You Can’t Craft a New Strategy Until...

...you’ve defined what the problem is with the old one

Published: Monday, August 18, 2014 - 13:20

A new strategy requires that some conclusions be made about the old one. The old strategy must be reframed as a choice between at least two mutually exclusive choices, from which some initial possibilities can be considered through focused, facilitated brainstorming.

(Side rant to all the creativity “experts” out there poo-pooing brainstorming: Go pound sand. Brainstorming works very well with proper focus and facilitation. Creativity thrives under intelligent constraints.)

Let’s assume you’ve got clarity and consensus on your current strategy, using the framework from A. G. Lafley’s and Roger Martin’s book, Playing to Win (Harvard Review Press, 2013). That is, you’re clear on 1) your current aspiration; 2) the spaces in which you're competing; 3) the basis of your advantage; 4) your specific capabilities that produce that advantage; and 5) the systems that support those capabilities. (If you’re not clear on those, check my last column for a list of questions to help you achieve clarity.)

Here are the three things you need to do before you dive into drafting a new five-point strategic cascade.

1. State your problem

The first thing you need to do is agree on the most pressing and troublesome strategic problem you’re facing. Has your leadership position slipped? Is market share shrinking? Have competitors surpassed you with better products or services? Is growth not happening as fast as you’d like? Are your capabilities becoming irrelevant with end users?

As with any type of problem solving, you’ve got to grasp the current situation and identify the strategic issues that have you thinking you need a new strategy in the first place.

If you’re not sure where to start, walk through the areas that you’ll eventually reverse engineer with strategy’s “magic question”: What must be true? Basically, you want to discuss current challenges in your chosen segments, your channel customers, your end users or consumers, and your capabilities and costs in comparison to your competitors.

If you’re like most of us, your current strategy is rather target-rich—meaning you have more than one pressing issue. Pick the one that’s keeping most everyone up at night. That’s your bogey.

2. Reframe the problem

Here’s where strategy differs from problem solving. You’ll be tempted to begin analyzing the problem. Don’t. Instead, reframe the problem as at least two mutually exclusive, high-altitude approaches to the problem. For example, if your problem is inferior capabilities vs. your competitors, the choices could be between building new capability and outsourcing. (At the most generic level, the choice is always going to be between more of something and less of something. The language may change, but the basic choice remains the same, e.g., “broaden vs. narrow,” “up market vs. down market,” “generalization vs. specialization.”)

One of the key ideas in the Martin framework is that successful strategy combines logic and creativity. In other words, there’s an art to strategy, and as that clever guru of strategy Frank Zappa once said, “The most important thing in art is the frame. For paint, literally. For other arts, figuratively—because without this humble appliance, you can’t know where the art stops and the real world begins.”

3. Brainstorm possibilities, cluster, and cull

You’re still not ready to dive into the new strategy work just yet, basically because you have nothing to dive into. What you want to dive into are possible where-to-play and how-to-win combinations that will riff off of each of the two choices that reframe your problem. In other words, you’re looking for a good double fistful of “how-to’s” for the two choices. This is where a solid 30 minutes or so of brainstorming will work wonders.

When I work with groups, I like to split that 30 into 15 minutes of individual brainstorming and 15 minutes of group brainstorming. The first 15 make the second 15 very productive.

Martin likes to approach brainstorming possibilities as if you were creating “a happy story about a potential future that lays out where your company plays and how it will win there.” Start by thinking up different ways either to broaden or narrow where you play. Think through the various spaces in the categories of customer segments, channels, product or service offerings, geography, stage of production, etc.

Then you can think about various ways of winning. One creative device might be to play the “what would X do?" with respect to what Michael Porter in his seminal Competitive Strategy (Free Press, 1998) identified as the only two broad categories of competitive advantage: low cost or differentiation. So ask, “What would Amazon do?” (low cost) or “What would Apple do?” (differentiation) in these spaces.

Note: You’re still not ready to draft a strategic cascade. You’re just brainstorming. And as with any brainstorm, you’ve got to synthesize your ideas into something both meaningful and relevant to the problem. The best way to do that is to simply cluster the where-to-play and how-to-win possibilities by general theme. You might have three basic themes: broaden, maintain, narrow. Remember, you haven’t scrapped your current strategy, and it remains a viable strategy at the moment.

The final thing you want to do is cull those thematic possibilities into the few for which you will draft a full strategic cascade. Martin recommends three to five possibilities, plus the current strategy.

Example: Star Fitness Training

Joe and Mary Buff, former Crossfit winners, offer in-home personal training services to an upscale clientele in the Hollywood area. Their clientele, which includes some celebrities, pay a premium over even the highest-priced health clubs for their personal attention. The Buffs are very successful with this strategy but have reached the limits of scale in their business and can’t take on new clients. They view it as a good problem to have, but a problem nonetheless.

They define the problem in three words: “ceiling on growth.” They reframe their problem as two choices: 1) expand into new client segments; and 2) offer new products to existing clientele. These are two completely different choices, and each has a number of possibilities:
• Expand to cover all of Southern California by franchising Star Fitness Training
• Extend into high-end health clubs
• Expand through boutique storefront studios
• Expand to downscale clientele with trainer certification model
• Offer online training programs
• Offer exercise DVD products
• Offer nutritional products
• Offer exercise equipment

Clustering these possibilities might look something like:

Grow geographic area
• Expand to cover all of Southern California by franchising Star Fitness Training
• Extend into high-end health clubs
• Expand through boutique storefront studios

Diversify clientele
• Expand to downscale clientele with trainer certification model

Fitness products
• Offer online training programs
• Offer exercise DVD products
• Offer nutritional products
• Offer exercise equipment

They selected three possibilities they believe are worth exploring, and scrapped the rest: expand to all of Southern California through franchising; expand into a less affluent client segment by hiring, training, and certifying new training associates; and offer exercise DVD products.

In my next column, I’ll introduce a tool I’ve developed with Roger Martin’s input that helps teams explore strategic possibilities.

About The Author

Matthew E. May

Matthew E. May counsels executives and teams through custom designed facilitation, coaching, and training using four basic ingredients: strategy, ideation, experimentation, and lean. He’s been counseling for 30 years, a third of it as a full-time advisor to Toyota. He is the author of four books, the latest The Laws of Subtraction (McGraw-Hill, 2013), and is working on his fifth book. His work has been appeared in The New York Times, The Wall Street Journal, Harvard Business Review, and many other publications. May holds an MBA from The Wharton School and a bachelor’s degree from Johns Hopkins University.