What is different about strategy today?
The core principles of strategy aren’t changing, but there are huge shifts in how we inform and deliver strategy. Three factors are shaping strategy today: empirical evidence, the social or people side of the equation, and the need for bigger, bolder bets.
The increasing availability of data and creative ways to mine it are producing an empirical revolution. We can now make statistically valid claims based on our long-term tracking of corporate performance.
But just as we are getting smarter, the task is getting harder because the stage on which we are developing strategy is much less stable. The basic economics of strategy haven’t changed, but cost innovations, network effects, and the dramatic speed of development mean that those economics are producing much stranger results, such as the emergence of “winner take all” companies seemingly out of nowhere. This means that strategy needs to be bolder and faster moving.
And strategy is a social game: teams need to adopt their beliefs, people are effectively competing for resources, traditional power bases are being challenged, and conflicting incentives and time horizons come into play.
What does the nature of a strategy project look like today?
A successful strategy intervention is going to look more like a journey for the top team than an analytical project.
It’s going to be integrating a lot more lenses and viewpoints, and because we are forming new beliefs, it’s going to be a little less mechanical and clean, and a bit more interactive and iterative.
We are quite disciplined about the steps to take—framing the decisions, making an accurate diagnosis of why you create value, forecasting a range of alternative futures, choosing among potential pathways, committing via resource allocation, and, finally, setting up to evolve the strategy over time as you learn more. And strategies will be more agile, as the rate of learning and adapting becomes faster, so I think we will see fewer "set and forget" 5-year plans and more dynamic pipelines of initiatives around central themes.
How do we get more truly bold strategies?
The times demand a bold response, but evidence shows a clear bias toward timidity in large corporations. How to change this? First up, knowledge is power. A lot of business leaders just don't know the empirical facts of strategy: that it is almost impossible to defy a trend, and that in the long run it is the submarket you select at a granular level based on analytics that could make the difference. You have to move!
Second, we need to address the inertia of companies. Quoting one of our popular articles, you need to “put your money where your strategy is.” Finally, boldness comes from a deep conviction—our strategy processes need to be more demanding and ruthlessly aimed at challenging our underlying assumptions.