Crafting Strategy is the first “season” in an organization’s “annual” cycle.
Strategy is about perspective and time.
Sound strategy is formulated with a broad perspective in mind. Looking at the whole landscape of an organization’s environment from a macro, global perspective to the micro, nano, “what’s under that rock,” “worm’s eye view” perspective. This Grand Canyon picture represents that macro perspective.
Ambush prevention is the name of the game when it comes to perspective. You either know the broad landscape or you will get dreadfully surprised by it. A case in point was this morning’s bankruptcy filing by Blockbuster. They were ambushed by Netflicks and others. The arrogance of their narrow perspective and inability to keep pace with technology and the marketplace has destroyed their considerable market capitalized value.
Timescale is the other critical perspective. Strategy is primarily focused on the future. What will happen? What do we want to happen? In a 1 year, 3 year, decade and multiple decade perspective. But the future cannot be fully separated from the past and the present. It should not be simply extrapolated from the past, but it likewise must be instructed by the context of the past and present.
To define strategy for organizations Stan Abraham puts it in simple, straightforward terms in his book:
- Strategy is “How a company actually competes.”
- Strategic Thinking is “Coming up with alternative strategies or business models that deliver customer value. Strategic thinking drives the strategic-planning process.”
- Strategic Planning is “The process by which a company (organization) develops a strategy to achieve certain purposes.”
(Abraham, Stanley C., Strategic Planning: A Practical Guide for Competitive Success, Thompson South-Western, 2006)
Another way to say it is that strategy is how an organization positions and differentiates itself in the marketplace relative to competitors, suppliers, customers, and regulators. A strategy should be a clear, easy to understand set of directions or “running rules” that guide members of the organization as they make the day to day trade-offs in spending their personal and organizational energy, effort, and resources in the pursuit of achieving the organization’s purposes.
(Please see the “not-for-profit & government nuance” below!)
Planning Versus Crafting Strategy:
Henry Mintzberg offers a distinction between planning strategy and crafting strategy:
Imagine someone planning strategy. What likely springs to mind is an image of orderly thinking: a senior manager, or a group of them, sitting in an office formulating courses of action that everyone else will implement on schedule.
The keynote is reason — rational control, the systematic analysis of competitors and markets, of company strengths and weaknesses, the combination of these analyses producing clear, explicit, full blown strategies.
Now imagine someone crafting strategy. A wholly different image likely results, as different from planning as craft is from mechanization. Craft evokes traditional skill, dedication, perfection through the mastery of detail.
What springs to mind is not so much thinking and reason as involvement, a feeling of intimacy and harmony with the materials at hand, developed through long experience and commitment. Formulation and implementation merge into a fluid process of learning through which creative strategies evolve.
My thesis is simple: the crafting image better captures the process by which effective strategies come to be. The planning image, long popular in the literature, distorts these processes and thereby misguides organizations that embrace it unreservedly.
My cousin Paul Sorenson is an example of someone who is a consummate craftsman/strategist (http://www.pbhay.com/). He farms in Ellensburg, Washington where our family are
original homesteaders. When I go out to work in the field with him I am constantly impressed with his feel for the land, the weather, and the crops. A couple of years ago we went out irrigating in the hay fields. Just after we left the barnyard he pointed to a section of the field and said, “We need to get water on that spot today.” I looked and saw green alfalfa plants that all looked the same to me. I asked him how he knew the area needed water. He explained to me that the blades of the hay were turned and curled slightly and that they were a grayer color of green. After our discussion I could see what he meant. Well, I could kind of see what he meant. Throughout the rest of the day he continued to point to areas that needed water, areas that were not growing as fast because of the soil, and other mysteries that he has mastered over 4 decades of farming that land. That kind of mastery and craftsmanship is what Mintzberg is talking about when he talks about strategy.
Mintzberg goes on to say that planning and crafting strategy and deliberate and emergent strategy are complimentary and actually go hand-in-hand:
In practice, of course, all strategy making walks on two feet, one deliberate, the other emergent. For just as purely deliberate strategy making precludes learning, so purely emergent strategy making precludes control. Pushed to the limit, neither approach makes much sense. Learning must be coupled with control. That is why the McGill Research group uses the word strategy for both emergent and deliberate behavior.
Likewise, there is no such thing as a purely deliberate strategy or a purely emergent strategy.
Craft requires control just as it requires responsiveness to the material at hand. Thus deliberate and emergent strategy form the end points of a continuum along which the strategies that are crafted in the real world may be found.
There is no one best way to make strategy.
(Henry Mintzberg, “Crafting Strategy,” Harvard Business Review,July/August 1987)
In my three decades of experience working on strategic organization design I have found that Mintzberg is right, there is “no one best way to make strategy.” There are approaches, tools, and practices that work well, but the reality is that they have to be adapted to the organization and the context in which the organization exists.
Not-for-Profit, Government, & Quasi-Governmental Nuance:
By the way, some of my not-for-profit colleagues have protested that they do not compete. I have asked them if their funding sources dried up during and after the Asian Tsunami in 2005, the 2008-2009 Global Recession, and the Haitian Earthquake of 2010. Each time they say yes. In response I point out that they are competing, that these events highlight that fact, and that they need to move out denial and begin deliberately and strategically competing to achieve their purposes while not violating their values.
Their task is to make the best case for why their work as a not-for-profit should receive a high priority allocation of discretionary funding. This case rests on the value that they create for “customers,” “recipients,” and “funders.”
Strategy, strategic thinking, and the strategic planning process are mechanisms through which they define how they will create that chain of value and communicate and convince others that the value they offer is real.
For governmental organizations the same logic applies, but their lag in funding is usually a bit longer than that of a not-for-profit. Both must ultimately make the case for a higher priority allocation of discretionary funds.