Exploring strategy, technically speaking

Good morning!

At the Uncertainty Project, we explore models and techniques for managing uncertainty, decision making, and strategy. Every week we package up our learnings and share them with the 2,000+ leaders like you that read this newsletter!

Last week’s post was on ‘Exploring possibilities, together’

In the last few newsletters, we’ve been sharing a facilitation canvas we’re calling the Strategy 5x5. This week, we will continue - with some more examples derived from some great thought leaders.

We see the Strategy 5x5 as a tool to help leaders explore (collaboratively) the possibility space. More importantly, they can explore strategy in a way that acknowledges uncertainty, complexity, and the challenges of bias. Since it’s just a canvas, it’s a modest intervention that can serve as an entry point to a very deep (and intimidating?) field, and put you on a path for real change.

The common theme across the examples this week: strategic dialogs that require more technical know-how. Last week, we highlighted some business-oriented examples that a business leader, CRO, or Head of Product might choose. This week, we will highlight examples that a CTO, CIO, IT director, or digital transformation leader might choose. 

These are leaders that are accountable for effectively leveraging new technology and methods. These possibility spaces are more driven by challenges that are internal to the company (e.g. capabilities) than challenges external to the company (e.g. competition).

The strategy frameworks and authors we will build from are:

• Wardley Mapping - Simon Wardley (drawn from “Wardley Mapping”)

• IT Asset Model - Mark Schwartz (drawn from “War & Peace & IT: Business Leadership, Technology, and Success in the Digital Age”)

• Better Value Sooner Safer Happier - Jonathan Smart (drawn from “Sooner Safer Happier: Antipatterns and Patterns for Business Agility”)

Once again, here’s our strong disclaimer: what follows are over-simplications of some really great thinking models. We hope they help you get started improving your strategy development practice, but - please remember - these summaries are no substitute for learning directly from the sources.

Wardley Maps

Decision Framework:

• What 'climatic patterns' are we anticipating?

• What 'doctrines' should be applied to the map(s)?

• What 'gameplay' can we use to influence the map?

• From which position should we start our 'attack'?

• What should be the direction of movement (and why)?

This approach is good for leaders who want to explore how trends in technology can influence their strategic choices. It frames the dialog around an understanding of how the tech used at each level of a product’s value chain is likely to be evolving over time (i.e. the next 5 years). Wardley makes the great point that while we can’t say for sure when a change or shift in a technology will occur, we can say with some certainty that a change or shift is likely to happen, and our strategy can (and should) take that into consideration.

Build your Wardley Map first. This will clarify the boundaries of your strategic discussion. Your users, their needs, the value chain behind your product offering, and your assumptions about the maturity (and likely evolution) of the technology landscape… all this will be surfaced by your working group when they create the initial Wardley Map.

And this is no small effort! The ideas are novel and it will take some time to reach a common understanding with your leadership team. 

With an initial map in place, the Strategy 5x5 can craft some possibilities that define a direction of movement across the map. 

Start by walking through each level in the value chain. For the technology behind it, try to anticipate what the future holds. Wardley says, “Everything evolves due to competition.” Where is current competition driving things? What is the group’s confidence in these assumptions? Wardley calls these things climatic patterns that will change the map over time, regardless of your actions. Identify those first. [He uses the historical example of cloud computing to explain this idea in his book.]

Next, consider how different parts of the map will warrant different approaches. He calls these doctrines, and offers an abbreviated catalog of principles, to help you get started. Some examples:

• Across maps for your different products, look for duplication of components in your value chains

• Apply ways of working that apply the principles of Agile, Lean, and Six Sigma appropriately to development in different parts of the map (e.g. agile to the left, six sigma to the right, lean in the middle)

• Build teams with attitudes and missions that meet the specific needs in different parts of the map, using the Pioneer/Settlers/Town-Planners metaphor.

The next prompt looks for tactics that can be used to “influence the map”. Wardley likens this to gameplay (think: the game of Risk) and calls the tactics strategems. This is the deepest concept to absorb, so I’ll send you to his book for details. Here are some examples:

• Drive an alteration of user perception

• Accelerate (or deaccelerate) the evolution of a component, given its technology space

• Specific plays relative to the competition and the market: attacking, defensive, market positioning

With an understanding of your map, and the climatic patterns (winds blowing), doctrines to employ (skills to bring), gameplay to try (kinds of moves), we can pick a location on the map - a place to get started. Wardley says, “Ask where before why.” Which component in the value chain is vulnerable to (and in need of) change? After these discussions, the possibilities become more clear. Pick a few options.

Lastly, we will propose specific moves to make, again referencing the map. These are supported with rationale (the why), the doctrine and gameplay ideas, and beliefs drawn from the map-making exercise. The possible movements can be supported by changing the capital flows through the value chain. That is, to drive a change in a particular component, something needs to enable it: a new flow of money, a new flow of information, a new flow of people, etc.

Perhaps the best part (of taking a Wardley Maps approach to strategy) is that the map can be used to help the leadership team communicate their chosen hypotheses to the organization, to drive strategic planning. Saying “we are here” and “the industry is shifting there” and “we will move from here to there”... This is 10x more powerful than a set of bullet points listing your “pillars of a greek temple”.

IT Asset Model

Decision Framework:

• Which top-level business objectives have risk that can be mitigated by IT?

• What key risks/opportunities in the value of the 'Technical IT Asset' should we seek to mitigate?

• What key risks/opportunities in the value of the 'Organizational IT Asset' should we seek to mitigate/pursue?

