One of the common images that comes to mind when thinking of strategy is that of a Chess piece being moved into position. The analogy makes sense, Chess is a game where you plan ahead and make important moves based on your belief of how your opponent will play.
Indeed many companies’ strategy processes resemble a Chess game:
- Once a year the management team requests information from the organization on where they see opportunities
- The material is combined with a “trends” material researched by a strategy team or consultants
- Opportunities is therefore prioritized, perhaps after feasibility and growth potential
- The exercise results in a number of “strategic initiatives” and a business case for the strategy
This is treating your strategy as Chess. First, you assume to have full or at least a high degree of certainty of the future given that the strategic initiatives usually run for years. Secondly you make few and big moves that will either result in a win or loss situation.
This is an increasing a problematic way of working. The world is becoming faster and harder to predict, especially in the space of “Digital Strategy”. With increased uncertainty the game you play needs to change from Chess to something more akin to Poker.
Poker is, in contrast to Chess, a game of imperfect information. A player doesn’t know at the outset what hand will be the strongest and most hands end before any player actually shows their cards. Even the best players only plays 20% of hands. What then distinguish a good player? It is not her ability to win a specific hand but instead to have solid framework that lets her bet in a way that generates a superior outcome over a large number of hands.
This framework is based on the player’s belief of the game. It lets her take complex decisions quickly in a cohesive way. This is what I believe is the purpose of a strategy.
Management should be responsible for defining the framework based on their beliefs of the market, the company’s capabilities etc. However the bets themselves are not strategy and should be delegated to the teams in the organization.
Delegating the responsibility of the betting enables many smaller bets to be placed around the same beliefs. In this way the company is not betting its future on large Chess like moves but instead align its company around a system of bets. I believe this is how companies should manage their strategy in a high uncertainty world.