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  • Writer's pictureMartin Harshberger

The Strategy Argument We Should Be Having.

Updated: Feb 8, 2022

There are many arguments about the value of strategic planning. As someone that has spent the past 16 years working with companies on strategy and execution, I’ve heard most of them. But a recent article in Strategy + Business validated my thinking on the subject.

The article was written by two Stanford Business School professors entitled “Arguing Your Way to Better Strategy.” (You can read the full article here).

They asked the question, “how do you transform all of the theories into a unique strategy capable of driving your company’s long-term success?”

Jesper Sørensen and Glenn Carroll addressed this in Making Great Strategy. It’s a book about strategic due diligence. And it fills an important gap in the literature by caring not a whit about a company’s strategy per se, but rather focusing entirely on how rigorously that strategy has been formulated and how thoroughly it has been vetted.

This caught my attention because I’ve learned through dealing with mid-tier companies that strategy due diligence makes a profound impact. My experience has verified their following thought.

Sørensen and Carroll find that in many companies this process of argumentation is either altogether missing or poorly conducted. Instead of using logical argument, decisions about strategy are often dictated by the most powerful people in the room. Or, when they are made more democratically, they are chosen in a rigged or otherwise flawed manner. The authors’ insights help explain the findings of a 2019 survey by Strategy&, PwC’s strategy consulting group, in which only 37 percent of 6,000 executive respondents said that their company had a well-defined strategy, and only 35 percent believed their company’s strategy would lead to success.

Where I differ with them is that they are focused on assumptions used to build forward looking strategy.

I think the “argument” should not be limited to developing forward looking strategy, but in the “vetting” process to determine where the organization is starting from. You cannot develop a sound strategy without understanding and agreeing where your organization is currently. The “where do we want to go” question should be based on a clear understanding and consensus of “where we are now.” The authors talk about building a strategy map, but no map has value unless you know your starting point.

My 16 years of working with mid-tier companies have taught me that far too many business owners have assumptions about their current operations and those assumptions are rarely challenged by their management team. When I work with them on strategy development, and challenge their thinking, many are surprised that their assumptions are not well grounded.

Owners and CEOs know their business so well, they no longer look at it objectively as an outsider would. Strategic plan development creates real value for the CEO when they are forced to do “due diligence” on their own organization to determine as a minimum:

· Internal weaknesses and real strengths?

· External threats and opportunities that exist today?

· The financial resources to fund strategy or change initiatives?

· Sales effectiveness what and how they sell?

· Marketing message, value proposition?

· People strategy, can they attract and retain great people?

· Barriers to strategy execution, how well can they implement change?

There is little value in looking forward unless you have a clear picture of the present.

Most change initiatives fail to add value. Most companies that have a strategy don’t execute it. The vetting process should address these facts and understand why. My experience has shown that many underestimate the difficulty of long-term change, while overestimating their current capabilities.

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