Part 2: Developing Your Strategy, Getting to Decisions and Actions
This is part two of our blog on Thinking of Future Strategy in Adversity and Uncertainty as Leaders. If you have not read part one, you can find it here. We recommend that you read them sequentially and, if using with teams, do the analysis first, as per blog one, followed by the steps outlined in this blog.
The first blog gave an overview of the things to consider when looking at future strategies and possible scenarios and alternatives when dealing with uncertainty. This blog will take you through some theory and the options we have in taking our strategies forward, known as strategic postures. This can help leaders and teams think about the decisions and actions required.
The blog is intended as a self-coaching guide or for using with colleagues in virtual team meetings to engage the team in understanding the current complexity, what options there are within developing strategy, the postures, moves, decisions and actions required.
Tailoring Strategic Analysis to the Four Levels of Uncertainty.
Blog one talks about the different analysis you can undertake in looking at future strategies using Hugh Courtney’s 4-part framework to help understand the levels of uncertainty. From undertaking this analysis, you will have gained insight into where you are currently and the possible approaches and alternatives you can consider given the uncertainty. This blog looks to help you think about what is known as strategic postures - possibilities, actions and decisions - that you may want to consider..
In their article on Strategy Under Uncertainty (Hugh Courtney, Jane Kirkland, and Patrick Viguerie), the authors say ‘that at least half of all strategy problems fall into levels 2 or 3, while most of the rest are level 1 problems,’ so we need to think through our options to advance and be agile and ready to adapt your strategy in such uncertain times.
Leaders, teams and organisations may need to do further analysis, look at the options, strategic postures, the actions and the decisions to take that will help develop their strategy. The figure below illustrates the 4 steps you can use which are required in getting to the point of developing and managing the future strategy.
Figure 1 – working through uncertainty and the stages in developing future strategy.
Some language to become aware of in developing your strategy and intentions
Step 1 - Defining Your Postures and Moves
Before we can talk about the dynamics of formulating strategy at each level of uncertainty, we need to introduce a basic vocabulary for talking about strategy. First, there are three strategic postures that you can choose to take vis-à-vis uncertainty: shaping, adapting, or reserving the right to play. Second, there are three types of moves in the portfolio of actions that can be used to implement that strategy: big bets, options, and no-regrets moves.
These are illustrated in the figure below:
Figure 2 - the three strategic postures
What Are Your Strategic Postures
It is important to look at which posture or postures you wish to take. Any good strategy requires a choice about your strategic posture. Fundamentally, posture defines the intent of a strategy relative to the current and future state of your sector/services/industry. Below is an explanation of the three postures for you to consider and discuss each aspect to understand the postures that you feel will be applicable to your level of uncertainty.
Shaping the future is the aim to drive your industry/service/product etc. toward a new structure of your own devising. Your strategies are about creating new opportunities in your market—either by shaking up relatively stable level 1 competitive industries or by trying to control the direction of the market in your industry with higher levels of uncertainty. For example, developing a new technology within your industry that others have not done in responding to the future or changes due to uncertainty the current context brings.
Adapting to the future is the aim to adapt and take your current sector/ industry structure and its future evolution as givens, the organisation/ teams consider how, and they react to the opportunities the market offers by adapting. In environments with little uncertainty, adapters choose a strategic positioning—that is, where and how to compete—in the current sector/industry. At higher levels of uncertainty, their strategies are predicated on the ability to recognise and respond quickly to market/service developments required.
Reserving the right to play is a form of adapting. This posture is relevant only in levels 2 through 4; it involves making incremental investments here and now that put a company/organisation/service/team in a privileged position, through either information others don’t know, cost structures or key relationships between customers and suppliers. That allows the company to wait until the environment becomes less uncertain before formulating a strategy.
The authors say that ‘the choice of a strategic posture and an accompanying portfolio of actions are straightforward.’ However, I feel that in practice, these decisions are highly dependent on the level of uncertainty facing your services/teams/organisations/business. Thus, the four-level framework outlined in part one can help clarify the practical implications in any choice of a strategic posture and actions you may take.
After discussing or thinking through the postures you may wish to take, you then need to think through your actions, known as A Portfolio of Actions.
A posture is not a complete strategy. It clarifies strategic intent but not the actions required to fulfil that intent. Three types of moves are especially relevant to implementing strategy under conditions of uncertainty: big bets, options, and no-regrets moves. The discussion that follows will demonstrate the different strategic challenges that each level of uncertainty poses and how the portfolio of actions may be applied as outlined in figure 3 below:
Figure 3 – Portfolio of Actions
Step 2. Deciding upon Your portfolio of Actions
It is important to understand the actions you need to think about, the decisions you need to make to take forward your strategic intentions. The following explain each action
No regret moves are moves that will pay off no matter what happens. Examples of these are, programmes of work, possible initiatives aimed at reducing costs, gathering competitive intelligence, or building/developing skills. No-regrets moves are an essential element of any strategy.
Options - all strategic intents need to look at the options to secure the best-case scenarios while minimising losses in the worst-case scenarios. Options are likely to link to finances or investments which may mean thinking through making modest initial investments that will allow you to ramp up or scale back the investment later as things are clearer or the market evolves, e.g. this could be piloting a project or new product, technology before implementing. The authors state that ‘those reserving the right to play rely heavily on options, but shapers use them as well, either to shape an emerging but uncertain market as an early mover or to hedge their bets.’
Big bets are large commitments such as major capital investments or acquisitions that will result in large payoffs in some scenarios and large losses in others.
Step 3
When you have had some thinking time or, if doing this with the team, have had discussions about the strategic postures, it is important to now think through the actions required. Asking the following questions can help determine your next steps and when and how you will approach the next steps. So, from the above you can also ask some of the following:
(These are some suggested questions only and exclusive of others)
What are the priorities from the possible actions and recommendations that require addressing – in the short, medium, and longer term?
Who will be involved?
Who will lead?
Who will be accountable, who will make decisions?
How will the team/subgroups/boards/organisation(s) support the strategic intent
What are the risks we need to mitigate against?
How will the progress be monitored?
How will you keep scanning the environment/ the uncertainties?
How and when will you revisit your intentions and portfolio of actions?
Leading and developing a strategy in times of uncertainty takes courage, being risk adverse, creative and using opportunities to make the best of the situations they face. Engaging your colleagues, teams in understanding the current position and gaining their input/ideas/thoughts can support team members to understand that in uncertainty leaders/managers may not have all the answers to such complexity.
If you would like to speak to us about how you can undertake this with your team/or use these blogs as a self-coaching guide why not get in touch at information@weareprospect.com or email jackie@weareprospect.com
Jackie Barringer – Senior associate
References
Harvard Business Review, November-December 1997, Strategy in uncertainty by Hugh Courtney, Jane Kirkland, and Patrick Viguerie