Monday, May 4, 2015

Is Strategy Art or Science?

Strategy development is a process of drawing your artistic best future of business into a scientific canvas.

"Leadership is much more about doing the right thing than doing things right." (Drucker) Spending time thinking and acting strategically is one of the right things to do, yet many senior executives spend less than 5% of their time stepping back from the day-to-day grind of the business to think longer-term. They feel comfortable with an annual budget, but get increasingly uncomfortable beyond that point. And even fewer begin with the end in mind. Is strategy an art or science, how do leaders leverage strategic thinking in their daily work?

It is an art AND a science: Gathering information, such as market insights, customer insights, and competitive intelligence - that should be followed as a scientific method. But understanding what all the data means for your business, deriving the strategy, and making decisions about implementation, is different in each situation- so it's more of an art. The challenge is that 'science" can often be "sterile" or "purist." It is the "art" which brings life, form, meaning, practical application to what we gain from science in business. Sometimes the “science” means processes and the suggestions of a tame problem, and “art” suggests a more creative, uncertain approach that suggests a wicked problem. However, just focusing on creativity risks losing context and ignoring all the many factors that need to be considered to make the strategy implementable, be that brand, proposition, culture, leadership, stakeholders, and so on. A process helps ground and ensures rigor, but can sometimes come at the expense of relevance, in that 'one size' does not fit all.

Focusing on what you are distinctive from others is a good way to succeed. That means you have to think about challenges and core competencies that exist in any organization rather than to think about obstacles only. You have to think in a vision to draw out a remote future, but not only on what background you have. You have to focus on what you will ignore rather than what you will focus on. Deciding what not to do is as important as deciding what is. A clear method to prioritize is key by ROI, etc, but also the capacity for the organization to implement. The adaptability of strategy is important for reasons including responsiveness, culture, and execution. Offering a cynical view - That is, ensuring key stakeholders are bought in, aligned, and equipped to execute and ensure value/benefits/outcomes are realized. And there is some art in it, creative adaptation, there is a good amount of old-fashioned slogging away or science, a change or transformation program, to implementation as well. Creativity, or innovation, without purpose - just for its own sake, does not ensure it adds value to the organization, customers, and other key strategic stakeholders, it is not only an ineffective use of the most valuable resource - people's minds but does little to ensure the long-term sustainability or competitiveness of the business.

It is all about "balance" between science and art, which can be situational. It starts as art and ends with science. However, if the product is transformational, it will be art, science, and art. Sometimes it maybe 80% science and 20% art. Other times, it is 80% art and 20% science - or some other balance between the two - it will vary in any given situation - it will not be constant from one situation to another, or from one strategy to another. The strategy needs to diagnose business issues and find the right solution, but problems arise when companies try to "solve" symptoms, and that's where things get sticky - since addressing symptoms usually creates additional problems. Strategy development is a combination of art, science, and your own realization about the best future. Realization indicates the wisdom that you have learned by observing your previous actions. Indeed, all scientific principles relevant to the strategy should be used but with your artistic improvisation. To make it short, strategy development is a process of drawing your artistic realization about the best future into a scientific canvas.

Strategy - Execution is a continuum: With business environments changing at an ever-faster pace, the strategy must be understood as a dynamic living problem and less of an asynchronous plan-then-execute task. For sure, a sound analysis is required to formulate some options for a winning strategy (the 'science'), but "you cannot prove a victory before it is won." So strategy needs to be conceived of as contingent, as a 'going-in' position to take to market. What's required then is an attentive engagement with the target environment and critically, organizational agility that enables you to evolve your strategy as the market environment responds to it. So the “art” comes in both aspects - initial strategy formulation is a highly creative process, and so better strategic options usually result from a more creative and open process. Successful strategy management also depends on a certain talent that great leaders exhibit, which can draw the total organization with them and result in a truly energized, dynamic, and sustained effort behind the strategy.

There are three levels of strategy execution management:
(1) The first is what is called the "basics" - those routine activities which the customer expects that an organization should be flawless in delivering - reliability - The fact is that if some problems to basic operational tasks occur frequently, the customer will defect. There is no differentiation created by doing these activities routinely well - it simply keeps you in the game.

(2) The second level refers to as "wants" or "wishes.” Every customer has a "wish list" - a list of things they would really like the organization to be doing for them, but at the present time, they are not. If you find these through in-depth interviews and focus group activity (qualitative activity rather than quantitative survey activity) and act on them, you can create differentiation for the business.

 (3) The last level is "adding value." The value can be defined as "any tangible or intangible benefit which the customer perceives the competition is either unwilling or unable to provide." Therefore, it is an immediate source of differentiation and competitive advantage for your organization.

Design a strategy could be stressful and fun at the same time. It seems the strategy has to set out exactly 'how' the goal will be delivered: what levers need to be pulled (internal and external) and what the impact will be on a whole raft of stakeholders (customers, staff, suppliers, shareholders, etc.)? And the range of levers that are available is clearly enormous. Due to the limited resources, you can't pull them all. And leadership is about deciding which ones will make the biggest difference, given the goal and given the capability and market of the organization. And executing the strategy according to the design is a real challenge. This the artistic arena!

What is a "great" strategy? Is it one that helps the organization get a step closer to its vision? Maintaining its core purpose, but gaining a competitive advantage in the market? Better ensuring the long-term sustainability of the business? Ensuring all key/strategic stakeholders' expectations are balanced and met? A good strategy is based on the application of scientific, economic, socio-cultural, and practical (technical/ non-technical) knowledge in order to design processes and solutions to resolve and transform situations and complexities in opportunities and success. But this approach is never going to reach the goals if you don't add innovation, motivation, passion, and a lot of courage. A true strategy either addresses a current problem or anticipates a future opportunity. Generally, once the problem or opportunity is properly understood, the actions to be taken become fairly self-evident.


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