Traditionally, organizational strategy has been cast as equal parts analysis and prediction. A small group of elite organizational leaders apply a framework (e.g. Porter’s Five Forces), consider trends that might alter the status quo, and then produce a plan to guide decision making and resource allocation for the foreseeable future. It’s that “foreseeable future” thing that has undermined the value of strategic planning. Market conditions are increasingly turbulent and competition arises from unexpected places. Who would have predicted that Amazon, once an on-line bookseller, would be competing with grocery stores?
As the future has become less foreseeable, strategic planning departments in large organizations have become marginalized. Compared to fifteen years ago, fewer and fewer Fortune 500 companies have a role called “Chief Strategy Officer.” I recently spoke to a Director of Corporate Strategy who described the strategic planning process at his organization as an annual ritual during which business unit leaders begrudgingly fill out a template without giving any real thought to market trends and conditions.
Go into any large organization and ask someone at least two levels removed from the top team to describe the corporate strategy. In my experience, you’ll hear some version of “we don’t really have a strategy” or “we’re focusing on _____________;” you can fill in the blank with: Solutions, Customers, or Quality. If you ask how the strategy influences their daily choices or activities, you get blank stares. Whenever I have mentioned to senior leaders that the people in their organizations have only a vague notion of the corporate strategy, I get a reaction somewhere between baffled and outraged. I am likely to hear, “But, we just had a town hall meeting on our strategy!” or “It’s the first thing they see when they log on to the corporate intranet.”
More recent perspectives on organizational strategy suggest that strategy formation may be more akin to a discipline of observation and communication than to a discipline of prognostication. Strategy conceived of as a description of what people do and how people think shifts the leadership burden from deciding and telling to paying attention and co-designing. In the late 1980s and early 1990s, Henry Mintzberg introduced a paradigm shift in strategy theory by talking about strategic thinking instead of strategic planning. Mintzberg wrote about crafting strategy rather than planning strategy. Under the crafting image, strategy takes shape when skill and inspiration come together with raw material to produce something unexpected, but useful.
During a lecture at the University of Lille in 1854, Louis Pasteur remarked, “In the fields of observation, chance favors only the prepared mind.” One may read the quote to imply that the payoff for rigorous inquiry is an expansive outlook, a mindset attentive to options and weak signals that the unprepared mind might mistake for background noise. In the same sense, perhaps strategy favors the prepared organizational mind.
Framing strategy as what emerges through the collective understanding of what organizational actors are doing and what meaning they attribute to their choices suggests a very different approach to training leaders how to think strategically. The key to strategic thinking may boil down to developing our ability to pay attention. The raw material of our organizational strategy is always present, it takes shape when know how to see what’s changing about the way people do their work. For example, a salesperson starts being asked by a potential customer to explain the company’s sustainability programs. Is this an anomaly or a leading indicator of an emerging trend? The barrier to strategic thinking may not be a lack of analytical skill or imagination. The problem may be that the unprepared organizational mind only knows what it sees, because it can only see what it knows.