• What are the key risks/opportunities in the value of the 'Data IT Asset' should we seek to mitigate/pursue?

• In what direction should we make incremental changes to the 'IT asset', to make an impact?

This approach is derived from the work of Mark Schwartz, who has written extensively on how IT departments can better enable business agility. His model for IT strategy stems from his concept of the “IT asset” (composed of three parts). It’s worth quoting him directly, because he’s a fantastic writer.

“I find it helpful to think of an enterprise’s total IT capabilities as a single economic asset - the IT asset. It includes the organization’s software systems, its infrastructure, and the devices it puts in the hands of its employees… The IT asset enables a company to conduct its business - to generate revenues and to manage costs…Some aspects of this asset appear on the balance sheet, but some do not - the IT asset I’m proposing is a tool for managerial decision making, not for financial reporting.

This defines the technical asset owned by IT. He introduces two more assets to round out the picture:

“Organizational agility is determined by non-technical factors as well. A second intangible asset, the organizational asset,  consists of the non-technical resources the company has for rolling out IT capabilities. It includes investment management, budgeting, and governance processes, for example, and the people who use or create its technical capabilities.”

He carves out another asset around the use of data:

“There is a third intangible asset to consider: the company’s ability to use the data in its databases. There is value in those data, but only if they can be extracted and made available to employees and managers…The agility of your data asset, then, is yet another source of future profits and mission accomplishment.”

Given this “three asset” model, the decision framework starts by identifying the top-level business objectives where IT can make a difference (and is expected to make a difference). Then it explores each of the three assets, with a risk-based mindset, to call out specific IT risks to the business objectives (and mitigate them with defined opportunities). After surveying for risks in the technical, organizational, and data assets, the group can propose some directions of change in these assets.

The possibilities are captured as incremental change opportunities, and funded within IT to enable change. Teams will take the direction and identify specific change ideas. He advocates funding teams quarterly, and monitoring the team-level experiments (and resultant insights) each quarter, to inform decision making on future funding. He also encourages the use of Impact Maps to help communicate how the IT risk mitigations will impact the business.

Schwartz summarizes, “IT strategy, then, is a matter of incrementally investing in these three assets - rather than one of investing in projects or products… Digital transformation requires you to take a holistic view of your enterprise’s IT and organizational states. When you do, your transformational process becomes low risk: it’s incremental and consists only of improvements to assets you already own.”

Better Value Sooner Safer Happier

Decision Framework:

• Do we need to change?

• What are we optimizing for (and where)?

• What are your principles (and/or values)?

• Which outcome measures should be changing?

• Which behavioral value measures should be changing?

This approach is helpful for leadership teams looking to focus inward, seeking strategic change in their ways of working. It is also a great decision framework for risk-averse environments, where the “change budget” is either not clear, or underfunded.

The workshop starts with the most basic question: Do we need to change at all? This is so powerful from a change management perspective. Without agreement on this point across the participants, any perceived progress on strategy might be superficial.

What follows is the smartest question (I think): What are we optimizing for? This line of inquiry recognizes that there will be tradeoff decisions, and that the target of optimization can (and should!) change over time based on the evolving context. The Better Value Sooner Safer Happier model from Jonathan Smart puts a focus on value creation, with varying attention to quality (“better”), lead times (“sooner”), compliance (“safer”), and satisfaction (“happier”). These are the optimization options. And there will be necessary tradeoffs across those dimensions.

Similar to the Wardley Maps approach, this framework surfaces candidate principles to guide possible change. Framing strategic intent as principles allows the front-line teams to identify, own, and execute the actions that bring the strategy to life. And do it faster.

This BVSSH model emphasizes the pursuit of explicit desired outcomes. When measurements are defined for these outcomes, some will be lagging indicators (e.g. key performance indicators), and some will be leading indicators (e.g. measurable behavioral proxies that signal better probabilities for the desired outcomes). The last questions explore options for new measurement systems.

The possibility space is defined in terms of (1) insights that support the need for change, (2) a domain to optimize, (3) some principles to guide change ideation, and (4) measurement systems to close feedback loops. From this, specific possibilities can be framed - and funded as experiments, or experimental programs.

The aim of the workshop is to target a specific area for experimentation, with measurement systems helping to define success criteria. To activate the experimentation, leaders must signal a willingness for teams to spend some time experimenting with new ways of working. They can set expectations, with each team, on what percentage of their effort should go towards “running the business” (i.e. KTLO, day job) vs. “changing the business” (experimenting on new ways of working). Different teams will set this ratio at different levels, and might change the ratio from one quarter to the next.

From this, a strategy to incrementally improve value creation can emerge. When teams are organized around value streams, the dialog can become even more customer-centric. And when teams are empowered and given permission to change their ways of working, organic change efforts can produce better value sooner, in safer contexts, with happier customers and employees.

These three examples illustrate how the Strategy 5x5 can be used to spark rich dialog on more technical topics like technology trends, IT business systems, and ways of working.

Take a look at what’s top-of-mind for leaders in your organization. See if one of these Strategy 5×5s could help steer the dialog to making bold choices that drive more focused investments of time, money, and attention.

Also consider how these canvases could help communicate the choices, by acknowledging that other (good) possibilities were left on the table, deliberately, to increase leverage and reduce WIP. You’ll need a good picture or two to communicate this, because when you make bold choices, some people will need (want?) to see the receipts. 

Good thinking models create good rationale behind the good decisions. And that’s worth sharing.