Recently, a CEO I know (I’ll call him Jeff) invited me to weigh in on a corporate strategy initiative that his company was undertaking. Jeff and his leadership team had been focused on day-to-day execution for a few years now, trying to manage the business through the pandemic and its aftermath. He had a sense that it was past time to take a step back and assess the bigger picture.
Over the last decade, Jeff has built a team of solid operators. They know how to get things done, drive clear accountabilities, and empower teams to make decisions quickly. The challenges of Covid played to their strengths.
Great execution is essentially an act of task division and coordination: you take a big goal and break it up into lots of little objectives according to business functions like marketing, manufacturing, human resources, and customer service. You then keep tight metrics on each team and manage the hell out of each objective on a weekly and monthly basis. Jeff is particularly good at this.
Often though, that knack for execution doesn’t readily lend itself to great strategy formulation. As Michael Porter famously pointed out, strategy is not operational effectiveness, and what makes for great instincts about execution can lead you down a strategic blind alley. Great execution chops can bias a strategy towards short-term incrementalism. Worse, those instincts don’t always help you see if you’re focusing on the right problem to begin with.
My friend Jeff had found himself in just that kind of situation. His team had started in a good place, asking what their company should look like in 2030. That’s a great question, and they paired that question with some ambitious topline goals for revenue and profitability. But then, they assembled groups from each major function and asked them to answer the question on their own. The supply chain team would figure out the future of supply chain. The talent team would figure out the future of talent. The plan was to then stitch everything together at the end. Like any good execution plan, their approach had been one of task division and coordination.
The results were pages and pages of individual initiatives with no overarching vision or clear direction. None of the initiatives from one functional silo reinforced the actions of another. And every idea seemed like no more than an incremental tweak on the status quo. There was no game changer, no big idea for how the company would achieve its admittedly ambitious growth goals. Jeff was more than a little bit frustrated…
Strategy is not execution and execution is not strategy. You need to be good at both. After all, strategy without execution is a daydream, but execution without strategy is a nightmare.
Five Hundred Questions…and Five
A great strategy process can get started for any number of reasons. Often, it’s sparked by the instincts of a leader. Maybe they’re just a little anxious about where things seem to be headed right now. Maybe they’ve set ambitious goals for the business, and they aren’t sure how to get there. Maybe, like Jeff, they’ve been heads down for a while and just feel like it’s time.
When that happens, it can be helpful to just get in a room and start talking it out. A couple of my teammates and I met with Jeff and a few of his leaders to explore what their major issues were. We started by just asking about the state of things. Then we pulled out some Post-it notes. We asked the group to write down every question that was on their mind related to their strategy, one per Post-It.
The questions varied wildly, from “How is A.I. going to change our marketing?” to “Who should we hire?” to “Are we focused on the right customers?” We kept going until we had nearly five hundred stickies. The goal was to get it all out of our heads and onto the board. Then we took a step back.
Like most leadership teams, Jeff and his colleagues had a lot of questions they wanted to answer. It was natural that they felt a little overwhelmed. The good news, though, was they didn’t actually have five hundred questions. They had five. Those five hundred Post-it notes were detailed versions of five big questions, that Roger Martin of Rotman Business School described as a kind of strategy “cascade,” with each question flowing into the next one…
1. Who are we? A great strategy should start with a clear idea of who you are. Why you exist. What makes you great. And what you’re trying to do. It’s about understanding the DNA of your organization. “Who are we?” questions include stuff like “What do we stand for?” and “What’s our right to win?”
2. What might happen? It’s well and good to know who you are, but the world is changing. And a strategy that’s future-focused should take into account the important changes that might occur in the next five to seven years. “What might happen?” questions include stuff like “What new technologies are emerging?” and “How will shifting demographics change our customer base?”
3. Where to play? Based on your strengths and the shifts you’re seeing, you can start to make decisions about the businesses you’re in and the markets you serve. “Where to play?” questions include stuff like “What adjacencies should we expand into?” and “Are there opportunities in a premium products category?” and “Should we get into services?”
