Improving Strategy Development with a Strategy 5x5

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Improving Strategy Development with a Strategy 5x5

Managers striving to become great leaders are frequently asked to “get more strategic.”

But learning about strategy can feel like falling into the deep end of the pool with doggy-paddle skills and water wings. It’s a rich and deep field that draws from, and supports, a range of business, military, and organizational contexts. It’s not something that’s easy to pick up with some light reading on a cross-country flight.

It would be nice if we could start to codify the concepts (from the many great thought leaders in the space) and find ways to activate the work of strategy development. Mastery will only come from experience, so how can we get started? 

You can start by giving yourself some enabling constraints, for the work of strategy development. Constraints that aim to take a wide open space (“you can do anything!”), and make it more manageable for you and your leadership team (“where can, and should, we focus”?). We seek to assemble a constrained space that can reasonably drive great dialog (in a three-day strategy offsite, for example). 

Here is a mock up of a facilitation tool that could help with this. Let’s call it the Strategy 5x5:

Let’s take a step back, though, and remind ourselves why strategy development is so hard.

Strategy development is confusing

Is it about planning? Should it be about exploring my context (e.g. product strategy), or done in conjunction with the other (i.e. business) leaders? Is it about creating a good set of goals? Is it about crafting a vision? A mission? Is it about seeing into the future, with scenario planning? Should I call out the uncertainty? Sweep it under the rug and pretend it’s not there? Try to quantify it all into probabilities? Help!

Strategy development takes time

Strategy requires creative thinking, which takes time and collaboration. Time is in short supply, though. Plus, strategy requires a mindset that is a polar opposite of the tactical day-to-day monitoring and fire-fighting that consumes most of our hours. So we recognize that we need to carve out dedicated time for the activity (e.g. 3-day offsite, or annual strategy summit). But how much time is needed? And how much time is appropriate, given our needs?

Strategy development requires bold choices

It is not fun to make decisions that will impact colleagues’ career opportunities (e.g. when the impact is seen as negative, in their eyes). It is also not fun to make decisions with incomplete information. Strategy forces a choice across multiple options (each of which are probably “pretty darn good”) so FOMO will be lurking. You’ll have to move past this fear to find focus, though.

Strategy development needs safety

Your organizational culture will shape the quality of the strategy. Strategy means “saying no” to good options and making some people unhappy. Is there enough psychological safety to support this kind of dialog? 

Plus, sometimes we will “say no” to options where, with hindsight, we should have said “yes”. What are the ramifications for leaders in these situations? By the way, your fellow leaders already know the answer (and they are already acting accordingly…).

It would be useful to have a “thinking model” that could:

1. Minimize the confusion, 

2. Make good use of our time, 

3. Highlight the needed choices, and 

4. Remind us of the uncertainty we face (and the need for humility)

The good news is that there are many great “thinking models” out there. Thought leaders like Roger Martin, Richard Rumelt, and Simon Wardley (just to name a few) offer crisp, coherent approaches for strategy development.

What we have noticed is that they have a similar structure - a structure that can help us define, explain, and craft a consistent strategy development activity in our organizations:

• They describe strategy as an intense, thoughtful exercise that is both removed-from, yet wholly-within the operational experience of leaders.

• They describe strategy as an integrated set of choices

• They stress that strategy guides and constrains actions and plans, but is not “planning”

• They highlight that strategic dialog requires a vocabulary that supports concepts in complexity and uncertainty (e.g. “emergence” and “hypotheses”)

Could we leverage this observation to find something useful for facilitation? What would we need?

Something that:

• Distills the concepts, but is not overly simplified

• Makes the concepts visual, to support communication during the activity

• References the advice of experts in the field (instead of creating a new approach)

• Allows leaders to choose which experts’ ideas are the best fit for their context

• Builds a common understanding, with a common vocabulary

• Supports learning (for leaders) and building a craft around strategy (for the organization)

• Produces adaptive strategies, less of a static deck and more of a “living” thing

• Supports good decision making, in a reasonable amount of time

• Uses a vocabulary that acknowledges uncertainty and complexity

• Connects into the resource/budget planning exercises that constrain the organization

To set the table (and that is actually a helpful way to think about what we are doing… putting a “game board” out on a table, for people to gather around…), let’s lock down some definitions (and positions) on strategy development. [Hopefully, these are just clarifying, and not controversial.]

• Strategy is an integrated set of choices

• Choices come from decisions

• Decisions are framed by questions

• Decisions move resources (ie. investments to pursue a path)

• Decisions can be revisited, as learning lessens uncertainty

Our “game table” (i.e. “Strategy 5x5”) is composed of these sections:

1. The campaign

2. The decision framework

3. The possibility space (5x5)

4. The candidate possibilities (paths through the space)

5. The results (e.g. funding of preferred possibility as desired path)

Let’s see how this could help with the main challenges we face:

Challenge #1: Time

We have to carve out time to develop strategy, so let’s be explicit about it. We create a campaign that identifies a fixed amount of time (e.g. 3-day offsite, or a dedicated week, or a series of meetings over a month), a small number of active participants (covering different perspectives), and a workflow that matches the approach (guiding the development).

