Talking with a Chief Executive the other week about a new strategy map and balanced scorecard for their organisation, he had realised the importance of emergent strategy and wondered how the modern strategy map and scorecard supported it.
Like many organisations, until recently, they ran an annual planning round from which the annual plan was developed. Usually this is where either the executive team contributed to the strategy or, in some cases, they ran a loop where the next level of managers developed their parts of the strategy and these were built into the annual plan. Whichever way it was done there was an annual assessment of the organisation, its environments, its strengths, weaknesses, opportunities and threats, followed by the development of “Some startegies” and some “plans”. This became the annual plan for the year, until next year.
Very deliberate in intention. This is a classic “deliberate strategy” approach. Set a direction and run along it. Focus on delivering the strategy once the strategy has been chosen and set in motion.
The problem is deliberate strategy assumes you know everything when you start. That you have complete control of your destiny. That things won’t change. That you can drive the market and organisation towards a chosen point.
Stuff happens! Your strategy is not perfect, (sorry) you realise assumptions are not correct, (Sorry). People. come up with improvements (Hurrah). In reality you need to learn, refine change and adapt. But deliberate fixed strategy and exhaustive detailed plans and annual budgets have being build during extensive periods of conversation, negotiation, organisational alignment, programme design, projects, measure choice, objective cascaded and target setting. Darn, these have to change.
Yet the systems don’t help. The budgets can’t be updated, the targets are set, the personal contracts have been drawn up. The edifice is a fixed entity where each part is intimately tied to the others. The systems are designed to make sure they run. Run in the direction they were set off in, 4 months ago!
It is all so hard to change.
It you take a more emergent approach you still being strategic, but not in the same “deliberate” way.
With Emergent strategy you are not assuming that you can set a destination point and plan towards that. On the contrary you assume that you cannot set a pure destination and in fact that your strategy will emerge and develop as you move forward. Of course be as ambitious as you like and set a sense of where you want to be by a certain time. However the process is one of learning and feeling your way forward. The “vision” gets ripped up when reality hits. You no longer believe that that is “The right approach” but rather are testing ways forward.
The strategy emerges as you find out more about the environment and test your views of the world, customers needs, their pain, your propositions and whether your intentions hold water. It is much more a process of learning and refining and adapting.
That is what this Chief Executive realised he needed. An approach that also took more input from his team and people in teh organisation, let them free to experiment and disciover opportunities. gave them exposure to the outside world and got them to gather insights and spot opportunities.
Also be realistic. Accept that you don’t completely know how you will get there. Accept that others will shape the journey. Accept that you don’t have all the answers, only the understanding.
Emergent strategy lets strategy emerge and be come refined, adapted and to a great extent contingent on what you find. It is far more realistic. It is how most entrepreneurs work. It is how we live our lives (we don’t plan a year to the minutest detail, but let things emerge and respond appropriately).
More responsive when stuff happens
Importantly, in this day and age, it is more realistic about “stuff happening”, changes developing, unforeseen events, and the reality that markets, competitors and the environment changes. It is more contingent.
It also means that you can potentially have a more responsive organisation. it means you can listen to what your people are learning as the strategy develops through the year. The emergent strategy approach is a good way towards a more responsive, adaptable organisation. One that learns as it develops. One that makes it much more likely you will be successful.
Emergent strategy puts pressure on traditional ways of managing strategy and performance
The management processes of most organisations are organised around annual processes, annual planning, annual budgets and annual appraisals. The whole system is set up to respond and work with deliberate strategy set once a year. Fixed targets, annual processes, no learning embedded in the organisation.
We see the same in simple, early versions of the balanced scorecard. Simple versions that are simply measures and targets fall foul of having measures chosen that must remain in place and targets set for those measures that are applied for the year. The conversation in performance meetings is “Have you met these targets?”. The conversation rarely moves up to real management questions such as:
- “What is happening around us?”,
- “Is our strategy working?”,
- “Are these the right measures and targets?”and
- “What are we learning from what we are experiencing?”
This “destination statement” approach is one that is mentioned in some “third generation balanced scorecard” approaches. Approaches designed to systematically implement strategy. In other words the management team set a destination, and a time frame at which that destination will be arriived at. They then set their targets and objectives on their balanced scorecard as they expect to move towards that destination and deliver their strategy. This is a very deliberate approach – not one that accepts there will be changes, that the team made assumptions and that the process is one of evolution and learning, rather than being deliberate and fixed.
But life is not like that! When stuff happens in the outside world.
We need an approach that is more flexible. An approach that is more responsive. An approach that learns as it executes. Tests the strategy against reality and refine it. An approach that supports both deliberate and emergent strategy thinking and processes.
Emergent strategy, learning and fourth generation balanced scorecards
The fourth generation balanced scorecard approach is designed fundamentally different to previous generations. It is based on the principle that organisations, and teams, need to incorporate learning, refinement and re-communication. That strategy is a continuous, emergent process. That in our uncertain world, change happens and we need to monitor it.
This is fundamentally different to earlier generations. It is not simply an add on. It exploits the core principles of the approach, but updates it for today’s uncertain and changing world. A world where organisations need emergent strategy.
To find out how you can be a more responsive, adaptive organisation and operate strategy as an emergent process, simply get in touch.