Which Strategy is Right for My Company? Part 7- (Still) Deciding How to Decide
In part six, we looked at various ways you could decide which strategy is right for your company:
- I’m the boss
- You’re my team
- Chicken soup for the strategist
- Wait and see
Those approaches clearly yield decisions, and there’s much to be said for that. As Will Rogers said, “Even if you’re on the right track, you’ll get run over if you just sit there.”
It’s less clear, though, that they yield good decisions. And if you’re on the wrong track, do you really care how quickly and decisively you’re moving along?
Other approaches seek to find the right track through good, logical analysis. There’s something to be said for that too. Unfortunately, no one seems to have an entertaining quip about good, logical analysis.
Searching Google for “strategy analysis” produces “about 203,000,000 results.” We’ll touch on 0.00000197% of them here.
SWOT (strengths, weaknesses, opportunities, threats)
Rationale. Understand the situation and the right answer becomes clear(er). Avoid unpleasant surprises, spot promising trends by deliberately contemplating the future.
Technique. Facilitated discussion with you and your experts. First, identify SWOT dispassionately and non-judgmentally. Next, build and discuss options, such as how to take advantage of opportunities and counteract threats. Finally, choose the option that seems strongest.
Upside. No tools required. Inexpensive. Easy to convene and conduct. Relatively fast. Effective at bringing individuals’ ideas to the group. Fairly broad. Explicitly takes competitors into account.
Downside. Can be superficial. Can be trivialized by political correctness and overconfidence. Prone to get in-the-box, “obvious” results. Easy to ignore costs and to conclude we should be all things to all people.
Hints. Avoid political-correctness pitfalls with anonymous comments (use outside facilitator, Powernoodle.com, etc.). Reverse the titles — e.g., strengths become weaknesses, threats become opportunities — after completing the initial discussion.
Rationale. There are many possible futures; think them through to manage risk. Spot favorable scenarios and you act to help make those scenarios come true.
Technique. Can be formal or informal, detailed or broad-brush, quick or comprehensive. Can even be computer-generated. The core idea is to brainstorm qualitatively different futures, as opposed to minor variations on a single theme (“the market will be as before, only it’ll grow a little faster or slower”). Prioritize those most worthy of further study.
Upside. Can surface important ideas. Can be quick and inexpensive. Mental discipline improves skill in strategic thinking. Stimulating, engaging, even enjoyable. Creates a visionary, open-minded culture.
Downside. Can be superficial or incremental. Identifying scenarios does not identify action to take. Can be overwhelming. Hard to know when to stop.
Hints. Sometimes I prioritize scenarios using three criteria: how much would the scenario affect us, how likely is it to occur, and how unprepared are we for it.
Business war games
Rationale. Stress-test strategy options in a safe environment before committing real money and careers to it.
Technique. Two basic approaches, qualitative (open-ended) and quantitative (rigorous). In both, teams of your people role-play your business, its key competitors, customers, investors, etc. The strategies they develop compete with each other (in judges’ minds, a computer model, or both), and they get rapid feedback on what seemed to work and what didn’t.
Upside. More realistic than spreadsheets, trend analysis, etc. More dynamic than SWOT. Highly effective at gaining insight and consensus. Produces better strategists as well as better strategies. Safe. Private. Hard to manipulate the results. Exciting and engaging, not business as usual.
Downside. Can be complex. Can be time-consuming. Can be expensive. Almost certainly requires outside facilitation. Done badly, it’s glorified SWOT analysis. Can only test a few strategy options, though that may be enough. Never quite know what will happen.
Hints. Disclosure: I have conducted hundreds of business war games around the world. ACS’ website and blog have a lot about business war-gaming.
Rationale. Simulation models handle arithmetic better than any human can. They help answer “if we do this and they do that, what’s the result?”
Technique. Many: statistical, cause-and-effect, interactive what-if, “optimizers,” etc. See hints, below.
Upside. Unexcelled for estimating future performance. Unexcelled for estimating risk. Fits well with scenario planning and business war games. Need not be complex. Can be calibrated for specific business situations.
Downside. Some people inappropriately consider simulated results to foretell “the” future. Can be complex. Can be expensive. Some people suspicious of black box.
Hints. “Garbage in, garbage out” is relatively unimportant. Far more important: make sure the simulator matches your problem conceptually before you worry about whether it fits mathematically. For example, don’t use an accounting-based model to solve a competitive-strategy problem. Disclosure: I have built numerous strategy simulators, and earned a patent (another is pending) and an industry award.
View Part 1 of the Series – What You Want
View Part 2 of the Series – What They Want
View Part 3 of the Series- Speaking the Same Language
View Part 4 of the Series- Generating Ideas
View Part 5 of the Series- “Holy Futures, Batman!”
View Part 6 of the Series- Deciding How to Decide
Coming up next
Strategy decisions are not only about strategy. They’re also about decisions. In our next and final installment, I’ll share my thoughts on what improves the quality of decisions.
About the author
Mark Chussil is Founder and CEO of Advanced Competitive Strategies, Inc. and a 35-year veteran in competitive strategy. He has designed strategy simulators and conducted business war games for dozens of companies, in many industries, around the world, helping them make or save billions of dollars.
A highly rated and entertaining speaker, Mark speaks about strategic thinking at conferences and in corporate workshops. He has written three books, chapters for five others, and numerous articles, and he has been quoted in Fast Company, Harvard Management Update, The Wall Street Journal, and other publications.
Mark is also a Founder of Benefitics, LLC (which quantifies Social ROI for non-profit organizations) and a Founder of Crisis Simulations International, LLC. He earned his B.A. at Yale and his M.B.A. at Harvard.