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| 81 Do’s And Don’ts On The Road To A Great
Corporate Strategy
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“What you do
Still betters what is done”
—William Shakespeare from A Winter’s Tale
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- Don’t fall in love with a strategic hypothesis—especially the current course you’re on.
- Do be suspicious of “overwhelming evidence” in favor of a strategic hypothesis.
- Do demand your proposed strategies prove themselves in the fire of falsification.
- Don’t seek the one right, great idea for your company.
- Do probe for many great ideas.
- Don’t overestimate the value of consistency in your own and your staff’s thinking.
- Don’t apply measures of internal consistency as the “gold standard” in testing of strategic ideas.
- Do frown suspiciously at analyses, presentations and staff positions that are highly internally consistent—the evidence was likely forced to “fit.”
- Don’t mistake a mission or goal statement for a strategy: they are ships without rudders.
- Do make explicit and precise the conditions under which you expect certain strategic results: Work out the “If…Then” statement that is your strategic hypothesis.
- Do make explicit and precise the results you expect from the conditions you set up—and set out the laboratory or field experiments to test them.
- Do remember that it’s only human nature to imagine what we see around us to be “the true facts of the case”—including ones about corporate strategy and making money.
- Do generate lots of strategic hypotheses—to generate a good hypothesis, it’s best to generate lots of hypotheses.
- Do ensure you have a broad range of hypotheses—not just variations on a single theme.
- Don’t settle for broad top management consensus on a strategy before you’ve done your level best to falsify it: cultures wear blinders.
- Don’t delegate hypothesis generation—it’s a top, middle, and bottom management responsibility.
- Don’t procure your strategic ideas from the same old sources: yourself, consultants, marketing, strategic planning, the sales force.
- Do seek out ideas from everywhere in and out of the organization.
- Do use stretch targets to push your strategic thinking: never allow that your staff’s first, second, or third answer is good enough..
- Do get top management out of the office and into the offices and parking lots of customers and competitors.
- Don’t expect market research to point you in the direction of the right strategy without its being pointed first in the right direction by you.
- Do expect more productivity from market research, especially hypothesis generation, especially from focus groups.
- Do use quantitative market research-but primarily to test precisely formulated strategic hypotheses, not because you expect it to provide strategic insight
- Don’t compete head-to-head—Hammer-to-Hammer--if you can avoid it.
- Do identify the Hammer in your competitors’ strategy: that’s the only way to avoid it.
- Do identify the Pivot and its Bearing in your strategy—that is your most vulnerable point.
- Do determine the Hammerhead in your strategy and over-resource it.
- Do create Mobile Assets, Mobile Reserves and Financial Reserves and use them to reinforce your Hammerhead—or to help out if your Pivot or Bearing are under attack.
- Don’t focus strategy entirely on customers and “the market.”
- Do contemplate making your strategy competition-centric: Seek out the competition’s Pivots, Bearings, and underlying strategic Assumption and bore in on them.
- Don’t believe it, if you’re tempted to think your strategy gives you a Sustainable Competitive Advantage—they’re getting as rare as dinosaur teeth.
- Do consider the Opportunity Creation and Exploitation (OCE) cycle as a dynamic alternative to Sustainable Competitive Advantage.
- Don’t seek a strategy, exploitation style, or leadership style without listening to the inherent variability in your business environment.
- Don’t let the annual budget process drive resource allocation; consider dropping it altogether as far as the CPAs and GAAP will allow.
- Do drive resource allocation according to whether a department is playing offense or defense, whether it is in your strategy’s Hammer or Pivot.Do drive resource allocation based on where you are in the OCE cycle rather than on last year’s budget or a department’s yearly proposed action plan.
- Don’t think there is only one way to create a real-world realization of a strategic idea: to “drive with concentration.”
- Do evaluate using many “probing pinpricks” to find the breakthrough real-world realization of your tested strategic hypothesis.
- Don’t imagine there is only one way to exploit a strategic breakthrough.
- Do think through whether it is wiser to exploit a breakthrough “in depth” or “sideways:” Consider that an exploitation in depth often creates a strong Pivot for exploitation “sideways” later on.
