“We need a strategy.”
“I’d like to present our strategy.”
“Their strategy is terrible.”
Why is strategy always used as a noun? Why do we talk more about strategy than we do about strategizing? Why do we think of strategy as something static? Google, Wikipedia, and Dictionary.com all start with the same basic definition of strategy as a plan:
“A plan of action or policy…”
“A general plan to achieve one or more long-term or overall goals…”
“A plan, method, or series of maneuvers…”
Despite Roger Martin’s protestations, they all use that dreaded, set-in-stone word.
A plan, by definition, is a static thing, something you are not supposed to deviate from. If a plan changes during its execution, it’s seen as a negative. “The best laid plans of mice and men oft go awry,” said Robert Burns.
Well of course they do.
This is why it’s a mistake to regard your strategy as a plan instead of the constant act of strategizing. You don’t have a strategy. You strategize. Any viable strategic direction must be flexible enough to adapt to changes, and have access to resources that allow them to make those adaptations.
I’m not talking about “Plan B.” That’s just a backup plan, and two static plans do not constitute a strategy. I’m talking about the value of strategy in the incredibly uncertain domain of innovation, where you put everything on the line every day for a single idea in a domain full of risks. To quote one of my generation’s great thinkers, “Everyone has a plan until they get punched in the mouth.”Strategy is a verb. It must be able to adapt to changes. “Everyone has a plan until they get punched in the mouth.” - Mike Tyson Click To Tweet
Most innovation departments don’t seem to have even a plan, much less a strategy beyond the shotgun approach of “try a lot of things and see what works,” which is subject to chance and reactive to the whims of industry. This is better than doing nothing, but it’s not very strategic, and certainly not very satisfying for an entrepreneur.
Part of good strategy is knowing when to make decisions and what decisions not to make at all. A plan is meant to be detailed enough to execute step-by-step. A strategy deliberately omits details and defers decisions.
It’s hard to execute a plan in sports. If we were playing basketball, our detailed plan might be to dribble the ball down the right side of the court and pass it to a teammate under the net, who will shoot the ball. But in the moment of execution, the teammate may not be free, and the plan is no longer viable. We are now improvising.
Executing a strategy is much different. A good strategy accounts for different choices that only become available at the moment of execution — tactical options. Our strategy can account for defenders under the net blocking our pass. It can include the option to move the ball around the scoring area and approach the net from the other side. Our strategy allows for flexibility and taking advantage of options as they arise.
Nowhere does our strategy tell us exactly when to work the ball to the other side of the net, or which player will be there to try that pass. Those are unknowns that we can’t plan for. So we leave decisions to the individual players in the moment of execution. We are confident that they will make the right calls because our team revolves around strategy, and they have grown their capabilities to effectively react to obstacles. We have trained the players to think for themselves in the execution phase instead of blindly executing a plan and hoping our opponents behave like we want them to.
The same is true in business. Our strategy should not tell our marketing department what to tweet two years from now. Our strategy should not tell us which innovation to launch in 2030. We simply don’t know enough now to make those decisions.
Instead, we teach these teams the tactics they need to be innovative in the office or on the court. A basketball player has perfected their lay up, so when they see an opportunity to approach the basket from the right angle, they can take a shot. An intrapreneur knows how to use landing pages, customer discovery interviews, and Wizard of Oz tests to quickly size up an opportunity and exploit it when they see an opening.
Just as a good strategy defers decisions when not enough information is available to make the best call, a good team understands the tactics necessary to execute that strategy in the face of changing information. We not only leave the decision until later, but we allow the person with the most information to make it at the appropriate time.
But that’s not very useful if the players don’t learn the tactics that allow them to make these decisions in the moment. So we need to build our capabilities before we play.
If we want to enter a new market, we must think strategically, and we must have our team prepare so they have the capabilities to execute tactical decisions in the moment.
We cannot just decide to launch a new line of shoes today. We have to figure out how we are going to manufacture those shoes. If we know that consumer demand is changing rapidly and we will need to produce a new style every other month, we must retool our large-order-based factory to produce smaller batches with a faster setup time. The improved manufacturing capabilities will allow us to rapidly execute tactical changes needed by changing consumer demand that we could not have foreseen 6 months or even 6 weeks ago.
Finding the Right Moment
Finding the right moment to make a decision is tricky. It’s best to wait until we have enough information to make an informed call, but if we wait until we have the most information, it may be too late.
If we wait until we see the opposing basketball team warming up to determine they are much shorter than us, we have lost our opportunity to prepare a strategy centered around out-jumping them at the net. We waited too long to discover the opponent’s strengths and weaknesses. We have the maximum information, but that information is now far less useful than it could have been had we better prepared.
