“Without rational analysis, neither vision nor discovery leads to strategic success,” write Stanford GSB professors Jesper Sorensen and Glenn Carroll. | iStock/Eyes that see
There is no shortage of advice on the technicalities of business strategy. However, in a 2019 survey of 6,000 executives by consulting firm Strategy&, only 37% said their company had a clear strategy, and only 37% believed that strategy would lead to success. was only 35%.
Professors Jesper Sorensen and Glenn Carroll of the Stanford Graduate School of Business point out that a lack of confidence in one's ability to formulate sound strategies is due to a lack of critical analytical thinking. They believe that the strategies that have driven the long-term success of companies like Apple, Disney, Honda, Southwest Airlines, and Walmart are generally, and not enough, driven by innovative vision or the serendipity of new opportunities. We discovered that one of the findings was due to: In their new book, Build a good strategy: assert your organization's advantagethey argue that neither explanation tells the whole story.
“Frankly, without rational analysis, neither vision nor discovery leads to strategic success,” Sorensen and Carroll write. In this book, which grew out of developing and teaching a strategy and organizational design course at Stanford GSB, Sorensen and Carroll apply the tools of logicians to creating successful corporate strategies.
The importance of rigorous logic
Executives need logical tools to build consistent and effective plans. strategy theory, Sorensen and Carroll recognize this as the common core of all successful strategies. They define strategic discussion as “clarifying how a firm's resources and activities combine with external conditions to create and capture value.”
Glenn Carroll (left) and Jesper Sorensen | Nancy Rothstein
“We tend to respect and admire strategic intuition, but intuition can always be wrong,” Sorensen explains. “Leaders must guard against that possibility by being strictly logical. And logic is easier to convey precisely than vision. If I articulate a grand vision for the future, You may be inspired by it, but how do you act on it?”
“There is a difference between talent and skill,” adds Carroll. “Steve Jobs had a talent for envisioning the future that cannot be taught. But logical arguments that reveal holes in the strategies being envisioned or missing things we hadn't thought of. The skills you need to deploy, that is. can I'll teach you. “
Therefore, strategic discussion is an essential pillar in formulating a strategy. “This pillarless strategy becomes a mishmash of customer empathy practices, analytical insights, and market research,” the professors write. “Without this pillar of disciplined deductive reasoning, executives end up in a situation where they don't really understand what their strategy is.”
in Create a great strategy Sorensen and Carroll divide the ability to construct and test strategy arguments into three activities: visualization, logic, and debate. “We tried to think of this as a multifaceted challenge,” Sorensen says. “Many managers and executives don't really know how to talk about strategy systematically. We wanted to give them a set of activities and tools to help them do that.”
Visualization
Visualization is a mapping exercise that shows the causal paths that lead to strategic outcomes. “When you're told you have to construct a logical argument, it brings back bad memories of doing deductive proofs in high school or college,” Sorensen says. “But mapping is very easy and collaborative. You take sticky notes and move them around on a whiteboard. Part of the purpose is to lower the barrier to entry, so to speak. It's not uncommon for people to sketch out their arguments.
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Strategic decisions often come down to power and who has the upper hand.
attribution
Jesper Sorensen
Professors advise that when mapping a strategy discussion, start with the destination (or conclusion). When mapping out Wal-Mart's strategic theory in this book, they start with Wal-Mart's ultimate goal of lowering costs than its competitors. Then work backwards to identify the set of conditions that will enable you to achieve that goal. In Wal-Mart's case, one of these conditions is a bargaining advantage over suppliers, which goes back to a more detailed set of conditions, such as bulk purchases, a tough negotiating style, and private his-brand products. In this way, strategy theory is finally revealed in its entirety.
logic
logic, In the second activity, you clarify the assumptions underlying the links in your map and formalize your strategic path. Establishing, testing, and refining assumptions and conclusions can be a time-consuming process. “But in the long run, this is very useful,” Sorensen says. “In business and management talk, incomplete arguments are all too common. If you decide to invest a billion dollars in something, you should be as rigorous as possible, and that's what you're doing.” It means pushing yourself to reveal your implicit assumptions.”
Mr. Sorensen and Mr. Carroll charged that market leader Nokia's failure to respond to the competitive threat posed by Apple's iPhone launch in 2007 was a failure of logic. Nokia strategists concluded that the iPhone would be a niche product, citing the device's poor calling capabilities. Their central assumption remained steadfast: excellence in telephone technology would determine the winners of the mobile phone market. However, this turned out to have a fatal flaw.
discussion
discussion, The final activity challenges assumptions underlying the strategy discussion, forces consideration of alternative views, and solidifies buy-in. The professors summarize the appropriate focus of discussion in the strategic mantra as follows: Effectiveness today, health tomorrow.
“This belief is very important because too often strategic decisions come down to power and who has the upper hand,” Sorensen says. “When that happens, the person who loses actually feels like they weren't heard and walks away really frustrated. This is a terrible way to make strategic decisions, but often the strategy is This is how it is accomplished.”
Instead, Carroll says, the discussion process should include space for articulating alternative arguments and determining whether they are plausible – whether they are relevant today and will be relevant tomorrow. It states that it should include “suspension of disbelief” to provide.
Organizational culture also plays a big role in a team's ability to discuss strategy in a constructive way. “We need leaders who are not afraid to make mistakes and encourage people to speak up, but also who are not afraid to make decisions about the process,” Sorensen says. “Then you can let it all out. Everyone will see it, understand it, and agree with it.”
Sorensen points to Intel's practice of “committing without agreeing.” This is a cultural norm codified several years ago by his CEO at the time, Andy Grove, in which executives and managers vigorously challenge consensus opinions and ultimately make decisions. We encourage you to fully support.
Sorensen says the tools described in his book are especially important as companies consider how to navigate this time of uncertainty and disruption. “The pandemic has shocked many organizations,” he says. “Deep and unquestioned assumptions in business models in many industries are flawed or proven to be false. Do leaders need to change their strategies to succeed in the future? must be determined.”
