When the topic of strategy is discussed, often it is done so in the context of strategic planning. The process of strategic planning is where most people are first exposed to the concept of corporate strategy. If you asked them about strategy, they would likely describe it in terms of the planning process. There is more to strategy and management though. Henry Mintzberg put it well when he said, “Management is, above all, a practice where art, science and craft meet”.
Strategy is much more than the annual strategic planning meeting most associate it with. The strategic planning process is typically a formal and defined process companies work through to define path to achieve defined objectives in the future. The process typically looks something like this:
- Define goals and objectives
- Analyze the current state of the company and the environments in which you compete
- Formulate strategy based on this analysis to achieve your defined objectives
- Translate this strategy to operational actions
- Manage the execution of these operational actions
Unfortunately this process often falls short. Strategic planning can end up becoming little more than budgeting, albeit with some great backup information and footnotes. Budgeting and planning are important things that you should be doing for your business; but, you may be missing something by approaching strategy solely as a process to be planned in advance.
There is a great book “Strategy Safari”1 that describes ten different schools of thought on strategy. These schools of thought broadly break down into two categories: prescriptive and descriptive. The prescriptive schools of strategy approach strategy as something to be planned based on a company’s current position and the environment in which it competes. The descriptive schools approach strategy as something that emerges and focus on trying to understand the why of a company’s success.
Strategic planning as typically performed falls squarely into the prescriptive schools of thought. Those that have participated in planning sessions will recognize some of the tools utilized in prescriptive strategic planning: SWOT analysis, market analysis, scenario planning, generic strategies of cost, focus, and differentiation, etc. There are holes in approaching strategy this way though:
- This assumes you already know or are able to know everything about your current state, what competencies exist within your firm and how they interact with the environment
- This assumes that you fully understand all aspects of the marketplace and its future
- The procedural nature of planning may limit creativity in developing and forming strategy
- Rigidly managing the plan may place blinders on your managers – you may be missing out on great strategic opportunities for your business
- Your business and the environments you compete in are not so simple!
I believe that the descriptive schools of thought can help plug these holes. Two of these schools of thought on strategy are particularly helpful for architecture and engineering (A/E) firms in this regard: The learning and cultural schools of thought. The learning school of thought views strategy as something that emerges over time through organizational learning. The cultural school of thought views strategy as something that emerges collectively through social interactions within the culture of the organization.
I hope to dive deeper into these schools of thought in greater detail in later posts on this blog, but for now there some important realization that we can learn from these schools of thought that can help strategy forming and strategic planning be more effective.
- Recognize that it is highly unlikely that you planned every aspect (or even most) of the path that got your company to where it is now. A lot of this likely emerged over time or you were only able to gain clarity on it after the fact. A plan is a good tool; just recognize its limitations.
- Take time to think about where you are successful and not successful. Then, take time to think about why this is. Try to define key internal capabilities and resources that drove this success.
- Take time to think in depth about these capabilities and how they developed over time. What projects, decisions and mistakes over time contributed to the development of these capabilities? You cannot use and mold these capabilities until you understand them deeply.
- Recognize the importance of culture in defining your strategy. The values and beliefs of the organization have helped shape what you are now and will help shape or limit what you will be in the future.
- Recognize the importance of being open to dipping your toe in the water to try new things. You may not be able to recognize or articulate an important competency or capability until you learn from these opportunities. I plan to write more about this in a later blog post.
So, is strategy planned or does it emerge? If you are doing it right, I think the answer is both.
References:
- Mintzberg, H., Ahlstrand, B., and Lampel, J. “Strategy Safari: A Guided Tour Through the Wilds of Strategic Management.” Free Press, 2001.