In financial terms, we have lost our option. It expired. We need a certain amount of time to prepare our capabilities, and if we don’t have that time available, the option is unavailable.
In some cases, calculating the right moment is very clear. If the supply chain will take two months to prepare before launch, we have until two months before our launch date to make the decision to invest. It makes sense to delay the decision until this exact moment.
Delaying decisions to preserve options has another key feature: it allows for the flow of information.
Strategizing is the act of making, delaying, and revising decisions as information becomes available. Setting a plan obligates your players to follow a path that pushes through obstacles. Setting a strategy gives the players the opportunity to evaluate those obstacles (gather information) and navigate around them (make decisions counter to the plan that are more in line with reality).
If our strategy is malleable and the act of strategizing is ongoing, we can adjust it as soon as new information becomes available. If none of our assumptions have been disproven by that new information, we can continue. Strategy is an ongoing process, not the one-time output of a strategy session. The Build-Measure-Learn loop from Lean Startup becomes Strategize-Execute-Monitor (Strategize -> Learn, Execute -> Build, Monitor -> Measure).
Strategizing, the verb, requires a continuous commitment to reevaluating our decisions in light of additional information. Strategizing is the act of achieving goals in situations of uncertainty with limited resources. The more uncertain the environment, the more our strategy needs to be flexible to react to new information.
The pace at which we must adjust our strategy increases as uncertainty increases. In a chaotic environment where external forces are changing things too rapidly to plan ahead, the strategy has to respond to things as they happen. We can only build a plan atop the strategy when the environment stabilizes to some degree.
When that happens, we can formulate a plan, but we must be ready to revise it in line with the strategy. When we know very little, any bit of information changes our worldview radically. So we constantly need to re-evaluate our decisions in the light of additional information.
If we are strategizing slower than the world is changing, our strategy is simply reacting to that change, which is really not a strategy at all. If we strategize faster than the world is changing, then we are the ones driving the change, the same way a smaller, faster gear drives a larger, slower one.
The more the world stabilizes, the more we can plan ahead. But even in the most stable environments, we have to watch out for early indicators that things are destabilizing. If we get caught off guard and things change in the middle of our two-year strategic cadence, we’ll be in trouble without the ability to notice that something has changed.
All this makes innovation strategy look particularly funny when we are used to seeing strategy as a fixed plan that might only change once every 2-3 years. In innovation strategy, uncertainty is extreme. Everything is uncertain. That is the point.
In fact, innovation teams are deliberately looking for new markets where there are no fixed rules. This allows them to create the rules and dominate the market. The act of making detailed plans to conquer a market we have not yet discovered is an act of arrogance.
Instead, innovation strategy focuses on building the capabilities to create options. Then we gather information to select the right options before they expire. When we do this correctly, innovation strategy allows us to rapidly exploit emergent opportunities.
So when the Chief Innovation Officer spends time focusing on culture and mindset change, they are focusing on building adaptive capabilities to deal with unknown situations, even though to the CFO, it just looks like a workshop with no ROI.
When an innovation team creates and launches an MVP, it’s not to generate ROI. It’s to generate information. This information allows them to evaluate an option and decide to execute, delay, or let it expire. The CFO might think it’s a mediocre product that won’t generate enough revenue to buy paper clips. But again, generating ROI is not the point.
When the innovation team is revising their strategy every week because they are exploring a new opportunity, it’s not because they don’t know what they’re doing. It’s because they are actively seeking out new information and adjusting their strategy accordingly. If they can’t yet articulate a fixed strategy (let alone plan), it’s not because they don’t “have” a strategy, it’s because they recognize investigating new opportunities requires the ongoing act of strategizing.
Ultimately, we must set our strategic pace slightly faster than the rate the environment is changing. And when dealing with innovation (or disruption), that rate is nearly constant.
As one of the great thinkers of a previous generation said, “Plans are useless, but planning is indispensable.”“Plans are useless, but planning is indispensable.” – General Dwight D. Eisenhower Click To Tweet
That’s because plan is a noun, and planning is a verb. Strategy as a noun is about as useful as a plan — static and unresponsive to new information. Strategy as a verb is the continuous act of strategizing based on constant adjustment to new information, which is essential for a business to remain relevant in a fast-moving industry.
- Strategy is agile, plans are fixed.
- Delay decisions to maintain options.
- Make decisions before options expire.
- Set the pace of strategizing faster than the rate of change.
- Strategy is a verb, not a noun.
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