Strategic planning for business was first formalized in the 1970s with new processes from McKinsey (the customer-market matrix), the BCG matrix (cash cows, dogs and stars) and the ground breaking books of Michael Porter on competitive analysis as the basis of strategy. This shift to formal processes followed the move in economics from more philosophical writings (e.g. the Austrian School) to a "scientific" approach (e.g. the Chicago School). As is the case with all new movements, intellectual or otherwise, the move toward scientific approaches was probably overdone.
In the last few years there has been a change in strategic planning for business. In part the change recognizes the simple fact that a process is only as good as the thinking of the people using the process. The increased focus on the quality of thinking is demonstrated in a new article in the McKinsey Quarterly,"Mastering the Building Blocks of Strategy". McKinsey describes the building blocks and the process as shown below.
The "Frame" building block demonstrates the change from a purely analytical approach to a more contemplative approach of "framing the question" or as McKinsey describes it "what are the right questions". As McKinsey states:
"That’s why taking some time to frame issues at the outset is so important. When strategists do so, they are better able to identify the real choices and constraints facing their organizations and to see which building blocks are likely to matter most given the situation at hand."
I disagree with McKinsey and believe that the environmental analysis and problem identification precede the "framing" step. How do you frame a question if you have not collected current data and information (Diagnosis and Forecast).
McKinsey offers no advice on how to "frame the question" in the article, which is perhaps why two Paris-based Partners from BCG, Luc de Brabandere and Alan Ivy, wrote "Thinking in New Boxes". This book offers an approach to bring greater creativity to thinking and strategy development. The example that illustrates the approach is a story about Bic, the French manufacturer of disposable pens, razors, etc. When pen sale revenues started to flatten out, the company explored what other kinds of disposable pens they could offer and realized there where no good opportunities. Presumably with the help of BCG, Bic realized that they were in the disposable business and not in the pen business. With this realization they launched many successful disposable products. The Bic story is an excellent illustration of framing or re-framing the question, but I found little really new in the book for anyone familiar with design thinking, "impossible" problems or the writings of Marvin Minsky.
For new thoughts on thinking and strategy development, I recommend William Duggan's book, "Strategic Intuition". Duggan draws a distinction between "expert" and "strategic" intuition. Expert intuition is the "technically" grounded, repetitive analysis of the familiar. Strategic analysis is the slow, iterative exploration of the "new", what Einstein called "combinatorial". Duggan devotes 100 pages to describing strategic intuition and making it user friendly. One example from the book shows Napolean's strategic intuition and how he came to a successful new military tactic. What Napolean, an expert in military strategy and tactics, realized was that he had been taught to fight battles where the enemy was located. What Napolean realized (the strategic intuition) was that he would be more successful if the battles took place where he wanted. Duggan does a beautiful job of using many illustrative examples, such as Napoleon, to make clear and usable the concept of strategic intuition. Strategic intuition is an approach that implicitly relies on "framing the question" properly.
A last thought on strategy, which is also inspired by the military. Something that I have been thinking about for awhile is why snipers were so effective in Iraq but were not used more in previous conflicts by the U.S. military. I think Duggan's Bonaparte example provides the answer. Snipers allowed the U.S. military to pick where they wanted to fight in a conflict without a lot of set piece battles. Snipers also had a special expertise and were available in large numbers compared with the insurgents. The psychological benefits of snipers against an informal opponent were an added plus.
If you do not like books on strategy, creativity or "framing the question", the snipers provide three easy to use lessons about strategy:
- Pick the part of the market you want to dominate rather than fighting with the entrenched competition (Napoleon)
- Execute a strategy that plays to your special strengths and expertise (snipers)
- Bring sufficient resources to succeed (lots of special operations and conventional military snipers)
If you want to know why snipers are so effective, early man had no enemies that swooped down from the sky to eat them. Therefore, man evolved with a two dimensional field of vision that really ignored looking up (where the sniper lives). Increasingly, it all comes back to neuroscience.