Strategy for Left-Brainers

We don't all think in the same way. Neuropsychologists call it Lateralization of Brain Functions. Some people prefer a more logical, systematical, methodological, analytical view of the things and facts around us. They are the so-called dominant left-brain thinkers, or left-brainers, for short. Others prefer a more inspirational, intuitive, emotional, artistic perspective. They would be the right-brainers.

Three neuropsychologists, Robert Sperry, David Hubel and Torsten Wiesel, received the Nobel Prize for Medicine, in 1981, for this theory, named, at that time, the split brain.

Same goes for the Strategy. Some regard it as a true discipline, dominated by logic, causality, and inter-dependencies. Some regard it as a flare of intuition, gut feeling and inspiration. For this very basic reason, any specific approach to managing the Strategy will never satisfy everybody. And that's fine, because we are born and have evolved with our distinctive ways of viewing what's around us.

Although I'd love to see many right-brainers enjoy the workflow diagrams below, I'm almost sure that the left-brainers will enjoy them the most. Now, do you remember the article where I've made an attempt to describe how Strategy works, in a single long paragraph? It is here, in case you haven't read it or want to review it: The Strategy Elevator Pitch, or How Strategy Works.

Let's look at the processes described there from a more visual perspective. Typically, this means depicting the Strategy Management processes as workflows of inputs and outputs, analysis, logical decisions, hypothesis, validations gates and feedback loops. I have divided it in several parts, based on the 10-step Strategy Clockwork diagram:

Where did this illustration come from? We can get the answer if we notice that it actually represents the integration of two fundamental management loops that have marked the evolution of the understanding of how we control the processes that we are operating: PDCA (Plan-Do-Check-Act), known as the he Deming cycle, or the Shewhart cycle, and OODA (Observe-Orient-Decide-Act), the air-superiority control loop imagined by Col. John Boyd.

In case you might be wondering what are the path ramifications doing in these diagrams, here are some clarifications.

Dual-Loop Learning in Strategy Management

Thirty years ago, the term Dual-Loop Learning was coined by Chris Argyris, in an article published by Harvard Business Review /*. Today, we still see how Strategy is managed based on single feedback loops. Typically, that happens wherever the assumptions and hypotheses used when formulating the Strategy and building the Strategic Plan are not continuously monitored and checked for validity.

The Strategy Clockwork cycle employs Dual-Loop Learning or Assumptions Validation twice, once within the Formulation process loop (against the estimated outcome) and once within the Execution process loop (against the effective outcome).

(a) The Strategy Formulation process is ITERATIVE and if our Strategy does not pass the Feasibility validation gate (probability of successfully implementing the mandated changes) and the Viability validation gate (sustainability of the business model(s) resulted), then the process has to return from Stage 5 to Stage 2 (A2), aiming for a better solution iteration. Otherwise, the Formulation loop exits, Stage 5 -> Stage 6 (A1), and the workflow enters the Execution loop.

Since the Formulation loop cannot test its hypotheses over time (except for the prototyping included in the Design Thinking process), we cannot tell, by the end of the process, if they are valid or not, based on past results. The only thing that we can do is to estimate Strategy's impact and its outcomes and then assess if Strategy's execution is feasible and if it may produce one or more viable business model(s).

(b) Within the Strategy Execution process, if the adaptation (replacement of invalid hypotheses and of their dependents) does not regard the input from the Formulation process, then the Execution loop may go around for another planning & execution cycle (Stage 10 -> Stage 6, B1), after the invalid hypotheses (employed in Stages 6-8) have been replaced. But if the adaptation requires significant changes, in regard to hypotheses employed within the Formulation process, then the Execution loop exits (Stage 10 -> Stage 1, B2), and we go back into the [re-]Formulation loop.