We can also set expectations (in our workflow) on how and when the strategy will impact our desired outcomes. Here is an example (this will depend on context):

• Initiate strategy campaign (1-3 days)

• Create and commit to strategy (1-3 weeks)

• Align strategy with execution plans (1-3 months)

• Implement and deliver on strategy (1-3 quarters)

• Evaluate impact of strategy (1-3 years)

Challenge #2: Concurrent decision-making

Since a strategy is an “integrated set of choices”, this implies that we need to commit to a set of related decisions. These dependencies (a good thing!) will drive us to approach the challenge of strategy development as making a few important decisions concurrently, instead of approaching them sequentially.

We have noticed that thought leaders usually frame their guidance as a set of questions to explore. We use these questions to build a specific decision framework that distills their recommendations into a small number of decisions-to-make. Since we will need to consider these decisions concurrently, we aimed for a number that wouldn’t place too much of a cognitive load on the participants. While the number is arbitrary, in most cases, we found we could successfully distill an author’s ideas down to five key “decisions-to-make”. Here are a few examples of decision frameworks, drawn from the work of popular thought leaders:

These decisions-to-make are each framed as a question, and the subsequent exploration usually involves new learning (i.e. new vocabulary or new ideas, shown in italics above). We expect that these decisions can each be supported by the organization’s decision architecture. For example, each decision-to-make can be framed as a “1-way door” or “2-way door”, can assign decision authority to an owner, can support collective understanding of the context before idea generation, can drive divergent thinking to produce options (i.e. more than 5) before converging (on best 5 for the grid), etc.

The added twist is that the decisions should not reach their respective “commit” until the options have been considered collectively across the decisions-to-make.

The strategy choice, then, consists of an integrated set of options, with an option drawn from each distinct decision-to-make. We call each distinct path through the options a possibility, and the 5x5 grid a possibility space.

Challenge #3: Bias

We construct this possibility space (i.e. the 5x5 grid) to help us minimize the impact of bias on our dialog. Here is how:

• Status Quo Bias - By representing the options that define the status quo alongside the alternative “change options”, leaders can more objectively evaluate continuing with the direction of the status quo.

• Confirmation Bias - By focusing on the relationship between options (from multiple decisions-to-make), participants with different perspectives must go beyond defending their pre-existing beliefs. 

• Availability Cascade - The experience of building possibilities with a decision framework avoids the trap of pre-mature extrapolation, where large slide-decks force a discussion that jumps to early convergence.

Challenge #4: Uncertainty

With a Strategy 5x5, we look for the best combination of options across the set of five questions. We refer to this best combination as a possibility, to highlight the uncertainty in the evaluation. This will be one of those times where decisions must be made with incomplete information. The “40-70 rule”, attributed to Colin Powell, suggests that leaders should feel comfortable making decisions when they feel like they have at least 40% of the information they want, but no more than 70% (to avoid “analysis paralysis”).

The enabling constraint of the 5x5 grid helps us avoid “analysis paralysis” by limiting the breadth of the dialog. Of course there will be times when our dialog drives the group to swap out one option for a different one, but, even then, the constraint (25 “tiles”) should hold.

Once a possibility has been defined (i.e. a path through the possibility space), it should be further clarified with a hypothesis statement. By using a syntax that begins with “We believe that…” we can make it crystal clear that, while the direction has been set, uncertainty remains with the choice.

Challenge #5: Adaptability

Strategies can get stale and lose value when they fail to adapt to changes in the context. A strategy that gets presented via slides in a January town hall meeting might be laughably irrelevant by April.

When we tie the options (“tiles”) in the 5x5 grid to supporting materials (i.e. conditions, metrics, beliefs, active projects, OKRs, teams, etc.) we can monitor how this context changes over time. In some cases, a change in the context might warrant bringing the participants “back to the game board” to revisit the evaluation, and consider alternate directions.

Since the “decisions-made” in strategy development drive resource allocation, we will need to balance the desire for adaptability (“should we change?”) with the organization’s ability to reallocate resources (“can we change?”). More adaptive budgeting practices can support more adaptive strategy development practices.

Overall, strategic dialog produces focus for the organization. But the activity of strategy development sometimes needs help focusing, to produce good decisions. The Strategy 5x5 is designed to improve visibility across multiple, concurrent decisions, and leverage industry-best guidance, to make a leadership team more efficient and effective in their strategy practice. 

It also supports continuous learning, since different frameworks can be swapped into the Strategy 5x5 while retaining the feel of the “game board” (say, from one year to the next). 

If you’re facilitating a strategy development process in the near future, and need some help organizing your thinking, give it a try!