Strategy is not about a couple of simplistic steps.
I keep Mintzberg’s The Rise and Fall of Strategic Planning on my desk. Mintzberg’s finding was that even though traditional strategic planning seems to make sense, in practice it has never ever worked. His work suggests that we need to think differently about strategy, not just refine our existing methods.
Happily, Peter Compo presents a different way of thinking in his book The Emergent Approach to Strategy. It’s the best book I’ve read on strategy. His starting point is that organizations are complex adaptive systems and strategy needs to emerge rather than be planned.
Compo isn’t a consultant or academic, he’s trained as a Ph.D. chemical engineer and spent 25 years in professional and managerial roles at DuPont. Throughout his career, he was frustrated by strategy practices inside the company, as well as the methods brought in by (high-priced) consultants.
One key idea – and Compo is not alone in pointing this out – is that the purpose of strategy is to provide direction so that managers can make the right tradeoffs. Too often strategies don’t do that. In fact, Compo would say if something isn’t helping managers make the right tradeoffs then it’s not a strategy at all. In particular, a strategy needs to provide guidance on the bottleneck that is holding back the business. To this end, he provides five tests of whether something is a real strategy or, what I would call a pretend strategy. One of these is the “opposite disqualifier”. If the opposite of a strategy statement is absurd, then it’s only a pretend strategy. For example, if your strategy is: “Hire better talent than your competitors”, then the opposite strategy would be, “Hire worse talent than your competitors”. That would be ridiculous, hence the strategy doesn’t provide any guidance for decision-making. On the other hand, if the strategy is, “Hire better talent than your competitors, even when you need to pay significantly more”, then the opposite would be, “Don’t hire better talent than your competitors if you will need to pay significantly more.” Both statements are reasonable, and hence could provide useful strategic guidance.
Compo’s book takes you through the steps needed to create and implement a strategy, but it’s by no means a simplistic cookbook. Perhaps I should have said that Compo’s book takes you through the thinking needed to create and implement a strategy. That thinking is hard work, there are no easy answers. However, that hard work is rewarded with a meaningful strategy, not the more common pretend ones.
With respect to HR, Compo discusses how each unit in the company should have a strategy that aligns with, but does not repeat, the overall strategy. The unit’s strategy needs to provide guidance relevant to that unit, and that won’t just be the same as the company’s overall strategy. Even if you don’t operate at the level of overall business strategy, you’ll find the ideas useful for a functional area like HR.
It’s refreshing to see someone start with the correct observation that organizations are complex adaptive systems, and then drive that through to pragmatic advice on how to deal with that difficult reality. That’s why I say this is the best book I’ve read on creating a strategy!
David Creelman is CEO of Creelman Research, in Toronto, Ontario, Canada. He helps to elevate the analytics and business savvy of HRBPs, and is best known for his workshops on Agile Analytics, Evidence-base Management and the Future of Work. His new book is Management for Scientists and Engineers.