalize what happened, and call it your strategy. This tends to be common under two circumstances. First, where there isn’t a strategy, but you need to create the impression that there is. For example, I once worked with a cloud computing business that talked about having a “full spectrum strategy,” which sounded good until you realized it was just their post-rationalization of a messy, complex, and largely un-competitive product portfolio. The second type of post-rationalized strategy comes from companies that have been successful but don’t know why. This is common in startups, where luck and good fortune are often post-rationalized as a strategy the founders then package and promote to others. Often, this ends up being little more than an exercise in survivor bias, as demonstrated by a common inability to replicate their own success twice.
If you’ve made it this far, you might wonder why this matters. Well, for a very simple reason. When you start working with a new client, or if you join them for a job, their approach to strategy tells you a lot about the organization. Organizations with heavily planned, deliberate strategies tend to be quite rigid. Change here is hard. Organizations with emergent strategies tend to be quite fluid. Change here tends to be easier but typically requires clear synthesis first. Organizations with unconscious strategies tend to have leadership teams with differing strategic agendas and are tactically reactive and chaotic as a result. And finally, organizations with post-rationalized strategies could be any of the above, which means you require a little more questioning to figure out if they actually have a strategy versus a beautiful articulation of something that made them successful once.
3. Putting brand strategy into context.
tl;dr: Fitting it together.
OK, so this is all well and good, but how does any of this talk of strategic hallmarks, emergent strategy, post-rationalization, etc., have any practical impact?
OK. So, let’s look at a few things. I’m sorry, there are only a few; I’d have to write a book or a lesson plan if I wanted to cover everything that matters.
First, it’s important with any new client to get a sense of two things that will dictate everything that follows. First, what’s their business strategy? Second, how strategically do they treat their brand?
Sometimes the business strategy is directionally obvious. This is great, as it provides a clear foundation and set of guardrails upon which to work, and the job is primarily focused on what the brand needs to do to help deliver. (At least until your work starts to identify holes in the business strategy, which does happen upon occasion) Unfortunately, clarity of business strategy is a fairly rare occurrence. More likely, you’ll find the business strategy falling somewhere between emergent and unconscious, which means your first job is to identify what it is and articulate it back to the client in a way they can all agree on. Because without this clarity and agreement, you’ll be working atop foundations of sand.
How the business thinks about and treats its brand internally is also very important. For some, it’s a genuine strategic asset. The business leaders see it as a critical customer and employee-facing component of their broader strategy. They’re keen to understand how the business, product, and experience will need to change over time to deliver on it and are engaged at both a resource allocation and how-to-win level. These are the best clients, but they’re also quite rare. More common is the opposite: the client that limits brand strategy to communicating what they’ve already got rather than how they intend to do business in the future. It’s hard to be truly strategic when you’re limited to “rearranging the deckchairs” via messaging. And while communication and framing are critically important, it’s hard to find satisfaction when the only thing you can influence is a message and how it’s written.
Assuming you navigate these things and you’ve developed your brand strategy, what form does it take? Well, I mentioned before that I find the battle between planned and emergent strategy to be pretty much useless in practical terms. This is because you need a little of both. Great strategies set direction, but they shouldn’t be so prescriptive that they act like a straitjacket. (As an aside, this is one of the bugbears I have with the deliverable-theater of visual identity guidelines. It should be a strategic tool that inspires people to act in a certain direction. Instead, it’s usually hundreds of pages of prescriptive grids and things you shouldn’t do. No wonder the ad agencies ignore them.)
But as much as the strategy can’t be a straitjacket, it can’t be completely emergent either because that typically ends up in a highly stressful situation of fire, ready, aim, where any cohesiveness of direction gets lost to chaos.
This is why, as I think about brand strategy, the most helpful metaphor is that of setting direction without getting too prescriptive around specific actions. There’s a modern military sensibility that’s useful here. It starts with the observation that “no plan survives first contact with the enemy.” To paraphrase an article I once read, complex military plans get boiled down into simple directional guidance for soldiers with boots on the ground, who then have tactical freedom to get the job done. Thus a complex plan to “take the hill” might boil down to directional advice as straightforward as “Platoon 6, it’s your job to move straight toward the hill. As you do so, don’t fire or move left. Another platoon will be there. You can do anything you want on the right. Everything else is fluid and up to you.”
This is a great analogy. No brand strategy survives first contact with the market either, so you need to be able to give people on the ground the tools they need and the direction they require to do their jobs well, cohesively, and without accidentally shooting each other in the process. In my experience, no matter how compelling the brand strategy might be, it’s rare to find an organization adept at translating this strategy into clear directional guidance for individual teams within which they’re given the tactical freedom to execute.
So, while I advocate for a deliberate strategy to set direction, I wouldn’t advocate for it to be so prescriptive that it acts as a straitjacket. It also has to be used in such a way that it can flex in response to change. It might seem like a subtle difference to be responsive rather than reactionary, but it’s huge in practical terms.
Being a consultant, this is the least satisfying aspect of my work. While I enjoy setting direction with my clients, there’s rarely an opportunity to work on what I’d refer to as “applied strategy,” which means establishing the direction and then working to see it through in application via action and tactics. Responding to change, doubling down on successes, learning from doing, synthesizing, and then bringing it back up to the strategic level to subtly reset direction.
Anyway, I hope some of this has been useful. Off Kilter shall return to its usual programming next week. I’m sure somebody somewhere will have done something daft enough for me to rant about.