Some years ago, Deming told us, “if you can’t describe what you’re doing as a process, you don’t know what you’re doing.” This is where scholars run into trouble. They might have the conceptual insights to describe a process, but they don’t finish “the last mile”. They stumble on the HOW. They can’t tell you how to apply the theory they are describing.
PORTER’S FIVE FORCES: A STANDARD STRATEGY MODEL
Some years ago, Michael Porter came up with his Five Forces model of strategy. Grounded in industrial organization economics, the theory explains how companies could find defensible market niches: “strategic fit” where a company can build a sustainable competitive advantage.
The problem, of course, is that the model is abstract, somewhat static, and difficult to apply.
That’s a stumbling block. Porter’s model assumes, for example, that we can define market boundaries fairly clearly. But what if we can’t? Boundaries were pretty stable and clear in the past. Steel was steel. Autos were autos. But now technologies are making them fuzzy, dynamic, and difficult to define. What if steel is advanced materials and autos are personal mobility?
What if markets, instead of being relatively static and stable, are open and dynamic? What if markets are complex open networks embedded in other networks? Then what?
RE-CENTERING STRATEGY FOR PRACTITIONERS AND SCHOLARS
In the 1990s, the foundations of strategy began to shift. Kathleen Eisenhart at Stanford, an excellent scholar of strategy in dynamic markets, framed the challenge in terms of complex adaptive systems. These systems have a large number of interacting components (“agents”) that interact, learn, and adapt.
Eisenhardt grounded her work in a simple definition of strategy: an effective strategy answers 2 questions: Where are going? How will we get there? She suggested that in dynamic markets, strategy consists of applying simple rules or heuristics, rules of thumb that practitioners learn by doing. In other words, to see how strategy is changing, study what practitioners do.
STRATEGIC CONVERSATIONS: THE CORE OF STRATEGY TODAY
If we envision strategy as a continuous process of adaptation and learning, several assumptions become clear.
>> To be effective, the process must be fast, low cost, and recursive.
>> The process must focus on “strategic conversations”: conversations that answer the two key questions of strategy.
>> Conversations sit at the core of strategy; that’s how we generate and distribute our knowledge.
>> The conversation is different depending on where the business is on its S-Curve.
>> Management frames these conversations and oversees the process to launch continuous experiments. These experiments generate knowledge, learning, and adaptation.
In other words, strategy is grounded not in economic theory, but in pragmatism.
#strategicdoing is designed around these principles. The discipline grew from years of reflective strategy practice addressing wicked problems.
The Director of the Lab at UNA and co-author of Strategic Doing: 10 Skills for Agile Leadership, Ed’s work has focused on developing new models of strategy specifically designed to accelerate complex collaboration in networks and open innovation. He is the original developer of Strategic Doing.