Why action plans are overrated

Action plans: everyone tells us they are the key to success. But unfortunately, that is not true. There’s another ‘get it done’ lever that is so much more important. To understand this rather strange idea, let’s take a look at something a famous strategist once said:

‘Strategy is a pattern in a stream of decisions’

Professor Henry Mintzberg is an internationally renowned academic. He wrote more than 150 articles and 15 books on business and management. One of Mintzberg’s insights, “Strategy is a pattern in a stream of decisions,” helps us to better understand how decisions relate to strategy.

A long time ago, when I worked at Arthur D. Little, I learned this phrase by heart—but it took me 5 years to really grasp the point of it. The trick I use to understand Mintzberg’s cryptic statement is to approach decisions in 2 steps. First, there’s the overall decision—the big choice—that guides all other decisions. To make a big choice, we need to decide who we focus on—our target client segment—and we need to decide how we offer unique value to the customers in our chosen segment. That’s basic strategy stuff. But by formulating it this way, it helps us to better understand the second part, the day-to-day decisions—the small choices—that get us closer to the finish line. When these small choices are in line with the big choice, you get a Mintzberg Pattern.

The Mintzberg Pattern

The Mintzberg Pattern is crucial to understanding successful strategy journeys. When we think and talk about strategy journeys, we think and talk about people and the decisions they take. Successful strategy journeys follow a Mintzberg Pattern, small choices that are in line with a big choice, like wagons that follow the train engine to its destination.

At first sight, from a strategist’s point of view, the big decision seems like the tough one. But that’s not quite right. Yes, defining a strategy is hard, but the power of small decisions—the day-to-day choices of all employees on the execution road—cannot be underestimated.

10.000 Colleagues

If one person takes the wrong decision, the overall impact on the company is very limited (and surely less impactful than making the wrong strategy choice). But if 10,000 colleagues make wrong judgments about quality and cost on a daily basis, then these small decisions aren’t so small anymore.

Imagine a construction company and its relentless focus on safety. If one person doesn’t wear a helmet (a small choice), the impact on safety is limited. It’s unlikely that something would happen to that person on that day. But if everyone at that organisation decides to wear helmets only occasionally, the accident risk increases exponentially. Small decisions do have a big impact on the success rate of strategy journeys, not because of their individual size or importance, but because of their sheer number and exponential force.

Most of us don’t pay attention to these small decisions. And that’s mainly because we find it difficult to grasp the logarithmic effect of wrong small choices. (How much worse can it be if a few more people don’t wear a helmet?).

Brittney Gallivan of Pomona

Take 1 minute to solve the following challenge given to high school student Britney Gallivan of Pomona, California: If you fold a piece of paper in half 50 times, how thick would the end result be?

Most of us would imagine the end result to look like a stack as big as a large phone book. We visualize 50 pieces of paper lying on top of each other. But the answer might surprise you. Gallivan decided to test it. She knew she needed a big piece of paper. After some searching, she found a 0.75-mile roll of toilet paper. With her parents, she rolled out the jumbo paper, marked the halfway point, and folded it once. It took a while because it was a long way to the end of the paper. Then she folded the paper a second time, then again and again. After 7 hours, she folded her paper for the 11th time into a skinny slab of around 31.5 inches wide and 15.75 inches high and posed for photos. In the end, she was able to fold the paper 12 times. If she could have folded it 17 times, the final stack would be taller than your average house. Three more folds and that sheet of paper would be a quarter of the way up the Burj Khalifa, the largest tower in the world. Ten more folds and it would have crossed the outer limits of the atmosphere. Another 20 and it would be about 60 million miles high, about two-thirds the distance to the Sun.

“The world was a great place when I made the twelfth fold,” Gallivan wrote when documenting her experiment. She also explained the phenomenal exponential force of repetitive small actions, known as a ‘geometrical expansion’. This is an important lesson for us. Taking into account the sheer number and exponential force, small decisions become SMALL. And successful strategists have SMALL decisions on their radar.

A Decision Tree rather than an Action Plan

If strategy is a decision pattern, strategy execution is enabling people to create a decision pattern. In other words, strategy execution is helping people make small choices in line with a big choice. This notion requires a big shift in the way we think about execution. As a leader looking at strategy execution, we should imagine a decision tree rather than an action plan. Decisions patterns are at the core of successful strategy journeys, not to-do lists. To improve execution speed and accuracy, we should shift our energy from asking people to make action plans to helping them make better decisions.

This article is based on ideas explained in the book The Execution Shortcut. You can join the discussion on LinkedIn.

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Business Strategy: 7 things you should know

Strategy is a cool word. Business people like to use it. It leaves a good impression with your audience if you talk about strategy. It’s even expected from a certain seniority level in an organisation. But strategy is probably also the most over and misused word in business language. Most people who use it don’t really know what strategy is all about. And I often have the impression that the more someone uses the word ‘strategy’ in a conversation, the less they know about the subject.

Here’s a list a 7 things I believe every leader should know about strategy. Know these inside out and you will do better than 80 percent of the managers that you will come across.

