How to Think Strategically. Greg Githens
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a useful amount of rigor about what strategy is and how it works. The word relationship is the most important concept, because it is the relationship between ways, means, and ends that gives strategy its power.
A strategy has a less-powerful punch when it’s disintegrated. Many managers overlook the word relationship and focus on one of the elements. For examples of disintegration, some will tell you that strategy is a statement of vision (they’re focusing on the ends statement). Others will tell you that strategy consists of the steps toward the goal (they’re focusing on the ways statement). Yet others regard strategy as a matter of budgeting resources during an annual planning cycle (they’re focusing on the means).
Here are two examples of the incomplete view:
• Top executives. The typical pattern for top executives is to exchange the word strategy for goals, such as, “Our strategy is to internationalize,” or “Our strategy is to cut costs,” or “Our strategy is to be the industry leader.” Statements like these focus on the ends of strategy and ignore the ways and means.
Many people like to include visioning and vision statements in their strategy work. Many subscribe to the value of a “visionary leader” who describes a future state. These are simple and attractive ideas because the vision can establish a direction and motivate people to apply extra effort.
For contrast, former IBM CEO Lou Gerstner declares that, “in and of themselves, [vision statements] are useless in terms of pointing out how the institution is going to turn an aspirational goal into a reality.” He even goes so far as to criticize vision statements as “truly dangerous” because they create a comfort and confidence that’s not backed up by a commitment of resources and a logic for making progress. (Gerstner has the experience of being a CEO of several organizations. We examine his time at IBM in Chapters 9 and 10.)
I emphasized the word how in the preceding paragraph to stress that a strategy is hollow if it doesn’t identify the resources, commit those resources, and provide guidance for configuring those resources to pursue that strategy. Resources are finite. Managers must make difficult decisions about what the organization is going to stop doing or which opportunities it can’t afford to pursue. Strategy is more than declaring goals and setting a vision.
• Project managers. Managers who are assigned goals often use the word strategy to mean the steps (the ways) to achieve the top manager’s vision (the ends). Their goal is to determine the optimal sequence of actions to accomplish that goal.
When I hear strategy defined as the steps to get to a goal, I’m reminded of standing in the checkout aisle at the grocery store perusing the covers of magazines that have teaser headlines such as, “Five strategies to get a flat belly,” or “So-and so’s strategies for sinking long putts.” The articles describe techniques, tips, and hacks.
Use the word goal when you are referring to a targeted outcome. A good strategy is not a goal, nor is it the steps to reach a goal.
I prefer to use the word programming (and not strategizing) to describe the activity of combining techniques with resources for the purpose of accomplishing goals. I also find it helpful to keep this question in mind: What if the assigned goal is illegal, impossible, or poorly thought out?
It’s an unfortunate shortcut when people oversimplify to define strategy as a target (the ends), or in other cases, the steps (the ways) Figure 2-1 provides a general template, structured to describe the organization’s beliefs, choices, and adaptations. There are five numbered statements that serve as a preamble for introducing each part.
1. The collective interests. Oakland’s interests could be stated this way (the first preamble):
Our interests, as the Oakland organization, include … fielding a successful team and supporting our community. Our owners are important stakeholders and have established budget constraints that limit our ability to outbid our wealthier competitors for baseball talent.
It’s worth noting that an organization’s interests can change with the arrival of new ownership, new management, new governance, new rivals, new regulations, and changes in technology and social trends. Too, events can overtake the organization. As an example, during the time I was writing this book there were weekly controversies involving firearms rights, sexual harassment, and race relations in the United States. High-profile organizations found themselves making important choices and pronouncements clarifying their interests and policies. It was common to hear executives, as well as politicians, say, “My thinking on this matter has evolved.”
Figure 2-1. A five-part template for writing strategy, originating from collective beliefs, choices, and adaptations.
The identification of interests provides an opportunity to challenge assumptions about fundamental values and the organization’s place in a larger network of stakeholders.
2. The collective beliefs about the context, situation, and issues. The next part of writing strategy describes the context for the strategy and the group’s underlying justified knowledge.
Given our interests and circumstances, we believe that:
• We are at a competitive disadvantage to our rivals.
• The talent market may be inefficient. We believe that we have advantages over rivals in evaluating talent.
The above is not a comprehensive list. Further, it isn’t likely that there would be a widespread agreement with the “we believe” part of the preamble. Gaining agreement is one of the tough challenges of strategy and is a topic we’ll explore in Chapter 12.
Much of the development of good strategy involves testing beliefs. More specifically, the strategist will develop a hypothesis, collect data, and evaluate the data. For the Oakland example, if the market is inefficient, then the organization’s challenge is to discover methods to exploit that inefficiency.
3. The collective beliefs about the core challenge. A core challenge is the biggest issue (threat or opportunity) facing the organization. It’s the stimulus for undertaking the development of strategy. I state the core challenge for Oakland as follows (the third preamble):
The core challenge for our organization is … that we are in a weak position, compared to rivals, because we are a small-market team with a constrained budget for resources. The presence of inefficiencies in the market for baseball talent provides us an opportunity to recruit affordable talent, enabling us to field a winning team.
The recognition of a core challenge is a crucial element of strategy. Since strategy is defined as a specialized tool for issues management, the crucial task for the strategist is to articulate the specific nature of the opportunity or threat facing the organization. I explain more about the core challenge in Chapter 6.
4. Choosing the ways to configure the means. Strategy involves a stream of aligned, reinforcing decisions through the organization. I use the phrase we choose to qualify each object.
It’s helpful to understand those choices regarding the previously used concept of strategy as an integration of the ways, means, and ends. I have indicated the ways and/or means in brackets to help clarify the impact of the decisions.
Here is the fourth preamble applied to Oakland:
Given our interests and diagnosis of the situation, we choose to:
• Emphasize offensive performance over defensive performance [ways].
•