Quick summary:

Setting the right strategy starts with formulating a coherent “view of the world”
This worldview can change over time as new insights become clear; it is not fixed
When senior leaders coalesce around a shared vision, this forms a foundation that is critical in formulating a sound strategy that inspires and motivates employees
By minimizing threats, you risk being too reactionary to unexpected developments
Go beyond generalizations and share your worldview to stress test and refine it

Sound strategy starts with a coherent worldview

How do you begin the process of developing a sound strategy? For many organizations, this starts with the development of a mission statement that broadly gives purpose to your organization. Additionally, some version of a SWOT analysis identifying strengths, weaknesses, opportunities and threats is often performed, commonly with help from an outside consulting firm. Consultants and leaders with prior experience working in other organizations can add value in benchmarking your firm alongside competitors and speak to best practices they have used successfully. Areas for improvement are identified through discussions and prioritized. Potential projects are scoped and the required investments in terms of resources are estimated. Collectively, a strategy (of sorts) is formulated which speaks to the future direction of the organization and provides justification for the investments that have been decided upon by senior leaders.

In my view, what is usually missing from this process is a broader examination of key trends and the development of a narrative or “worldview” that attempts to explain what is happening, why it matters, and how your organization plans to respond. Such narratives are simplistic by nature; just as a statistical model is an abstraction of a real-life phenomenon, so are worldview narratives. However, both the process to develop a coherent narrative that senior leaders can agree upon and the final version can be illuminating. Attempts to craft a worldview will inevitably involve seeking answers to key questions:

What fundamental changes do we see since the last time we refined our strategy?
What are the major themes or trends in our world today? How do they impact us?
What assumptions did we make about how things would play out last time? Which ones proved correctt? Where did we miss the mark?
Does our worldview narrative adequately describe trends we currently observe? If not, how does the narrative need to change to better reflect reality?
Where are the gaps or unknowns in our story? What info is needed to fill them?
If this story about how our world is correct, what does this imply for our organization? How should we respond to be well-positioned in the near future?
Assuming our worldview is incomplete or inaccurate, where are our biggest blind spots? Are there some key assumptions that our strategy rests upon? Can we build in agility and adaptability to allow us to quickly pivot if/when necessary?

Think deeply about threats and how to respond

In my experience, one of the biggest shortcomings of strategy formulation is not thinking deeply enough about threats to your current business model. Yes, organizations pay lip service to traditional and even some non-traditional competitors like Big Tech. Too often, however, companies are so focused on achieving their annual objectives that they are not well equipped to step back and process what is going on in the outside world in a systematic way. Few organizations have a true competititve intelligence team, and those that do are often more narrowly focused on the specific actions of a limited number of known competitors. How many taxi companies foresaw the rise of ride sharing? They were likely much more focused on other transportation firms, not startup technology firms. The same is true of hotel chains - they were likely much more focused on known rivals than Airbnb and VBRO.

Another challenge to thinking holistically is the bias to attribute all successes to internal efforts and look for external reasons (excuses) when falling short of plan. Throughout my time in the insurance industry, I heard a lot about missing profit targets due to factors outside of our control (such as severe weather) but rarely did we attribute better than expected results to good fortune. We are so focused on our own efforts that, when we have success, it is tempting to pat ourselves on the back. When we fail, it’s easier to search for external factors beyond our control first before we look in the mirror. Finally, it is also tempting to blame poor execution before asking whether our strategy was sound in the first place. We see this in sports all the time: it is fairly evident when the head coach makes a poor game-management decision, such as when to use their time-outs or substitute players, but much harder to assess whether their overall strategy was lacking until an entire season (or more) is played.

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Go beyond generalizations to inform your actions

My advice for improving your corporate strategy is to look at three areas in particular:

Have you created a coherent narrative or worldview that captures the current state of your competitive landscape and where it appears to be heading?
Have you identified key trends based on data and impartial observations and documented key assumptions that should be re-examined periodically as part of developing your strategy?
Have you taken time to thoroughly document threats to your existing competitive position - real and imagined - and ranked them in order of size and importance? Do you have plans to address the most relevant threats and contingencies in place if and when unexpected developments occur?

To properly address all three, you need time and engagement from all aspects of your organization. Too often, strategic discussions are rushed, crammed into days full of meetings which mostly address operational concerns. Even if you take time to do an offsite planning effort, interruptions throughout the day are practically inevitable. Finding the time and space to focus on assessing your current strategy and refining it is challenging. The problem is that when the necessary time and effort are not put in, the elements listed above become a mash of generalizations and platitudes. Strategic direction must be more than a “word salad”. Resource investments must be more than a list of “pet projects” that each senior leader favors, but are only loosely related to one another and support a grand strategy to meaningfully push your firm forward. Be as specific as possible in articulating your worldview, the trends you see and threats your perceive, and be sure to document and revisit key assumptions at least twice yearly.

Forestview

Start your strategy by stating your worldview