PTW/PI All-Stars Book Club – Chapter Fifteen

What Makes for a Great Strategist?

Welcome to Chapter Fifteen of the Playing to Win/Practitioner Insights (PTW/PI) book club. In the spirit of a book club discussion, I have responded to all previous comments and will continue to do so. Of the 37 all-star pieces out of the 260 in the series, the randomizer picked as the fifteenth chapter What Makes for a Great Strategist? This one is from the second smallest category – personal development in the domain of strategy. You can find the whole PTW/PI series here.

My Reflections on This Piece

This piece made me quite happy. I had written previously about various bits and pieces of the topic, but this gave me the opportunity to put it all together. In particular, in this piece I wanted to lay out why both mindset AND skills are required to become a great strategist. Neither mindset nor skills alone will do it. A great strategist needs both.

On the mindset front, there are both don’ts and dos.

I like the way I described the first don’t: a belief that strategy capability and IQ/GPA/GMAT are positively correlated. It is a bit cheeky – but it does reflect the dominant mindset in the world of strategy. It reminds me of the early days of my old consulting firm, Monitor Company. We believed the above in spades. By my recollection, four of the first eight Directors were Baker Scholars – the super-smart graduates who rank in the top 5% academically of all Harvard MBAs.

And because people tend to recruit in their own images, we aggressively recruited Baker Scholars – just like McKinsey, BCG and Bain did. It was brutal competition for these precious few. In our first decade, we won more than our fair share – which made us proud and happy.

But interestingly, they didn’t work out so well – in fact, less well than our average new hire. Part of it was their mindset that I am a Baker scholar, I know best. They didn’t listen enough or enquire enough about others’ insights, especially clients.

If you want to be a great strategist, your mindset should be that a high IQ/GPA/ GMAT is more likely to be a hindrance than help. If you do, you can flip it to an advantage. A humble smart person is a good combination.

Linked to the first don’t is the second, a belief that strategy is primarily an analytical exercise. This is no surprise because of the origins and evolution of the strategy industry. If you were a great analyst in business school, you were told you should become a strategist, and the strategy firms came looking for you. But as I have written before in this series (here and here), data analytics has limited utility in strategy.

Unsurprisingly, the third mindset don’t is believing that strategy can be created by people divorced from operations. It follows nicely from the first two: I am smarter and a better analyst, so I am way more qualified to do strategy for line managers than they are. Sadly, that is a fully delusional mindset. Your job is to help strengthen their practical knowledge with your strategic rigor – not to replace it. Substitution for practical wisdom is delusional arrogance; augmentation of practical wisdom is the sweet spot.

These three limiting strategy mindsets are almost guaranteed to turn strategy into planning, which is an anathema to strategy.

The positive mindsets are largely unsurprising given my earlier writings. First is a belief that strategy starts with customers, not with what shareholders want, or with what ‘core capabilities’ we have. Rather, it starts with a profound appreciation of and fascination with customers, and a deep desire to make their lives/businesses better off.

The second is a belief that the world is a complex adaptive system – probabilistic not deterministic, but not random. The business system in which you operate is challenging to understand, but it has patterns that can be comprehended, not perfectly, but well enough to make educated guesses that can be tweaked as you get feedback from the actions that you take.

Finally, there is confidence to invent the future – that is, to make true something that is not now true. That is the heart of strategy and the mindset of a great strategist, and it necessitates balancing the exploitation of what is and the exploration of what might be – a relatively rare mindset combination.

But those mindsets aren’t enough. An aspiring strategist needs to build a reinforcing troika of skills that can only be built through practice, practice, and more practice.

The first skill is qualitative appreciation, the capability of making fine distinctions in the qualitative attributes of their environment. Great strategy lives in nuances – subtle understanding of customers, fine distinctions in competitor behavior, etc. This skill isn’t developed in normal business education, which focuses on building skills in the manipulation of quantities. That skill needs to be balanced with the appreciation of qualities.

You have little choice but to initiate on your own building skill in this domain. Take an art appreciation, sommelier, Le Cordon Bleu course. They teach you rigorous ways how to appreciate qualities – unlike business school.