Going down to the OODA-PDCA foundations, how could we illustrate the Dual-Loop Learning in the OOD(A) + PDCA integrated visualization, including both the feed-forward and the feedback loops? Maybe like this:

/* The HBR article (1991): https://lnkd.in/eeuzp29S

Environmental Scan & Choices Making

We sometimes use Porter's Five Forces (with JTBD in mind) and PESTEL (Politics, Economy, Society, Technology, Environment, Legal) as Environmental Scanning or Situational Awareness tools, within a Strategy context, looking at trends in the Micro-Economic (Industry/Arena) and the Macro-Economic influence factors.

What outcome to expect from this? Taking as reference the Strategy Formulation cycle in the Strategy Clockwork, we get multiple outcomes.

(1) STRATEGIC SCENARIOS

We use PESTEL to identify trends in relevant Driving Forces that can determine Strategic Scenarios, as alternative futures resulting from combinations of trends reversals or significant trends deviations. You can find out more about Scenario Planning from the recommended specific reading https://lnkd.in/eniUJ2bb

(2) STRATEGIC HORIZON

The Strategic Horizon of our Strategy is driven by the anticipated inflection points in the evolution of our industry (arena) /*. We use Porter's Five Forces model for this purposes, evaluating the trends in the five forces of the model. It would be recommendable to have the Jobs-to-Be-Done (JTBD) of our customers in mind when considering these forces ... more details: https://lnkd.in/eFqTqhEt

(3) STRATEGIC CHOICES & BUSINESS MODEL(S)

A palette of possible Strategic Choices areas, like the Penta Model /**, and the combined relevant influence factors, resulting from using Porter's Five Forces and PESTEL, facilitate the selection of Strategic Choices on both Strategy dimensions: Where-to-Play (WTP) and How-to-Win (HTW), which have the potential to allow us to reach our Winning Aspirations on the Strategic Horizon decided.

The JTBDs corresponding to our selected Strategic Choices are best addressed by our Value Propositions that require a Capabilities System, which further determines the Business Model(s) that we must implement or adapt, during the Strategy Execution cycle.

/* The Strategic Horizon: https://lnkd.in/eBCpgiUu

/** Penta Model diagram: https://lnkd.in/eTqETAhn

Desirable, Feasible & Viable

We might have formulated a brilliant Strategy, which is potentially capable, in itself, to provide a strong competitive advantage. But then its execution fails. Or we succeed to execute it, but find out that we need to change it because things don't work as expected and our business is no longer sustainable.

So, what went wrong?

As David Kelley's IDEO d.school Design Thinking /* core concept emphasizes, successful innovation requires three essential attributes: desirability, feasibility and viability. Same goes for our desirable Strategy, which needs to pass the feasibility and viability validation gates, before we even start executing it.

Desirable: We have to design a Strategy that clearly defines what needs to change in our business, based on a deep understanding of why must that happen and which our winning aspirations are.

Feasible: No matter how well designed might our Strategy be or what great winning aspirations might it promise, we should be able to execute it within the constrains of the organizational resources that we can mobilize for that, and aligned with what we are able to do, as a team. Otherwise, our Strategy will crumble before producing any expected results.

Viable: Once successfully executed, our Strategy will bring to life one or more business models that might resemble or not those that we have been using before. However, if their financial bottom lines will forever remain in the red, our Strategy will certainly fail.

/* IDEO Design Thinking https://lnkd.in/eHsEyfmt

The full Strategy Cycle timing

An Adaptive Strategy system /* determines a Strategy Management cycle of variable duration. That happens mainly by varying the timing of the Strategic Plan's execution, as the need to adapt our Strategy may sometimes trigger the shortening of that process.

Nevertheless, as a general guiding principle, what would be the timing of the main processes within our Strategy Management cycle? Let's take the frequent example of a full cycle intended to take one year, usually synchronized with the annual budgeting calendar. If our non-executive processes, meaning ...

