What makes a successful strategy?

Earlier this month I attended a ‘Best in Corporate Strategy showcase' event at Cass Business School, which included a plaudit of professors of strategy engaging in a lively debate about the nature of strategic planning. Some of the themes that emerged were quite thought-provoking:

• We use the term ‘strategy' in two different ways – as something an organisation possesses, a defined and chosen direction or intent; and as an activity that is undertaken, the work of coming to such decisions and then implementing them. This distinction between ‘content' and ‘process' is not irrelevant – as strategic planning has developed over the past 20 years different emphasis has been placed on each, from the reliance on analytical frameworks to determine strategic positioning to the realisation that strategies can ‘emerge' through engaging and energising people to work out how the organisation should develop. It begs the question, is an organisation's strategy the outcome of intentional deliberations, or a rationalisation and crystallisation of what's already happening?
  
  
• There are 3 approaches to how strategy is developed:
  • the traditional, top-down, formal structured process of formulating then implementing a strategic plan
  • a gradual development of strategy, emerging from people in the organisation thinking, talking, making sense of what to do
  • intuitive, entrepreneurial action, based on innovation or leadership direction

Each has their time and place – depending on the situation in which an organisation finds itself, from urgent opportunity or threat, the need to evaluate various options or to re-energise the organisation. In each case strategy can be developed within a small group and then ‘sold' to the rest of the organisation; or it can result from a process that involves many in the organisation

• What role leadership plays in company strategy is significant. The style can range from the more autocratic, deciding the direction and driving this forward through power, politics or sheer force of personality, to creating the environment in which strategy can be developed and implemented collectively. Jack Welch at General Electric found a balance of keeping the organisation on its toes without overstressing it - an ‘on the edge of chaos' position. He would launch a new initiative about every 3 years that moved the company forward, but provided support for his managers so that the company was not overwhelmed by ‘initiative fatigue'. Organisations whose leaders have around them people who can contribute and challenge are arguably in a stronger position than those whose leaders dictate, or where the struggle for consensus and too many checks and balances sap energy and hinder progress
  
  
• How are strategic decisions made in an organisation? Are alternatives explored thoroughly and risks assessed and debated, or are choices made because ‘it feels like the right thing to do'? Has there been a clear decision point, or has a strategy just been ‘adopted' by consensus? Successful strategic decisions can be made without there being a strategy – the direction set then determines the strategy and the future path of the organisation.
  
  
• Arguably, case studies about successful strategies are the stories of strategic decisions that have worked out favourably. The classic tales such as IBM's reaction to the personal computer and Honda's breakthrough in the USA are about choices made at key times – but are strategies always about deliberate and understood actions, or are they sometimes about doing things that just happen to work (and the ‘strategy' then becomes a post-rationalised explanation?). Perhaps the organisation just got lucky, with the right breaks in the particular circumstances at that time. Many top companies have achieved business growth by acquisitions and mergers – whether through deliberate targeting or seizing opportunities. It takes time to tell whether a strategy is successful, looking back with hindsight. And there is no guarantee that success will continue – organisations need to be able to learn and adapt to tackle new challenges, and many failures occur because they are unable to develop from what has brought them success in the past. Case studies are an established part of business school learning – useful for reference and sharpening analytical skills, but perhaps not that effective in helping you deal practically with a real situation.
  

Strategy is an art and a craft as well as a science. It requires both analysis and intuition – arguably intuition is just a higher level of thinking that develops out of understanding informed by analysis. Process and content are both important – good processes are likely to result in good content (but neither can guarantee success) – and both logic and emotional commitment have their place. Outcomes and skills are both important – the ability of an organisation to make sense of what challenges and opportunities are facing it and choosing how to move forward – and then adjust to whatever happens – are as vital as the results of each decision.