4. How to win? Once you’ve decided where to play, it’s important to figure out how you’re going to beat the competitors in your space. Answering those questions requires both benchmarking of what other people are doing, as well as a fair bit of your own insight and creativity. “How to win?” questions include stuff like “How do we differentiate ourselves against our biggest competitor?” and “How do we better leverage social media?”
5. What to do? The final question encompasses the decisions that a company makes to bring its strategy to life. It includes decisions about infrastructure to invest in and capabilities to build. “What to do?” questions included stuff like “Do we need to make some big acquisitions?” and “Do we have the right talent on the team?” Done well, these decisions look more like experiments to test and learn.
Figuring Out Where to Start
One by one, we moved all of the Post-it notes on the board into five buckets to represent each of those five questions. Then we took a step back and started to look for patterns.
Several “What to do?” questions suggested there might be issues around the talent and capabilities of mid-level managers. Many of the “How to win?” issues assumed that the company’s competitive set wouldn’t change much in the next few years. That might not be true. Disruption from A.I. wasn’t showing up as much as it probably should have. Overall, though, the larger pattern was in the distribution of issues.
As often happens with this sort of exercise, the stickies weren’t evenly distributed. There were hardly any Post-it notes under “Who are we?” There were a bunch under “What to do?” Nearly half of the stickies were under “Where to play?” It seemed clear that this was the most pressing question to focus on.
Funnily enough, that’s often the wrong way to choose how to focus a strategy exercise.
Years ago, we got the chance to engage with some senior leaders from Pixar. My team and I learned a lot. One of the most important takeaways I had from the experience was about storytelling. At Pixar, it’s not uncommon for a team working on a movie to come across a scene that simply doesn’t work. Maybe it confuses the audience. Maybe it lacks the emotional punch that it should have. When that happens, it can be tempting to work the scene over and over to make it better. Often, that doesn’t help. As one exec explained to me, when you have a scene that doesn’t work in a movie, it’s usually because you failed to do something in a scene a few minutes earlier that would have made the problem scene more understandable or impactful. If a scene isn’t working, rewind fifteen minutes to figure out where you messed up.
The same is often true for strategy. If a company has a lot of pressing issues in one part of their strategy, it might be because they needed to answer something important in a previous question. For Jeff and his team, the ambiguity about “Where to play?” was a result of not having clarity about “What might happen?” If they identified the major forces that might affect the business in the next five years, they’d be better able to articulate how their business needed to change. And they’d have a much clearer sense of what adjacent white spaces were important to expand into.
This sort of thing happens a lot in strategy development. Clarity in one question prompts action in the next. Disney knew that it needed to start a streaming business because it could envision a world where people stopped watching cable. Target knew it needed to acquire a same-day delivery service because grocery shopping was moving online. Investment firm TIAA realized it needed to expand beyond managing pension funds for educators because early signs suggested that the number of new teachers would soon plateau.
That sort of insight can happen at any point along the cascade. Massive uncertainty about “What to do?” with infrastructure and investments can indicate a lack of clarity about “How to win?” Too many questions about “How to win?” may in turn be a lack of clarity about “Where to Play?”
We spent the rest of the day exploring ways that Jeff and his team could get a better handle on what might happen, both in his industry and in the world. Ironically, his company has a pretty robust insights organization that continuously monitors trends. However, those trends didn’t seem to be making their way into the strategy formulation. Moreover, the team hadn’t taken the next step to seriously develop possible scenarios for what might happen in the next five years and wargame what the company should do in each case.
Was our collective team able to crack the code on strategic growth for Jeff’s company? Not really. Not in an afternoon. But at the very least, we were able to begin to parse out and triage the seemingly overwhelming number of strategy questions that were keeping folks up at night.
When it comes to thinking about strategy, dividing the issue into functional areas isn’t the best place to start. Try using a cascade of five strategy questions instead. Your team knows more than it thinks it does—it just needs to get those issues out on the table. And even though you might have a myriad of issues facing your business, your list of five hundred is likely just five.
We all know that old joke: “How do you eat an elephant? One bite at a time…” But elephants are really big. And it’s helpful to know where to bite first.