In the grand scheme of things, business strategy is relatively new to the world stage. The field, like so many others, began life as a military pursuit and even today one of the most relevant books was written by the famous military thinker Sun Tzu (The Art of War).
After serving the military so well for so long the commercial implications of strategy were too good to ignore, being brought to life in the early 20th century through Alfred Sloan at General Motors and James McKinsey, founder of McKinsey. In business, as in military, strategy bridges the gap between means and ends, and develops a link between organizations and their environment. Even more alluring to business than the possibility of increasing profit and reorganising early 20th century operating models was the assuredness that strategy imparted. It was a simple formula:
- Understand the landscape you operate in
- Apply the established set of principles
- Project the future and set long term direction.
Newtonian physics live and in action in the business world. Captivating board level executives who understood the logic and outcomes, even if the details on getting there was a dark art. However, there is a fundamental flaw that is just starting to become exposed. The strategy profession that has taken us up to the present day has been based on one core misconception – that we know, and can manage, the future. Much as we now know that Newtonian physics doesn’t tell the whole story, the core idea underpinning classical strategy, that tomorrow is predictable, understandable and above all stable, is not as reliable as it seems.
The strategy of strategies has changed very little since Sun Tzu first penned his book over 2,500 years ago. We view the world with the knowledge that we have at a specific point in time, form a model and project forward. We try to anticipate everything, developing assumptions and caveats to ensure the model fits no matter what. This form of strategy has encouraged us to make long term plans to allocate scarce resources be it time, money or skills in one big bet. The problem is, however, very few big bets actually work. Those that do come off are hailed as genius when in reality it was more luck than savviness.
Life, and by extension business, is complex and messy. It is constantly in a state of flux that simply can’t be modelled on general principles – there are too many variables to create a reliable picture. This sentiment is truer now than it has ever been, and strategy needs to adapt. Looking to other industries is a time-honoured tradition and there is one out there that holds the keys to the reinvention of strategy itself – Machine Learning. By this I do not mean using Machine Learning in strategy, although the time for that has also come, but rather adopting the underlying principles.
In Machine Learning you build a base model from your understanding of inputs and outputs of a system and once this is set up you feed it data, lots and lots of data. From here the model “learns”, adapting, reassessing connections and refining itself to become better.
This is what strategy needs to be.
Rather than building a complete model from scratch, attempting to predict the next x years with overly complicated and grandiose assumptions, strategy needs to take a step back and start to understand the point to point relationships driving our market. One to one, not many to one.
If we follow this logic through to its conclusion, much like machine learning, strategy needs to have a strong starting point. An understanding of initial relationships, key business drivers as well as competitor and market analysis. From this carefully constructed beginning, rather than project initial conclusions ad nauseam, we need to let the model run. Diligently watching for signals in the market, understand what they mean to us, incorporate that insight into our strategy, adapt, reassess and grow.
Design the Minimum Viable Strategy. The smallest amount of strategic foresight and thinking that will get you to your goal, without blinding you to the true intentions of the market.
This is the art of un-anticipation. Don’t build it once and be done with it, expecting or predicting what will happen in the future. Design your strategy so no matter what the future holds, you can adapt, reassess and incorporate it. This is how good ideas are elevated to great products and services.
BIO specialise in creating beautifully designed products and services with un-anticipation as a core philosophy. If you want to find out more about how a minimum viable strategy could help your business or your product, get in touch