Strategic thinking the organic way

To many people, strategy means plans, formal statements of goals and the laying out of the route by which those goals will be reached. This is sometimes called the planning approach to strategy. The principles were outlined in the 1960s and 1970s by writers such as Igor Ansoff and Kenneth Andrews, and the planning approach is still widely taught and practised today.

But does it work? The danger is that by using this approach, strategy becomes a little like a video game. If the right moves are made in the right order, the end goal will be reached and the business will succeed. But life, and especially life in business, is not like a video game. Many things happen, usually at once, that cannot be predicted and there are no pre-set or pre-determined solutions.

Critics of the planning approach argue that it robs us of our ability to think creatively. We become slaves to the plan and very often we carry on with it even when events happening around us indicate we should be doing something else. In other cases, people simply ignore the plan if they cannot understand it or make it fit with the circumstances in which they find themselves. Instead, they do what they think is best. But sometimes what they think is best is not what the organisation as a whole wants or needs.

Henry Mintzberg, the Canadian writer on strategy, argued that planning is something foreign to what most managers actually do. In his book Mintzberg on Management, he stated that planning is something that is done using the left side of the brain, which processes information sequentially and in logical order. Most managerial work, however, uses the creative, intuitive right side of the brain. He went on to argue that most planning in fact confuses managers and makes it more difficult for them to deal with the challenges they must face. Another writer, the Japanese guru Kenichi Ohmae, commented that managers who rely heavily on planning are often unable to react quickly to threats. Hidebound by the plan, they stand like deer trapped in the headlights of an oncoming car, unable to move or avoid the danger coming towards them.

The alternative approach advocated by both is a more creative approach to strategy in which strategy making and the implementation of strategy become a continuous process. Ohmae referred to this as strategic thinking, arguing that the primary task of the strategist was to think about strategy constantly, making strategic decisions as and when they were needed rather than sticking to a pre-set plan. He did not invent this concept, and indeed it has a long history in the literature on strategy.

Business strategy is a curiously late invention. It really only emerged as a concept and a discipline in the early 1960s, in the works of Igor Ansoff and Alfred Chandler. But in fact, businesses have been making and implementing strategies for hundreds of years, even thousands. When they wanted to understand the concept, they usually turned to the works of writers on military strategy. Here too, there is an interesting tension between the planning approach and the semi-intuitive thinking approach.

The grandfather of all writers on strategy, the Chinese general Sun Tzu, came down emphatically on the side of the thinking approach in the fourth century BC. There are no set rules for strategy to be found in Sun Tzu’s work, usually known today as The Art of War. Instead, he emphasised concepts such as preparedness and knowledge of the situation. “Know your enemy and know yourself, and you need not fear the result of a hundred battles”, is one of his comments. He advised commanders to spend much of their time before a battle contemplating the situation, the resources they had to hand, the resources the enemy was likely to deploy and the environment in which the battle would be fought. Strategic decisions would then fall naturally out of this contemplation.

Two ancient Roman writers on strategy, Frontinus and Vegetius, took opposite sides. Frontinus, in his book the Stratagemata, advocated a planned approach. He created lists of strategic options relevant to specific situations. Readers could pick the option that suited them best and then put that idea into execution. Management consultants today sometimes still treat strategy in the same way. Vegetius, on the other hand, argued like Sun Tzu that the key lay in being prepared for any eventuality, rather than planning for a limited range of possibilities.

The same view was followed by the Renaissance writer and diplomat Niccolò Machiavelli. He has had a bad name down through the centuries thanks to his advocacy of the principle that the ends justify the means, but there is a good deal of sound thinking in Machiavelli’s writings on strategy and he was widely followed right through to the 20th century. He too believed that strategy was a matter of being prepared to take advantage of unexpected opportunities. Luck, or fortuna, played a large part in human affairs, he believed, and success went to those who could recognise the moment for action and seize hold of it. It stands to reason that those individuals who follow rigid plans will be less able to react more quickly to the unexpected.

Being prepared for the unexpected was one of the major themes in the work of another early writer on strategy, the nineteenth-century Prussian staff officer Carl von Clausewitz. He developed the concept of “friction”, a series of unexpected and unplanned-for events that gradually builds up to slow down the execution of a plan, or even derail it altogether. Clausewitz warned against reliance on planning and argued instead for flexible thinking. Although an army should have an overall goal in mind, the means by which it can reach that goal will change according to time and circumstance. Later German officers demonstrated the truth of what Clausewitz said. Prior to the First World War, the Schlieffen Plan was an elaborate and highly detailed plan for the invasion of France and Belgium. At first, in August 1914, all went according to plan. But gradually, unforeseen events began to build up. The Schlieffen Plan was too inflexible and could not account for these, and finally the German advance ground to a halt, beginning a bloody stalemate that lasted for four more years.

