Start with Reality, not Idealized Abstractions
A couple of weeks ago, I received a reader question about strategic choice cascades that echoed lots of related queries. That related set of questions inspired me to write this Playing to Win/Practitioner Insights (PTW/PI) piece called Misplaced Shoulds in Strategy: Start with Reality, not Idealized Abstractions. And as always, you can find all the previous PTW/PI here.
The Question
The questioner had clearly read a lot of my stuff because referred to terminology from two Year II pieces — Corporate vs. Business Unit Strategy and Understanding the True Building Blocks of Corporate Strategy — on indivisible businesses. He asked a should question: should his company do a single corporate cascade or the corporate one plus cascades for its four businesses.
His question echoed other should questions I have received over time. Should start-ups do strategy or just get to work? How often should we do strategy? And many more shoulds.
Essentially, this reader and others want me to provide an arbitrary should rule that applies in all circumstances — e.g. you should always do strategy for all the businesses, or you should do strategy every three years, etc.
A Different Perspective
I just don’t have should rules of this sort. I don’t say one cascade, or many is always better, or strategy is right at some stages and not others, or strategy should be done every x number of years. I don’t have general should rules of this sort.
My diagnosis is that all these questions are based on the notion that strategy only exists because you create it. It wouldn’t exist if you didn’t do an exercise to explicitly create it. And based on this notion, managers want both a rule for how and when it should be done. Then they often want an exemption for their special circumstance — as I talked about in My Business is Too Fast Moving for Strategy.
My view goes back to my fourth PTW/PI article — 247 articles ago — Strategy is What You Do, Not What You Say, which argues that every organization has a strategy, regardless of whether or not it engaged in an explicit effort to create one. Strategy is what you do. An organization can’t not have a strategy. Every organization makes choices to do some things and not other things, even if those choices are entirely ad hoc. Those choices define a Where-to-Play (WTP) and How-to-Win (HTW) — though the latter is often more accurately a how-to-compete rather than to win. They invest in some capabilities and management systems, and not others. They have an aspiration that can be inferred from the other choices — whether explicit or not.
The reader isn’t faced with the choice of creating cascades that don’t currently exist. The corporation and the four businesses already have strategies and implicit strategy choice cascades. Companies in fast-moving businesses have strategies whether they spent a minute on a strategy exercise or not. A start-up has one as soon as it starts operating. And you change your strategy every time you change a consequential choice.
None of these questions is governed by a should — at least not one that I would impose.
The Only Should Issue
For me, there is only one universal, generalizable should issue on this front: you should start from and focus on reality. Don’t start with an idealized abstraction.
Let me explain by using the reader’s case. There isn’t a universal should that I can apply to his case — either you should do one or do five strategy cascades. The answer lies in reality. The reader should reverse-engineer the corporate strategy and the four business unit strategies using the strategy choice cascade as a standardizing device — the current reality.
Once he is done, he can ask how similar they are. If they are very similar or nearly identical, he only needs once cascade — because the five choices pertain similarly to the whole business. For example, lets imagine a food company. Its Winning Aspiration is to be the leader across three related food products — pasta, pasta sauce, and parmesan cheese — known for natural high-quality products. Its Where-to-Play is in those three businesses, sold through retail grocery distribution, with high-end branded product. Its How-to-Win is to be much more selective than competitors on ingredient quality and to use extremely modern equipment but done using traditional Italian cooking processes (just making this up!). And so on with its Must-Have Capabilities and Enabling Management Systems.
If that entire corporate cascade equally applies to and describes all three businesses, then you don’t need to create separate cascades for each business.
But they might be meaningfully different. Let’s imagine in my (made up) example that pasta and pasta sauces have functionally identical cascades, but parmesan cheese is meaningfully different — the competitive set is quite different, the supply chain is totally different, the product is shelved in a different part of the retailer and purchased by a different buyer, etc. If you insisted that parmesan cheese follow the corporate cascade to the letter, it would damage its strategy.
If that is the case, you should have multiple cascades. But it wouldn’t automatically imply five cascades in the reader’s case. In my example, it might only be worth doing a corporate cascade — which would have to include the nuances of the parmesan cheese cascade, a cascade for pasta and pasta sauce together, and a parmesan cheese cascade.
That is basing the outcome on the reality of the situation, not on some idealized abstraction such as “there is only one cascade — the corporate one,” or “there must always be one cascade per business unit.” Don’t let that sort of thinking drive you away from starting from the reality of what is actually happening as the starting point of your thinking.
For those businesses that obsess about how fast moving they are, they imagine an idealized universe in which they don’t slow themselves down by stopping to think about strategy. That idealized world doesn’t exist. They automatically generate their strategy by way of the choices that they do or don’t make while racing forward. Embrace reality by reverse-engineering their current strategy based on the choices they make.
Have them ask themselves to what extent that strategy is producing outcomes that make them happy. If the outcomes make them happy, don’t change strategy. If not, it is time to make a different set of choices, regardless of how fast-moving the business is. And that will be ‘doing strategy’ even if they object to calling it that — because of their fast-moving-ness.
For those people who obsess about how often they should do strategy, The answer is similar to the fast-moving business answer. Their strategy is what they do. They need to assess the degree to which that strategy is producing the outcomes for which they wish. If it is, stick with the current set of decisions — i.e., their strategy. If not, there is no time like the present to contemplate a different set of choice — i.e., do strategy.
Practitioner Insights
Sadly, because strategy is so closely associated with big, complicated exercises, managers want rules concerning it — when, how often, what form does it need to take. Most of these questions are framed in a way that presumes there is a should-based rule. And they want me to give them.
There is a should — but it is more of a principle than a rule. The core principle is to be cognizant of, and guided by, what is. You have a strategy. In fact, every part of you has a strategy. Focus on that to start. If you do, it will tell you a lot.
It will tell you the degree to which it makes sense relative to what you understand about the world. It will tell you the extent to which it produces gaps with what you wish was happening. It will tell you the extent to which it is time to contemplate different choices.
You won’t get any of those valuable insights if you start from the idealized abstraction of the perfect strategy — rather than what is.
People will often tell you to follow your heart when you are making decisions — don’t crunch the numbers and automatically do what they tell you. Instead, follow your heart. To me, this is not a dissimilar should. Connect to and start from what is and follow that. You will get to a better place.
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As a reminder, I am doing a PTW/PI podcast series with friend Tiffani Bova. The eleventh in the series will be on LinkedIn here on Wednesday, August 6th at 12 noon EST and 9am PST. I look forward to seeing you there.