• A. Strategy Formulation (Stages 1-5) and
• B.1. Strategic Planning, Alignment & Operational Integration (Stages 6-8)

... would take more than 2-3 months, we would extend too much the time gap between starting our Strategic Analysis (Stage 1) and the beginning of our Strategic Plan's execution and models' adaptation (B.2. - Stage 9-10). Don't be fooled by the nice symmetry of the Strategy Clockwork diagram :-)

Therefore, a rule of thumb would be:

• A. 10% of the whole cycle: 5-6 workshops /**
• B.1. 10%: 4-5 workshops + N Alignment workshops /**
• B.2. 80%: monthly Strategy Reviews (inner-loop corrections) + quarterly Strategy Models Reviews (outer-loop adaptation)

where N is the number of SBUs (business units or teams) participating in the Alignment process. Some of the Alignment workshops may overlap.

For clarity: We are talking about Strategy models (plural) for separating the model built within the Strategy Formulation process (Stages 1-5: Scenarios, Winning Aspirations, Strategic Choices, JTBD, Value Propositions, Business Models, Capabilities System, Strategic Gaps, etc.) and the model built within the Strategic Planning & Alignment processes (Stages 6-8: Strategic Objectives, Cause-Effect Relationships, KPI & KRI Scorecards, Strategic Initiatives, Risk Events & Mitigation Initiatives, Alignment contributions, etc.), including their chains of Strategic Hypotheses. Also see: Two Types of Strategic Hypotheses https://lnkd.in/eDGmKph9

/* The Adaptive Strategy system: https://lnkd.in/e3SBz-G and The Adaptive Strategy diagram: https://lnkd.in/egvYV7mC

/** Workshops overlaid by the continuous Strategy Dialogue consultation ... see The Strategy Dialogue: https://lnkd.in/eztaBsb8

Working with the Corporate Strategy

There is a whole reference literature on Corporate Strategy related to multiple business lines organizations. Hopefully, most people understand the difference between Corporate Strategy and Business Strategy. Sometimes, confusion exists about this, partially because we colloquially refer to the latter with the Strategy shorthand, and partially because the former is not related only to the parallel handling of multiple business lines' strategies, but also to a variety of other change-related functions, like M&A (Mergers & Acquisitions), Investors Relationships, Corporate Branding, and so on.

It was 1987 when Prof. Michael Porter has described in a Harvard Business Review article /* the difference between Business Strategy and Corporate Strategy in this clear way:

"A diversified company has two levels of strategy: business unit (or competitive) strategy and corporate (or companywide) strategy. Competitive strategy concerns how to create competitive advantage in each of the businesses in which a company competes. Corporate strategy concerns two different questions: what businesses the corporation should be in and how the corporate office should manage the array of business units."

In all this, there is one essential thing that tends to elude our understanding, when talking about the way we formulate the Strategies for multiple business lines: the essential Strategy building block of Strategic Gaps. Let me explain.

The core Corporate Strategy function is Portfolio Management. For example, you are probably well familiar with the BCG Growth-Share Matrix, a popular business portfolio tool https://lnkd.in/eSk6jA59

(1) Whether our multiple business lines are in the Cash Cow, Star, Pet, or Question mark quadrants, each of their Business Strategies have to be managed [mostly] in parallel. We will certainly have different Winning Aspirations for each and, probably, even their Strategic Horizons will be different, as that is specific to the each industry or business arena.

(2) The Strategic Choices are specific to the two Strategy dimensions of WTP (Where-to-Play) and HTW (How-to-Win), which are mostly different between our business lines. Of course, there may be shared choices for some of them, but each will have its specific mix. Same goes for their Business Models.

(3) The required Capabilities & Activities (including pivoting ones) will follow the Strategic Choices and the Business Models, but because they are defined based on the same pool of capability categories /**, some of the required Capabilities & Activities are shared between our business lines.

(4) This is where the Corporate & Business Strategies get a common focus: the Strategic Gaps. The surprise that I had in two Corporate Strategy exercises was how many Strategic Gaps have been shared between multiple business lines. In many cases, we have realized that even capabilities that have been labeled differently at (3), were in fact the same and that lead to the same Coherence Gaps.

