The need for new strategy tools

What strategists need _ Engage Innovate Blog

Since 2010, we’ve been on a misson to “develop and share new strategy tools”. Our work goes under the title, ”Strategy Tools for the Next Generation“. In the the latest McKinsey Quarterly, the consulting firm lays out their case for a world in need of new strategy tools. It’s a strongly recommended read

The evidence is abundant. The world needs new strategy tools. The process of strategy; how companies shape their own future is rapidly changing. Yet the challenge remains; how do we solve tomorrow’s challenges using yesterday’s tools. Well, simply put. We don’t. Most of the strategy tools in actual use around the world were built for a time of slower change, less integrated markets, a more stable industry structure and a far longer life-time of most large companies.

This is just the reason we are in need of new tools, new thinking and a fundementally new logic around strategy. We’ve been proposing this for a number of years through “Two Lenses on Strategy“.

Two lenses on strategy
Two lenses on strategy by: Engage // Innovate’s Strategy Tools for the Next Generation

With this background in mind, we found McKinsey’s recent “What the Strategists Need: A Meeting of the Minds”, to be an incredibly valuable contribution to the field.  In a lenghty conversation between Strategy Officers, CEO’s, Strategy Professors and McKinsey’s Head of Strategy Practice, we get a great look into the current thinking around ”the state of the discipline,…with an emphasis on innovation in a changing world”.

We’ve chosen a few sections for summary of the talk (in italic) and our own comments below.

Old tools are actively misleading

”Yes, I think we may need new tools or frameworks. When the environment changes profoundly, the maps with which we navigate it may need to shift as well. For instance, from telco to healthcare to computers, sector boundaries are changing or dissolving, and new business models are redefining the competitive landscape. So tools such as Michael Porter’s five forces, created for a more stable, more easily definable world, don’t just lose their relevance—they become actively misleading”

This is a crucial point. The stable industry structure most strategists are comfortable with is increasingly getting challenged. Rita McGrath suggests “arenas” as fields of competitive thinking. A failure to acknowledge and understand these forces, will lead executives to view the world through wrong and directly misleading lenses.

We use what we know

”One reason our frameworks often seem out of date is that managers persevere to the point of desperation with the familiar things they learned 10, 20, or 30 years ago”

This is something we see often with clients and workshop participants  – and it also explains why the field of strategy is moving slowly in established companies. Today’s top executives went to school 20-30 years ago, and the theories and tools they learned were already getting out-dated. It’s no wonder, and quite a natural explanation on “the stuff we learned, is the stuff we feel comfortable using”.

Our tools are getting out-paced 

“A major problem is that the theoretical and empirical research in strategy has moved so quickly… that its distillation into intuitive concepts and frameworks applicable to strategy-making processes of firms has lagged far behind”

Yet, the challenge is not only the executives learning slowly (see our previous point). It’s also very much a problem of academy moving too slowly. A typical strategy research project can take years to design and complete, and yet several more years and multiple reviews to get published. In the meantime, the research and emerging tools simply get out-dated. Erik Wilberg, a senior lecturer on strategy at BI – Norwegian Business School and a long-time researcher on the media industry stated, “by the time my research gets published, it’s already out-dated”. Yet, this is changing. Crowd-sourcing, built on an open, global platform is now driving speed in academic research and time-to-market. The best example has been the “The Capitalist’s Dillemma“, with it’s unique approch to research. We can expect to see more creative, disruptive models of research in the future.

First, think. Different

My view is that we need …to help executives rethink what they do”

A key starting point for any strategy process; what’s our mind-set.Our starting point is always to help explore existing dominant logics and thinking modes. Without this, most teams simply fall into the mental trap of “more of the same, within our hidden, predominant view of the world”, i.e. trapped deeply in the box.

Innovation Thinking Modes -by Strategy Tools for the Next Generation
Innovation Thinking Modes -by Strategy Tools for the Next Generation

There’s a superb selection of books, helping Strategy Officers challenge their existing mind-set. We recommend:
Creative Confidence, by the Kelly Brothers
Creating Minds, by Howard Gardner
Mindset, by Carol Dweck

Questions drive creative thinking

”Framing questions is the other tough challenge, and it’s one of the most important yet underappreciated parts of strategy development”

Yes! A core skill for any Strategy facilitator, Strategy Officer and CEO, is the ability to find and ask the right questions at the right time. The skill to ask mind-opening, exploring and energizing questions, while most people around the table simply expect another PowerPoint presentation is a trigger for good stratey processes.

Strategy is fundamentally a creative excercise 

”A strategy is not the obverse of an analysis. It usually comes from some creative insight”

Gary Hamel, Clayton Christensen, Rita McGrath, Bill Fischer, Alex Osterwalder and Yves Pigneur, Costas Markides, Scott Anthony and Mark W. Johnson are just a hand-ful of the strategy experts arguing strategy being a fundementally creative excercise. Yet, few executives are trained in the skills and tools to make this happen. Yet.

Strategic innovation is challenging 

”…but it’s darned difficult to create truly innovative strategy options.”

Strategy; from "linear plan" to "a portfolio of business models"
Strategy; from “linear plan” to “a portfolio of business models”

We see the field of strategy moving from “a linear plan” to “juggeling a portfolio of overlapping and competing business models”. Rita McGrath calls this “balance a transient portfolio” of business models.

Developing a series of strategy options is one thing. Developing and running a series of business models, and reinventing the company again and again around these various business models, that’s a whole other challenge. Today, Amazon and Apple are the two leading examples. Tesla Motors is emerging as another. Yet, the truth is, for most strategy executives today, ”…it’s darned difficult to create truly innovative strategy options.”

This is why we find our work around Strategy Tools for the Next Generation to be highly energizing and a fantastic challenge. The world is learning to work differently with strategy – and we hope to contribute to that movement. The McKinsey Roundtable is another great conversation on the topic and we will see more of these in the future. For us, the next will be in Vienna, in November, we’re we’ll be joining the 6th annual Global Drucker Forum, The Great Transformation. With many of the world’s leading strategy academics in session, we’re looking forward to the conversations on changing how the world works with strategy and innovation.

The need for new strategy tools

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