Three things to know about post-Covid strategy…
We desperately need to revolutionise how we think about and develop strategy.
The majority of today’s business-school strategy approach evolved out of the work of legendary management thinker Peter Drucker. His most influential theories emerged in the fifties and sixties and have largely dominated corporate and academic thinking ever since. And for good reason: his ideas were revolutionary at the time, and some of his books still adorn my shelves today.
But Drucker practiced in a time when the economic world was a far more stable place than it is today. Back then, it was far more likely that multi-billion-dollar businesses (which was Drucker’s milieu) would rationally and responsibly plan to move their focus from one stable market to another, than it was for its core market to collapse beneath its feet in a matter of months. And that context is embedded in his approach and all of its descendants.
None of us are big corporations in predictable markets. Instead, we are comparatively small but complex, mission-led organisations in a time of rapid change and huge uncertainty. And yet, year after year, non-profits continue to try and wrestle strategies from these huge, convoluted, backward-looking, MBA-style processes, which shed virtually no light on the one or two meaningful conversations they actually need to have.
So, whether you’ve already revised your strategy in light of the pandemic, or whether you’re yet to do so, there are three fundamental, almost existential differences, in the way we actually need to formulate strategy versus how it’s traditionally taught. This is really, really important, so listen up.
As anyone who has ever reviewed a five-year strategy in the final year will tell you, for the prior three years it will have had no impact on any decisions whatsoever. The realistic planning horizon for most organisations is less than two years, and as the winds of change pick up pace, this only ever shortens. In contrast, fixing the strategic aims and direction of the organisation to a longer-term “North Star” is more important now than ever, to avoid being dragged off course by those same winds of change, and the issues and opportunities they bring on an increasingly frequent basis.
There is not one timeframe for strategy. There are two. The long-term view that creates an enduring framework for decisions, and the short-term view that defines the space for planned action. Accepting that reality has an important consequence.
Strategy should be refreshed, and entirely reinvented if necessary, before the end of the planning horizon. In 18 months, you will know far more about almost everything that’s relevant to your strategy, than you do now. That ten-year direction and five year “big hairy goal” might still be perfect, but the chances are they should both evolve. Some ideas will be working, others will be failing, whole areas will benefit from a rethink.
Everything from our past experience tells us this will be the case, but we never plan for it to happen. Instead, we end up addressing it through annual budgeting. Strategy takes a back seat, pragmatics take over, and the “three-year drift” begins. And the reason for this? Because we spent six months creating a five-year strategy just eighteen months ago. Which brings me to the third big difference.
If we want to break out of this cycle, we need to accept that we are not mega-corporations in stable markets. We need to realise there is rarely any merit in the vast majority of the MBA approach, whether that’s a SWOT analysis, extensive market research, stakeholder or customer engagement (and why weren’t you doing that anyway?)
There are very few mid-sized businesses or large non-profits for whom a strategy can’t be developed in three or four half-day sessions spread over a few weeks, if we just strip out all the bloat, all the things we think we need to be seen to do, and just cut to the chase.
What are the big questions your strategy needs to answer? What is the essential problem that it needs to address? What is the change it seeks to bring about and its best role in that process? And what is the greatest potential that it needs to unlock?
Start with those questions. Decide the best way to go about answering them. What are the options, and what is the minimum amount of information that will help you decide between them?
Then gather the information, make the decisions as best you can, summarise those decisions into a strategy, pull out the big areas for action, and start moving. In 18 months’ time, you’ll have a much better idea if you’re heading in the right direction, and you can course-correct then.
In the last sixty years, the concept of strategy has gone from a revolutionary idea to an academic imperative, to an industry of its own, to a vastly overengineered artefact of a bygone age. Now is the time to finally make it fit for purpose.