Given all of this, why did the early business writers on strategy put so much emphasis on planning? For one thing, business and war are not the same thing, no matter what some have claimed. Kenneth Andrews and others of the planned school believed business activities are governed by rational economic principles. In most well-run organisations this is true, most of the time.

Planning has advantages. For one thing, plans remind people of their own roles and what is expected of them. They contain timetables and budgets. So long as they are aids that help people to get things done, then they are a force for good. The danger is that they can constrain people and limit thinking and action. “It’s not in the plan” is one of the oldest human excuses for inactivity.

The planning process also concentrates the mind. Properly conducted, strategic planning reminds people of their goals and purpose and helps them consider the options they have available. The planning process can also help to reduce complexities in the environment. One well-known strategy guru, Michael Porter, recommended that companies begin their approach to strategy by considering two dimensions only. First, what market scope would suit best? Should the company take a broad approach and seek a mass market, or concentrate on niche markets? Second, on what basis would the company compete: on a cost basis, trying to undercut competitors, or on the basis of differentiation, creating unique selling points that would set its products apart from those of competitors? This kind of clarification can help people to focus on what is most important.

So long as this simplification is used as a device to kick-start thinking about strategy, all is well. Again, problems begin when people use frameworks like Michael Porter’s as absolute guides to action. This is not at all what Porter himself intended. His concepts of market scope and competitive basis were intended all along as a starting point. For example, it is entirely possible for a company to compete on the basis of both low cost and differentiation. The Porter approach is merely a tool to get managers thinking.

As already noted, the opponents of strategic planning – or at least, opponents of slavish reliance on strategic planning such as Ohmae and Mintzberg – argued that the planning process is not relevant to the way that most companies function. Mintzberg in particular believed planning was a largely foreign activity. Most managers did not plan, nor did they follow plans. They spent most of their time firefighting, trying to deal with the crises and problems that beset them in their everyday lives. The best option was to develop a crafting approach, slowly working out the strategy a step at a time. In Mintzberg’s view, thinking about and implementing strategy are part of the same process, just as potters determine the shape of what they will make by feeling the clay under their hands.

The idea that the gradualist, thinking approach is a natural one had been advocated earlier by Charles Lindblom in a famous article entitled The Science of Muddling Through. Lindblom argued that people shy away from taking big steps into the unknown because they are instinctively frightened by uncertainty. They prefer to take small steps so that they can control what they can around them and thus muddle through situations. Paradoxically, bold strategic plans that project forward into a future that is unknowable can actually increase uncertainty. Rather than providing guidance, they induce fear and concern. “How will we ever make this plan work?” becomes the commonly asked question. A later author, James Brian Quinn, took up Lindblom’s ideas to create the concept of logical incrementalism. Here, as with Mintzberg, thinking, reflection and action are all combined in a series of small, incremental approaches to the strategic goal.

Key for all of these writers is the concept of mental preparedness. Just as with Sun Tzu in ancient China, the first critical factors are knowing one’s own strengths and weaknesses, and knowing those of competitors. Next is the ability to think strategically, to spot opportunities as they emerge and react quickly, in the way that Machiavelli had advised. Summing up all of these ideas in his book The Mind of the Strategist, Ohmae likened strategic thinking to a muscle. If one exercises muscles regularly, they stay in trim and the person who exercises becomes stronger and more healthy. In just the same way, thinking about strategy all the time helps managers to both understand strategic principles and get better at spotting opportunities. To put it another way, the more managers think about strategy, the more effective their thinking becomes.

It can be hard to do this. In the words of the old phrase, “when you are up to your neck in crocodiles, it can be hard to remember that your original objective was  to drain the swamp”. But Ohmae’s and Mintzberg’s argument makes sense. A firm that spends two or three months of the year making a strategic plan and then the rest of the year trying to implement it will always face an uphill struggle. Far better to think about strategy as you do it, and keep thinking about it all of the time.

Since Morgen Witzel wrote this article in 2012, he and others have carried out further research into strategic thinking.

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