Strategy Should Be Constant
Strategy isn’t a once-a-year activity. Strategy isn’t just for when things are going bad and need to be shaken up. Strategy isn’t the production of a plan to never be viewed again until the next go around. Strategy is an ongoing activity that is central to the success of any company or organization. Many leaders want to believe a strategy is a closed-loop event performed at certain times and with specific start and end dates. Leaders want this to be the case because human nature encourages us to prefer things that can be defined and completed in a known period. Most people are less comfortable with items that require ongoing intention and attention. A strategy should be both convicted and dynamic, which makes most leaders uncomfortable and anxious. We’re wired to check boxes and complete stuff, and we’re not wired to operate dynamically, which is what good strategy calls for.
The best companies evaluate their strategy continuously. They don’t wait for something to happen, reevaluate after an extended period, let it go stale, or check a box and be content with producing a document. Strategy assessment is a priority and dynamic activity for company leaders who embrace doing the right thing over being right. Strategy is too frequently viewed as an event by business leaders because that’s how strategy has typically been treated. Strategy in other areas, such as sports, politics, and warfare, is expected to be dynamic. Yet, in business, companies come up with 3, 5, and 10-year plans. Strategy in business needs to be more dynamic than these other areas because the other areas are finite affairs, while business is an infinite game. Not to say that sports teams, political candidates, and national militaries don’t have long-term strategies and philosophies because they do, but when engaged, they operate dynamically. They change course, tactics, personnel, equipment, etc., based on what is working, what the competition is doing, and the risks associated with action/inaction. Coaches, politicians, and generals are guilty of professional malpractice if they don’t change their strategy when needed. Yet, company leaders often get caught being attached to and holding on to a flawed strategy for too long.
People playing in a finite competition are forced by the parameters and consequences of the competition to act more dynamically and decisively. People leading companies don’t have a game clock, election, or military conflict to lose, which makes their strategic flexibility and decisiveness more lethargic. The infinite game that most businesses play causes company leaders to wait too long to assess, shift and adopt a new strategy. Many biases, including sunk cost, endowment, and identity, exacerbate the problem.
Companies that evaluate their strategy consistently perform better than competitors. Companies should evaluate their overall strategy at least monthly. Progress on strategic initiatives should be assessed daily. A daily basis seems like a lot for companies that haven’t been good at strategy because they don’t have the rhythm and rigor it takes to execute strategic initiatives effectively. Companies that need to improve at strategy let things go for too long before assessing progress and validity. Companies that don’t take the management and execution of strategic initiatives seriously are more disappointed than those that ignore strategy altogether because they falsely believe they are executing toward a different and better existence when they aren’t.
Strategy serves as a compass. It helps organizations to know which direction to be headed. A compass is of little value if you only look at it at the start of a journey and is of no value if you don’t look at it all. A compass is a valuable tool when it is checked frequently. Strategy works the same way. A company’s strategy should be used continuously to inform what path to take, whether to stay on the path, or whether to head in a different direction.
We’ve seen several significant layoffs by previously fast-growing companies. The layoffs are the most direct and visible representation of a company’s change in strategy. The problem is that, in most cases, the layoffs come too late and are a lagging indicator of a company’s lack of previous strategic action. Yes, economic, political, and regulatory changes can quickly and unexpectedly impact a company’s strategy and catch the company off guard. Still, in my experience, the shifting sands were more anticipated and expected than not. So why would presumably smart and capable leaders of fast-growing companies get caught off guard to necessitate large-scale layoffs? I believe two reasons are intertwined; 1) The leaders had a set-it-and-forget approach to strategy and weren’t acting swiftly enough to redirect as circumstances indicated they should, and 2) Redirecting and changing strategy can be seen as a sign of failure and weakness, so instead of changing course sooner and faster, leaders dig into an existing strategy to be proven right. In some cases, it is both. Strategy is an anchor for too many companies. Strategy as an anchor instead of a compass doesn’t allow a company to adjust quickly and nimbly enough to changing circumstances.
Leaders who get comfortable with and embrace dynamic strategy will perform better. There is a risk of dynamic strategy becoming too shiny an object, but this isn’t the fault of assessing and directing strategy as called for; it is a flaw of a leader. Leaders who become unfocused and indecisive while evaluating their company’s strategy would do so irrespective of whether doing it is part of a strategy or not. Strategy work and evaluation don’t make a better leader by default. The opposite is true. Strategy work will expose a leader’s weaknesses, so many leaders avoid strategy and develop a set-it-and-forget approach. These leaders might not be aware that strategy will expose their weaknesses, but they most likely have a subconscious sense of it. Weak leaders are threatened by defining and assessing the effectiveness of a strategy.
I use a picture of a river in my talks about strategy and for this post, because a river is an excellent visual presentation of how a strategy should be continuous, like the trees on the bank of a river, and dynamic, like the changing water current of the river. Leaders need to be convicted about a chosen strategy but fluid enough to react and change based on the changing environment in and out of a company.
