Strategic Models and Frameworks – An Update
It cannot be said enough … in order to succeed in today’s world, astute business leaders understand the need for agile strategic thinking and decision making. Putting plans in place is not enough. What is needed is the ability to understand dynamic market forces, competitive landscapes and associated risks, and to respond rapidly when changes and unforeseen events occur.
Back in 2014, in an effort to help practitioners better understand the creation and implementation of strategy and how the old, traditional approaches don’t work anymore, McKinsey Quarterly published an article, What strategists need: A meeting of the minds. In the article they brought together fifteen thought leaders to share their ideas on the subject.
I recently ran across this article in my archives and decided to reread it. What struck me is that the insights provided by these thought leaders (five from industry, five from academia and five current or former McKinsey practice leaders) seem to dovetail well with a recent piece I wrote on the need for a different approach to strategy (Traditional Strategic Planning Models Don’t Work … There’s A Better Way).
In the McKinsey article, three modern-day factors are singled out as issues strategists are grappling with today: rapid market and technological change, growing external risk, and the advent of big data. All three of these factors have a substantial impact on the way we think about strategy and dictate new strategic models that depart from traditional approaches.
The article also lays out “seven needs for today’s strategist”. I would argue that these are compelling needs for virtually anyone running a business today:
- Techniques for identifying structural versus cyclical changes in the external environment
- Techniques for spotting and harnessing cross-functional capabilities that a company has and may be able to leverage for competitive advantage
- Tools for stimulating the creation of options, particularly where change is occurring rapidly and the scope for strategic action is shifting
- Tools for stimulating the understanding of forces that are truly dynamic, with multiple second-, third-, and fourth-order effects
- Proven tools for improving strategy processes, breaking inertia, and jolting conventional thinking
- Techniques for generating and harnessing insights from big data about customers, competitors, and suppliers
- Techniques for identifying and focusing the top team’s attention on new or poorly understood risks – before it’s too late
Three additional insights from the McKinsey article are worth noting:
- The importance of organizational learning
- Strategy as a “people-centric process fueled by conversation”
- The need for highly-agile strategic thinking and opportunistic decision making, as opposed to strategic planning
To this last point, a quote by Fred Gluck, managing director emeritus and founder of McKinsey’s strategy practice, struck me as particularly insightful:
“I like to characterize strategy as coming from three places: strategic planning, strategic thinking, and opportunistic decision making. My prejudice is that most of it comes from strategic thinking and opportunistic decision making. Something happens out there; you see it and you act faster. The strategic-planning process can deteriorate into an exercise of applying techniques and frameworks.”
In Traditional Strategic Planning Models Don’t Work … There’s A Better Way I presented a four-pronged approach to strategy:
This approach, when implemented correctly, incorporates all of the principles outlined in the McKinsey article. It provides a time-tested platform for business leaders to develop and implement winning strategies that is eminently practical, regardless of the size of a company or the industry it plays in.
Please don’t hesitate to reach out to me. I would be delighted to hear your comments and to answer any questions you may have.