(5) As most SBUs in our multiple business lines are different, we execute their Strategies in parallel. But, guess what? As some of the Strategic Gaps are shared, people from different business lines get to work sometimes in the same project teams for shared Strategic Initiatives deployed for closing those gaps within the same Strategy Execution cycle. That happens even if the gaps are aggregated into different Strategic Objectives for each business line's Strategy Maps.

/* HBR: From Competitive Advantage to Corporate Strategy, Michael Porter (1987) https://lnkd.in/ee77mqNh

/** Pivoting Capabilities https://lnkd.in/eFSxY6Bb

Integrating with Geoffrey Moore's Zone to Win

How can we move the Corporate Strategy relationship one step forward, in making it even more meaningful and insightful? This is one idea.

Geoffrey Moore didn't title his integrative Strategy framework in any way, although his Crossing the Chasm concept has always been in the background. What he excels at is building on top of concepts that have a wide adoption within the Strategy realm, pushing them one level up. That's climbing on the shoulders of giants and setting new boundaries.

Moore has built upon Everett Roger's Diffusion of Innovation theory, focusing on The Chasm between the early and the mainstream adoption, searching for success patterns on how to cross it and then how to grow exponentially from there. He also took McKinsey's Three Horizons of Growth concept and gave it a significantly more tangible meaning, especially about how to manage the Horizon 2 for successful disruptive growth. Furthermore, he took Clayton Christensen's Innovator's Dilemma theory and reshaped it into a management zoning framework and set of playbooks, for exploiting the hotspot between efficiency and disruptive innovations.

Geoffrey Moore's books and public presentations are a treasure trove of integrative Strategy insight that should be required knowledge for anybody interested in how Strategy is managed in successful organizations. If you can't make your mind about where to start, try first this 2020 presentation video: https://lnkd.in/ee9hN9iX I'm sure it will open your appetite for the rest.

To learn more watch Geoffrey Moore's Presentation videos: https://lnkd.in/ehtk5fYH and read his books: https://lnkd.in/eKmdimdu

After I have reviewed in more detail Geoffrey Moore's thought leadership Strategy concepts, I am haunted by middle-of-the-night thoughts about how to connect the dots between his work and the construct of Strategy theories, concepts and frameworks that I have gathered under one hood: the Strategy Clockwork.

The thought provoking fact is that Moore's concepts often transcend the boundary between formal Corporate Strategy and Business Strategy. For instance, his Zone to Win framework is some sort of Corporate Strategy on Steroids, built at the intersection of McKinsey's Three Horizons of Growth (https://lnkd.in/eFQRq29T) and Clay Christensen's Three Types of Innovation framework (https://lnkd.in/ekkdkw4u), laid at the foundation of his Innovator's Dilemma series.

Why Corporate Strategy on Steroids? There are a lot of reference books on Corporate Strategy, some of them business school textbooks. But none of them will approach Corporate Strategy in such a direct, insightful and practical way. A treasure trove of strategic thinking!

So the question is: How can we integrate Geoffrey Moore's Zone to Win model with the Strategy Clockwork? Do you remember the Corporate Strategic Gaps diagram? Here it is, just in case: https://lnkd.in/eF9xY-4n

The diagram below is a first attempt of such integration. The workflow path goes from Stage 1 (Winning Aspirations) through Stages 2 (Strategic Choices), 3 (Required Capabilities) and 4 (Strategic Gaps), then straight to the execution Stages 6 (Strategic Planning) and 7 (Strategic Alignment), assuming that we've succeeded to pass through the Stage 5 of validating the feasibility & viability of our Strategy.

A few first thoughts ...

