The problem with most organisations' strategies

Our principal at 2nd Road, Tony Golsby-Smith, recently wrote an interesting article for the Journal of Business Strategy: "The second road of thought: how design offers strategy a new toolkit" (Vol 28, No. 4, 2007).

He claims that the only way you can do strategy well is to reconceive it as an exercise in "design". I'll get to this later. But what's clearly prompted him to make this claim is the state of strategy in most organisations we see. There is a clear disconnect between what strategy could, and should, do in most organisations, and what it actually ends up doing.

As Tony says, "strategy should be the process that enables organisations to create new futures and engage their people in that exciting task". But too often "it weighs an organisation down with more data and inputs". Too often, organisations' strategies miss the vital elements of "coherence", "energy" and excitement.

The solution? See strategy as a design exercise. Not an analytics exercise. But how do we start to get our heads around "design"? By looking at the first principles of design thinking. And they can be found in the realm of rhetoric. So to start this journey, we'd better talk about rhetoric and the "two roads" story.

Monkey envy

Great piece in New Scientist about Capuchin monkeys and their sense of fairness (or of envy - depends which way you frame it).

Researchers trained some monkeys to pick up a rock and hand it over to the experimenter for a reward. They then sat two monkeys side by side and repeated the experiment. When each monkey received the same reward - a cucumber each - for handing over their rock - they performed the task within 5 second 90% of the time. But when one monkey got a much better reward (a grape instead of a cucumber - you've got to understand monkey economics here and not be put off by the comparative size of the grape - but rather look at its sweetness) the "ripped off" cucumber-receiving monkey started to slack off. That monkey only delivered the rock within 5 second 80% of the time.

A sense of fairness? Or monkey envy?

"Expectancy bias" in the USS Vincennes shootdown

I've just started dipping into what looks like a great book: "Sources of Power - How people make decisions" (Gary Klein, MIT Press, 1999). It has a fascinating chapter on the shooting down of an Iranian commercial jetliner in 1988 by the USS Vincennes.

Klein says that some decision making experts see this terrible incident as an example of "expectancy bias" (pp 84ff). Specifically, the crew in the Vincennes' Combat Information Centre reported seeing the unidentified aircraft descending towards the ship - in a pattern they saw as being aggressive. In fact - the data shows that the aircraft was always ascending through all stages of its short flight (it was shot down only 7 minutes after take-off).

What explains this mis-reading of the flight of the airliner? The decision making experts mentioned by Klein think the Vincennes crew were already convinced that this was an enemy jet. Why? Just after take-off there had been a (later shown to be false) IFF reading that the airliner was an enemy jet - and not a civilian plane (the full account of the whole incident in this chapter is worth reading). Because of this belief, the experts claim, the crew then started to see the data they expected to see: the data that supported the scenario they had already decided was occurring. A classic case of "expectancy bias".

Klein is not so sure. He asks the question - what would have happened if the Vincennes had not shot down the unidentified aircraft and it turned out to be an enemy jet that then successfully attacked them? Well - over the preceding month there had been 150 challenges issued by US ships in the Gulf to presumed enemy aircraft. In over 80% of those cases the aircraft involved turned out to be Iranian military (and only 1.3% turned out to be commercial airliners). In other words, if the Vincennes had not acted, and it did turn out to be the wrong call (that is - the aircraft attacked them) - then this decision could also be explained by "expectancy bias". It's just that in this case the bias would have been different - a bias against the available data that these unidentified jets turn out to be Iranian 80% of the time.

This is a great insight from Klein. "Expectancy bias" explains why the Vincennes shot down the airliner. But "expectancy bias" would also have explained the opposite scenario - the failure to shoot down an enemy jet that then successfully attacked. In Klein's words expectancy bias "explains too much" (p85). A theory that explains too much is no theory at all.

So why did the Vincennes make such a tragically wrong decision? Well, it seems that after a terrible chain of events, it was at the end a simple failure of information design. On the Vincennes' computers, the altitude data for nearby aircraft was contained in a small display off to the side. And critically, it did not display a trend: crew-members had to remember the previous altitudes of the jet so as to see if it was going up or coming down. In a pressured situation - over a short period of time - this turned out to be too hard.

Emptiness

(The fifth in a series of posts on "Is your strategy a duck?". Starting post is here.)

Benedikt's fourth component of realism in architecture is that of "emptiness". The quality of a building that allows the user to make it their own: to "complete" it. To give it some of their own meaning.

A strategy should also allow this. Employees should be able to be involved in the "emergence" of the strategy. Liedtka points out that one of the critical roles of senior executives is to set the "boundaries" of the conversations that will allow employees to put meaning into the strategy that's relevant to them and their work.

Materiality

(The fourth in a series of posts on "Is your strategy a duck?". Starting post is here.)

Benedikt's third component of realism in architecture is that of "materiality". That is, for a building to be real "it ought to be made of stuff". A building needs to be made of materials that "look like what they are".

For a strategy to be material, Liedtka argues, it needs to clearly link to the reality of the system on the ground. It needs to take into account the details of what will be involved in implementing it. And it needs to do that credibly.

Significance

(The third in a series of posts on "Is your strategy a duck?". Starting post is here.)

Benedikt's second component of realism in architecture is that of "significance". And what's important here is significance of the building to an individual - not the building being "symbolic of something".

Here Liedtka unpacks the idea that a strategy needs to engage at "the level of individual action". It needs to engage everyone in the organisation - including those on the shop floor.

According to Liedtka, strategies become significant when they help employees answer two questions:

• "What does this mean to me in my role in the organisation?"
• "Why should I care?"
  

Presence

(The second in a series of posts on "Is your strategy a duck?". Starting post is here.)

Benedikt's first component of realism in architecture is that of "presence". There is something about the building that commands attention.

How does a strategy command attention? Liedtka makes clear that to grab attention a strategy must be interesting. How so? To be interesting a strategy must:

• Combine the familiar and the novel. Too familiar and we will ignore it as nothing new. Too novel and it will seem too way out to be credible.
• Be unified and simple. Avoiding needless complexity and jargon: and easily suggesting action.
• Be delivered by someone "we know and take seriously". Usually our line manager - which of course requires that our line manager is also engaged with this strategy. (This reminds me of Aristotle's ethos of the speaker - more on this another time).