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Bad Strategy… Missing Data

August 21, 2013

I was responding to a blog on the question of “What is bad strategy?”
yesterday.  Most of the respondents were writing in about a correct
structure for strategy.  You know, clear goals, supporting action plans.
It was all correct and yet… something was missing.  It made me think
of 3 strategic plans for a bank, a hospital and a technology company
that I had just reviewed the previous week.  They all included goals and
action plans, and yet the strategy was still lacking something fundamental.
So what gives? What really makes strategy bad?

I guess if you worded it nicely, you might say bad strategies are simply
misguided efforts or effort expended, but in the wrong direction.
Expended effort in the wrong direction always sounds like “frustration” to me.

So, establishing goals, implementing and tracking action plans, but in
support of a flawed strategy results in a frustrating amount of waste.
On the other hand, an effective strategy requires both focusing on the
right things, and then creating the goals and action plans to execute.
So how do you know what the “right” things are.  Well if you base your
definition on looking in the rear view mirror, you might frame it this way:

A bad strategy is one that is unlikely to deliver the desired outcomes.

Got it.  But then most of us would like to figure out a strategy is bad
before we miss the desired outcomes.  Keep reading.

BTW, you’re probably aware that research confirms we all tend think too
highly (inaccurately) of our looks and intelligence.  The same is true of
strategy.  Most organizations think they have a better than average strategy.
It’s not true.  So if you’re thinking that.  See, I bet you were or have…
check that one at the door.  Why?  Because willingness to doubt your
strategy, can be the first step to becoming more data based and improving
strategic initiatives.

In my experience, I’ve found the biggest cause of flawed strategies,
once they are actually targeted on growth, and not some other agenda,
is incorrect assumptions, which are not uncovered because they aren’t
validated or challenged by a commitment to data.

So here’s part of the answer to what creates bad, let’s say “misguided”
strategy.  It’s a lack of data to back up the strategy.  But it gets worse.
On most strategies, there’s actually not only no data to back up the
assumptions on which the strategy is based, but there isn’t any plan
to collect data to validate that the strategy is accurate.

The point is, that strategies are our attempt to predict the future and
reach a desired outcome.  The challenge is that we don’t know for certain
what the future holds, so all strategies are based at some level on guesses,
assumptions, and hypotheses.  You never have all the data you need to be
certain that any strategy is correct (good), so you want to regularly
test and validate your strategic assumptions at the same time you are
executing them.

So why don’t we subject strategies to regular testing and validation?

There’s a great McKinsey blog entitled Your #1 enemy: Accepted Wisdom, that
speaks to this point very well.  They rewrite the line, “show me the money”
to state, “The rallying cry of every executive should be show me the data!”

They go on to state that “accepted wisdom” supplants the need to collect
data, and I’m sure they are correct, but don’t go far enough.  You see I think
it’s mostly about the conversations that goes on in our head.

Think about what the conversation sounds like if strategy is challenged to
be data-based.  For some of us, it may sound like, “I never thought of that.”
For others it may sound like, as McKinsey suggests, that it’s considered
common knowledge… so why test.  After all we don’t repeatedly test other
areas we know to be true, such as gravity.

Sometimes it has some overtones of hubris that sound like, “I know,
I’ve been around.”  Maybe even, “I don’t need no stinking data to
tell me, it’s obvious, and on and on.”

Thinking we “already know, so why ask or verify” can block us from
creating accurate strategies (back to those blind folds) and if we aren’t
careful can also drift into a certain belittlement of anyone who would
question or suggest there’s assumptions in that strategy that need
to be validate to avoid a misdirected strategy.  So people are afraid to speak up.

At the end of the day, when it comes to strategy, we all contend with blindfolds.

Whether it’s hubris, or just collective lack of rigor and assumed wisdom,
not questioning strategy and requiring it to be backed up by data is a
recipe for a) misguided strategies, and b) irrelevant strategy that no one
pays attention to.







Ok, so how do you get out of this situation?  How do you get rid of the blindfold?
On direct route is what I call “Lean Strategy.”  It mimics what you see in
Lean Startups and Lean Manufacturing, with the idea of  being direct and
compact in how you approach strategy.  Focused solely on how to move
the organization forward, and then test or validate and iterate with a
minimum of hubris about knowing better than the market.

So here’s what I want you to do… to start snipping off the blindfold:
1. Take each of your strategies and throw them into a table that looks like this
and then answer the questions by filling in all the spaces.  Then get to work
on the areas that need your attention.

Strategy – define
Why is this strategy Critical to growing or moving the organization forward? (more than others)
What are the assumptions underlying your answer to the Why question?
What data do you have to support those assumptions?
What data can you track and collect each month to confirm if your   strategy is correct?

Bottom Line:

“Bad” or misguided strategies are common, perhaps even the norm.  That’s
probably why so many businesses don’t spend much time on strategy, or
refer to it, once it’s safely stored in a plan somewhere.  You can change all
that by adopting some key questions that emphasize a critical look at questions
starting with:
–  “Why is this the best route to growth?”,
– “What are the assumptions?” and
– “Show me the Data.”

PS.  If this resonates with you and you are looking for some help to improve
your strategy, we’d love to work with you.  Consider working with us on
a “Strategy Makeover”  – all it takes is a day of your time to improve
your path to success in the coming months.

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