Big Lie Strategic Planning

Question 1

Why is strategy (potentially) a scary thing?

Answer 1

• forces execs to confront a future they can only guess at

- actually choosing a strategy entails making decisions that explicitly cut off possibilities and options

Question 2

What is the typical response to strategic planning?

Answer 2

• trying to turn it into a problem that can be solved with tried and tested tools
• detailed spreadsheets, make everyone a lot less scared, etc

Question 3

What does Martin think of this approach?

Answer 3

• Terrible way to make strategy

- If you are entirely comfortable with your strategy, there’s a strong chance it isn’t very good

Question 4

What is true strategy about?

Answer 4

placing bets and making hard choices, objective is not to eliminate risk but increase odds of success

Question 5

What is good strategy the result of?

Answer 5

simple and quite rough-and-ready process of thinking

-assess whether its realistic to try

Question 6

What are the 3 comfort traps of strategic planning?

Answer 6

Mistaking strategy for planning
Cost-based thinking
Self-referential strategy framework

Question 7

Trap #1: Mistaking strategy for planning

Answer 7

―Risk averse, so they supervise planning vs. making strategic choices
―All strategic plans tend to look the same. Typically three parts:
+Vision, mission +List of initiatives, constrained by affordability +Linkage to financials
―Boards, executives, Wall Street tend to think short-term

Question 8

Trap #2: Cost-based thinking

Answer 8

―Cost-based thinking tends to dominate:
―—-The company makes the decision, so controllable
―—–Yes, good costing is important, HOWEVER, cannot use this approach for revenue (less knowable, less controllable)
―For revenue, customers are in charge
―——Yes, short-term rev forecasting is possible (backlog, contracts)
―——-Be wary of “the market is huge, we just need a small slice” because it creates lazy thinking, lack of rigor
―——-Instead, think sequentially. . . What is the next step needed?

Question 9

Trap #3: Self-referential Strategy Frameworks

Answer 9

―Over-emphasis on emerging strategy
―Henry Mintzberg noted that managers were overly confident in their ability to forecast the future
―“Company’s response to unanticipated events”
―Danger: future is unknowable, therefore, let’s avoid difficult decisions and just “fast follow” the competition
―Over-emphasis on resource based view & core competencies
―Attractive concept because its resources and capabilities are within the company’s control
―Danger: “capabilities cannot compel customers to buy”

Question 10

How can strategists escape these traps?- Rule 1

Answer 10

Rule 1: Keep strategy simple
-focus energy on key choices that influence customers
2 choices determine success: where-to-play and how to win

Question 11

How can strategists escape these traps?- Rule 2

Answer 11

strategy involves a bet- can’t be perfect

Question 12

How can strategists escape these traps?- Rule 3

Answer 12

critical to write down answers about the logic+ make explicit

Question 13

5 Ways to Close the Strategy-Execution Gap

Answer 13

1) Treat strategy as evergreen- best companies see strategy less as a plan and more as a direction and agenda of decisions
2) value flexibility
3) think of strategy as a portfolio of options, not bonds.
4) Create response mechanisms- Rigorous contingency planning
5) Test and learn, then test some more

Question 14

Amazon Annual Report

Answer 14

• Fulfillment by Amazon and the Prime membership is important, 3rd party
• created a culture of builders, unafraid to fail
• listening to customers, but creating what they want before they know they want it
• imagine the impossible