(1) The Winning Aspirations are aggregated from our expectations (a) to grow in the Performance Zone and Efficiency Zone of our current Competitive Advantage (within McKinsey's Horizon 1, based on Clayton Christensen's sustaining & efficiency innovations /**), (b) to succeed in producing promising disruptive innovations in the Incubation Zone (Horizon 3), and (c) to pull one breakthrough viable Value Proposition through the Transformation Zone (Horizon 2) and push it over the chasm, preparing our next Competitive Advantage, based on expected mainstream adoption.

(2) Geoffrey Moore explained the principle of separate & independent Incubation Zone business units required to work on generating viable disruptive Value Propositions, out of which the best one may breakthrough into the Transformation Zone. We can play with the idea that (a) we might also need dedicated business units handling the transformation job, or (b) such job might be handled within business units focused on Horizon 1 and capable to slide into the Horizon 2. I would lean more towards (a).

(3) The pool of common Corporate Strategic Gaps still holds water, as we might be surprised to find out that the four zones might share some of the Strategic Gaps that are then morphed into their Strategic Objectives. In consequence, we may find people from business units focused on all four zones working within common Strategic Initiatives project teams.

(4) It would make sense that the Strategy Map at the Corporate level /** should have four Strategic Themes defined according to the Zone to Win model, then get vertically aligned to the corresponding business units. Then, the horizontal alignment will take care of completing the integration between the units, at Strategic Objectives level.

/* THREE TYPES OF INNOVATION https://lnkd.in/ekkdkw4u

/** ALIGNMENT https://lnkd.in/eyaxizd - see Figure 1-2, page 8.

The Strategy Management Workflow Diagrams

For a deeper dive into the Strategy Management process, here are the workflows:

1. The Strategy Formulation workflow

2. The Strategic Planning & Alignment workflows

3. The Strategy - Operations Integration workflow **

4. The Strategic Plan Execution & Strategy Adaptation workflows **

** to be added, soon.

I have to admit that it may take a little bit of patience (and curiosity) to go step by step through the workflows (try the higher resolution versions), but the outcome may be rewarding, as you'll probably recognize many concepts, theories, or frameworks that you might have encountered before, linked in a logical way. The second diagram (Strategic Planning & Alignment workflows) is relying significantly on the Kaplan-Norton BSC framework, known as the Execution Premium Process (XPP) - stages 2 and 3.

The Strategy Formulation workflow

You can download this digram at higher resolution from SlideShare or from Flickr.

The Strategic Planning & Alignment workflows

You can download this digram at higher resolution from SlideShare or from Flickr.

I guess that you may anticipate that beyond the methodology approach described there there is a software application for modelling the Strategy Management cycle. To do that, an inherent step is the development of a Strategy Markup Language: StrategyML, which describes, in a unified manner, for each step of the Strategy Management cycle:

❯ Driving and driven stages

❯ Inputs from external sources

❯ Inputs from driving stages

❯ Input filtering hypotheses & dialogue feedback

❯ Decision logic steps & sequence

❯ Decision step algorithm

❯ Decision step inputs & outputs

❯ Decision step hypotheses & dialogue feedback

❯ Decision steps outputs & stage outputs

By looking at the workflows above, it's evident that summarizing Strategy to a few steps is not something easy. In doing that, these three questions should concentrate our focus:

1. Which Jobs to Be Done do we target? (Where to Play)

2. What Solutions would best help do those jobs? (How to Win)

3. Why can't we deliver those Solutions ... by tomorrow morning?

The latter is the strongest question of Strategy, because it tells us what required capabilities are we missing, or are not adequately configured, and what required activities can we not perform. Resulting from that, are the Strategic Gaps that we have to close. That's what we should focus on, as those gaps clarify for us the path from desire to action, and allow us to plan, perform and adapt the execution of our Strategy.

Therefore, if must summarize Strategy to a few steps, holding on to the essentials, how would that look like? Maybe, like this:

I hope you've enjoyed this. Your observations, questions or bricks :-) are more than welcome.