The second skill is dialogue. As I have argued (repeatedly), the approach to strategy is to imagine possibilities and choose the one for which the most compelling argument can be made. Possibility generation and compelling choice are both the products of dialogue among thoughtful discussants. Strategy will be better if the discussion is better. As a strategist, you need to get good at having constructive and generative dialogue. It isn’t taught – so you have to learn it largely on your own.

The third skill is juggling more balls. One of the most powerful analogies I have ever been given was from Ingvar Rosen, a Swedish psychologist, who likened thinking to juggling balls. Each relevant variable is like a ball you must keep in the air. It is easy to focus on fewer balls, for example two balls. Three is harder but with a little practice it is doable for almost anyone. But making a decision that requires juggling seven variables is extremely hard, and strategy is a seven-ball, not a three-ball activity.

The formal educational system has zero utility on this front – in fact disutility. It teaches you that you should juggle only one ball at a time – and rewards you for dutiful one-ball juggling. Hence, to become a great strategist, you need to take responsibility for building your own skills in juggling multiple balls. Fortunately, there are practical tools for doing so. I have written/co-written two books on just how to build your capabilities to integrate more variables productively and skillfully into your decisions.

Becoming a great strategist is within your control — you just have to enforce a productive mindset, and practice, practice, practice.

Reader Comments

The piece generated eighteen comments, which was good for a piece about a third of the way through the series. As is always the case for an All-Star piece, the comments were laudatory -great piece…it is mind-blowing and I think this one is the most profound for me and great content!

There were several very interesting comments.

For example, Olivier said:

Strategy consultancies, such as McKinsey, BCG and Bain see strategy as a problem-solving exercise. So, they hire bright people who can “crack” problems (hence the case studies-based interviews). Once recruited they’ll ensure the problem is correctly defined, will break it down (MECE issues trees anyone?), generate hypotheses (so far, so good) and collect data to prove/disprove the hypotheses. That maybe where the process is flawed: the need to prove basically prevents fundamentally different/new WTP/HTW choices…So we end up with strategies that will enable the client to compete but probably not to win because it will be almost the same as its rivals.

I agree with his characterization. And that is why I think that strategy is becoming the lost art. The mindsets are dreadful and skills development is missing.

Ahcx1z said:

Appreciation for qualitative aspects has to a large degree been lost. There seems to be a belief that if you just “follow the data” you’ll eventually reach Nirvana. Unfortunately, this mindset leads to a loss of nuance and understanding of how things holistically fit together. You’re chasing your own tail while feeling smart about the numbers you believe will give you the Answer.

Again, I agree. It is a feature of the modern world of business – and world in general. The demise of qualitative appreciation is a great sadness.

Michael observed:

I frequently see companies create “strategy” teams that spend all day creating strategy to hand off to other teams to “execute.” The notion of strategy being continuous and cross-functional never occurs to them because everyone believes the “strategy team” knows better.

Pride goeth before the fall is my only reaction.

World As One 4Peace waxed philosophical about the piece:

I absolutely concur with your insights and how to rethink about strategy in light of how business education and analytics are being driven into American (possibly others) society. But how to take these lessons and apply them in the context of a changing, dynamic global system which is showing massive signs of divergence both politically and socially?

I think it is an interesting notion. I do worry that the world is heading in a direction in which all sides of arguments put forward their own analytically-based ‘truth’ and declare anyone opposing to be utterly wrong – and they just fight and fight despite none of their ‘truths’ being true.

Without further ado, the original article…

Chapter Fifteen

Last week, I got a good question from past student, Stewart: “What are the skills needed to be a strategist in today’s wild world?” Now, I am not so convinced this world is particularly wilder than before and have written about that previously in this series. But requirements for being a strategist is a good topic and I have decided my 42nd Year II Playing to Win/Practitioner Insights (PTW/PI) piece on What Makes for a Great Strategist: A Combination of Mindset & Skills. You can find the previous 94 PTW/PI here.

Mindset Don’ts

There are three common mindsets in the strategy arena that if held detract from a person being an effective strategist.

Click to continue reading the original article…