You would not fly a plane or drive a car that was untested – so why do we sometimes try to execute untested strategies?
There are lots of ways to test a business strategy and check its validity. Recently, I was running a strategy workshop for an Executive team of an international retail bank: I was delighted when the Executive team did one test of their strategy, quite naturally and spontaneously.
This Executive Team had just completed their two closely related components that I asked them to build:
- A view of the external environment, in themes, and how that will change over time, (The external tangible future) and
- The tangible pace of change they expected for their internal environment, (the internal tangible future, or pace of change).
So it seemed a natural time for a coffee break. However, they didn’t want to. They dived straight into an exercise they created for themselves: the one I was going to run later on.
Does our organisation’s strategy address the issues we have identified?
They started by numbering the issues, uncertainties and risks in the external environment. Then whilst one of the team stood next to the external chart, the others stood around the internal pace of change chart and started ticking off their work that should address the external risks, uncertainties and opportunities. They were doing a simple, check of the completeness of the main themes and topics in their strategy: to answer the question, “Does our strategy address the issues we anticipate in our external world?”
It only took them about 10 minutes to do, but it gave them a sense of certainty that they had not missed anything. In fact there was one issue on the external environment that was, in the Chief Executive’s mind, not properly addressed in their strategy. He made sure we put down a marker to come back to the topic.
It was interesting that we had not even yet reached the strategy map where we capture the strategy in more detail.
I was delighted to see this team spontaneously and naturally do these checks. It was a sign that they wanted to be systematic and methodical. It was also a sign that they wanted, as a team, to see the completeness. It was, in essence, an indicator of the quality of conversation and thinking that they wanted around their strategy. The purpose of these external and internal tangible future diagrams is precisely to test the logic and contrast the external and internal views of the world. Normally, having completed both, I ask the teams to look at the pair as a set (they are always placed next to each other) and to reflect on what the completeness and any inconsistencies. It is a natural part of the flow of the strategy workshop.
Sometimes I have to lead a team to make those sort of consistency checks on what they are saying. Occasionally I invite them to reflect on any glaring inconsistencies between the two pictures that they have created. (That is a polite way to say “What is going on here – that seems to be completely missed, or inconsistent”. Most teams have a good sense of what is going on outside, what might emerge and what their responses are. However sometimes, things get missed and it is a useful way to cross check.
Multiple ways to test fly your strategy
There are of course other ways to test a strategy.
- You can test the robustness of the strategy against diverse scenarios (having done some scenario modelling) is one. If the scenarios are robust and distinct enough, this will test the extremes of environment that strategy will survive in.
- You can make explicit the strategic hypotheses (what we believe that underpins the strategy) and then go out and test those hypotheses in the market to ensure they are true, (or discover they are false) before they commit to action. This is research based hypothesis testing. Some organisations like to test their strategy by starting to implement it and learning from the feedback that you get: a more emergent approach. Action tests strategy.
- There are tests you can run of the validity of the implementation of the strategy. For instance, testing for internal consistency, affordability, resourcing and redundancy that ensure the strategy can be delivered and will make the changes desired and achieve the impact anticipated.
- The strategy mapping process is useful for testing the internal and external logic of the strategy, and what will drive change. Having developed the first cut strategy map, I always get clients to go back to the external and internal pace of change diagrams to ensure all the issues, uncertainties and risks and covered , in some way, on their strategy map. If they are, then we have another test of consistency and completeness. If they are not, then we have some pieces to add or address, to ensure they are addressed.
How do you test your strategy, in what ways, at what stages?
Having reflected on your strategy and how it is tested, what could you now do? here are some resources that could help you:
- You can find out more about developing tangible futures, both external and internal, in chapter five of my book, Strategy Mapping for Learning Organizations. There are also some resources here.
- The approach to capturing and articulating your strategy, using strategy maps, is detailed here. If you have not come across it, my ‘Strategy Mapping 101’ video on Youtube will help you.
- Some of the approach to testing implementation coherence, and the consistency is covered here and in chapter 17 of Strategy Mapping for Learning Organizations.
- I write more about developing a coherent hypotheses and diagnosis of the strategy that can be tested here.
- And you can of course get in touch and we can explore how you can ensure your strategy is robust and will be implemented successfully.