Strategy picture - the execution shortcut, Jeroen De Flander

1. Strategy = compete to be unique, not to be the best

Strategy is not about being the best, but about being unique. Competing to be the best in business is one of the major misconceptions about strategy. And if you only remember one tip from this list, it should be this one. Many leaders compare competition in business with the world of sports. There can only be one winner. But competing in business is more complex. There can be several winners. It does not have to be a zero sum game – you win, I lose or vice versa. Within a single industry, you can have several companies beating the industry average, each with a distinctive, different strategy. They are no direct threat to each other. There can be several winners. So the worst possible approach to strategy is to seek out the biggest player in the industry and try to copy everything they do.

2. Strategy = compete for profit

Business is not about having the largest market share or about growing fast. It’s about making money. ‘I want to grow my business’ is not a strategy. ‘I want to grow my business’ is the same as saying, ‘I want to be rich’. Those things (unfortunately) don’t happen by themselves. Growing is not a strategy, it’s a consequence. When someone includes growth in their strategy, there should be an orange light starting to blink. That does not mean that you cannot use the word ‘growth’. I use it a lot in the analysis phase – for example, when you talk about growth areas of the business or when you look for growth platforms – areas where you can reach potential that will give you additional profit.

3. Know your industry

A company is not an island – it’s part of a larger ecosystem, an industry. Each industry has its own characteristics, its own structure. This structure and the relative position your company has within the industry determines profitability. Certain industries have a higher return than others. Your thinking about the industry and industry competition will determine your thinking about your strategy – how you are going to compete within the industry. The better you know and understand the industry, the better you will be able to determine elements that will make you stand out, be unique and reap a higher average return than the industry average.

4. Strategy = Choice

In my eyes, this is the most simple strategy definition. You need a clear choice of WHO you are going to serve and a clear choice of HOW you are going to serve those clients. It’s about connecting the outside world – the demand side – with your company – the supply side. Or in fancy terms: you need a value proposition for a specific customer segment and to develop unique activities in the value chain to serve them. The key word is ‘choice’. You cannot be everything to everybody. You want to target a limited segment of potential buyers with the same needs. Next, you are going to tailor your activities in such a way that they meet these needs. Or in fancy terms: you want to tailor your value chain – your company’s activities – to your value proposition. Strategic innovation is the process to make those choices – defining a new who and how for the organisation.

5. Learn to say NO

If you have clearly defined what you go for – a clear value proposition for a specific client segment (who) and a set of distinct, unique activities in your value chain to offer the needs of this client group (what), you will find out that there are lots of things that you are not going to do. There will be customers that you are not going to serve, activities that you are not going to perform and services/products that you will not be offering. In strategy, choosing what not to do is equally important. Using the words of the founding father of modern strategy thinking, Michael Porter: “The essence of strategy is choosing what not to do”. Each strategy should also have a section where it clearly states the noes.

6. Don’t ever stand still

Having a good strategy means that you have arrived. Competitors move, customers’ needs and behaviours change, technology evolves. One crucial element to determine a future path for your company is to predict these evolutions and trends and incorporate this thinking into the strategy-building process. If you don’t, you can miss out on new value that is created in the industry or even left behind and get into trouble. Think about the smart phone and Nokia and you’ll understand.

7. Scenario thinking is an important strategy tool

Facts and figures can only go so far. You need to turn data into assumptions that will fuel your reflection process. The standard way to work with assumptions in a structured way is by scenario thinking – fix some parameters and let other vary. This technique helps your reflection process by offering you possible future routes (read: strategic options) for the company. I believe that scenario thinking is a crucial skill for anyone who wants to deal with strategy. Every leader should at least master the basics so that they don’t need a strategy consultant for every reflection process or at least to help them challenge the scenario models that the strategy consultant presents.

There’s an active discussion on LinkedIn regarding this article with more than 45+ comments. You can join the discussion here

 

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The Pygmalion Effect – a leadership phenomenon

The Pygmalion Effect: success is a self-fulfilling prophecy. We all have great ideas. And we often need the help of others to let them shine. But getting people to support our brainchild is easier said than done. We know—and have probably experienced firsthand—that people don’t always do what we like them to do. We all [...]

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Strategy Execution Survey: your free copy

By Rafael Lemaitre Strategy Execution has been slowly and steadily strengthening as an emerging discipline over the years. A large amount of knowledge, research and academic papers have been written on the subject, not to mention the large number of conferences and presentations. Nevertheless, this information has some pitfalls. The first is that it relies [...]

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Implementation Intentions: how to reach your goals in 2014?

Do you have clear implementation intentions? For many of us, a new year is a new start. We have a long list of ideas and we’re full of gusto to make them happen. And off we go. We join the gym, start a diet or commit to spending more time with the kids. I’m no [...]

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Useful Strategy Execution ebook

Strategy Execution eBook  pdf

Strategy Execution is more important then ever. This 27-page ebook will help you identify the 7 most common strategy execution hurdles (execution villains) and shows you how to combat them. Download your strategy execution ebook here.

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