- Do consider the inherent variability of the environment before choosing exploitation “in depth” or “sideways”.
- Don’t do consulting company shoot-outs (just) at the beginning of a project.
- Do use a hypothesis testing shoot-out when the hypotheses have been generated.
- Do force your organization to attain stretch revenue, market share and profit targets for hypothesis generation.
- Don’t think the end of strategic hypothesis generation or implementation planning is the final presentation by your strategic thinkers.
- Do think it is the first half of a courtroom process where the opposing team gets to try to refute the hypothesis—and come up with something better
- Do use a courtroom process to test and falsify strategic hypotheses.
- Don’t measure the value of a proposed strategic hypothesis by the tenacity by which vocal managers maintain it; that is a beggarly kind of hypotheses testing
- Do organize conflict over competing hypotheses so a better answer emerges from the arena of conflict than any of the participants has going into that arena.
- Do remember it’s the process of reconciling these conflicting viewpoints that gives rise to a superior strategy than either view alone.
- Don’t rely on top management’s or sales’ or marketing’s “best judgment” to evaluate a strategic hypothesis.
- Do rely on fact based techniques such as Discrete Choice Modeling to test hypotheses.
- Don’t use focus groups for testing hypotheses: the sample is small, “group think” creates illusions, and your competition isn’t present.
- Do use focus groups as well springs of raw, unrefined ideas.
- Do assess the value of electronic boardroom focus groups instead of traditional ones.
- Don’t expect extensive unguided “fact-gathering” to result in strategic insight or hypothesis generation
- Do rely on intuition, experience and discussion to generate strategic ideas that can be rendered into precise strategic hypotheses, then tested.
- Don’t get wedded to a single, target capital structure
- Do expect to vary your capital structure dramatically depending on where you are in OCE cycle.
- Do decide first what is Pivot and what is Hammer and then financially assign resources with frugality or profligacy accordingly.
- Don’t take for granted, either, that your company’s culture matches strategic needs.
- Don’t take for granted that your company’s culture can’t be changed.
- Do inventory the influences on your company’s culture of its history, personality, and power structure.
- Do inventory the current conscious and unconscious components of your company’s web-of-belief.
- Don’t overestimate your company’s current diversity: there is less than your think.
- Do think about what creating a “machine tool culture.”
- Don’t be caught unawares by the influence of culture—it is ubiquitous and stealthy.
- Do look for the stealthy signs of culture, including the hidden assumptions in casual conversations, office/shop floor design, company etiquette.
- Do expect the diversity of people and their ideas to decline, rather than increase with time. If you are in a position of power and you are comfortable with “good thinking” of the people around you—watch out: you are at a point of maximum cultural danger
- Do expect the diversity of people and their ideas to decline rather than increase with time. If you are in a apposition of power and you are comfortable with the ‘good thinking” of the people around you, watch out: You are a point of maximum cultural danger.
- Don’t overlook the “CEO factor” in corporate culture: culture tends to gravitate toward the CEO’s personal style.
- Do ask yourself, as CEO, department head, regional or product line honcho: Would I be proud of a staff that imitated me?
- Don’t wait for a strategic or financial crisis to force a needed change in culture but….
- Do precipitate such a crisis to get needed change, if you have to: sometimes it’s the only way.
- Don’t take Top Management Team cohesion for granted.
- Do create the continuing conditions for increased top management cohesion, especially concrete near-term goals, weeding out untrustworthy team members and managing incentive compensation to make the goal of the individual the goal of the team and the goal of the team the goals of strategy.
- Don’t believe in the tyranny of specialists: that a cadre of world class specialists can be an efficient top management team.
- Do recognize that increasing TMT size usually reduces its efficiency; reduce the top management team to the barest minimum of members—a target of ten is a reasonable goal.
- Do use experienced, wide-thinking generalists to leaven a TMT made of high-impact generalists.
- Do enact sunset provisions for policy governance.
- Don’t believe there is any royal road to a great corporate strategy.
- Do believe there are great strategies out there to be discovered.
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