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Art Petty


When Defining Strategy, Choose the Right Tools for the Job

What’s in your toolbox?

Published: Monday, October 4, 2021 - 12:02

Imagine you have the opportunity to serve as the proverbial fly on the wall for various organizations across different sectors to observe the process of strategy creation.

When asked to share what you observed, I'm confident you will highlight a confusing morass of discussions, political debates, arguments over resources, glorified attempts at operational planning, and the gross abuse of something called SWOT. I’m equally confident you won’t have a better understanding of the actual work of defining strategy as a result of your adventure.

While we live and work in interesting times where traditional elongated planning processes no longer fit, leaders still have the responsibility to define a coherent strategy. After all, organizations must determine how and where to apply resources to serve stakeholders, beat competitors, and navigate the unexpected twists and turns of shifting business models and accelerating change. An organization’s leaders must develop competence as strategists.

Inevitably, defining strategy revolves around discussion driven by the use of various tools and frameworks. These tools provide different views to the organization’s situation, and in theory help teams identify possible strategies. Yet, a confusing array of options makes selecting the right tools for strategy work a perilous process.

In this article, I share guidance on cultivating your skill with strategy through selection and practice with the right tools and frameworks.

The importance of selecting the right tool for the situation

As a child, I marveled at the variety of my father’s tools for fixing and building things around our home. He patiently answered my questions about the different tools and their uses and would always conclude our discussions with the statement, “There’s no substitute for the right tool at the moment.”

He’s right, of course, on matching the tool to the situation. If you need finesse, it doesn’t pay to bring a tool that delivers force. And, if you need force, using the wrong tool is an exercise in futility.

And although I’m sure Dad isn’t the originator of this oft-repeated saying, he sure burned it into my brain from a young age: “If the only tool you have is a hammer, every problem looks like a nail.”

Yet, the most important thing I learned from observing him was that a good tool is only valuable in the hands of a well-practiced craftsperson who cares deeply about the work. The same goes for strategists.

Making sense out of the noise

Working as a strategist is a commitment to learning to make sense out of the noise in the environment. From shifting industry dynamics to the macro forces creating seemingly chaotic, relentless change in our world, the work of strategy is more complicated than ever. We need the right tools to help us find coherence out of the cacophony.

Run a search on business strategy at your favorite online bookseller, and you’ll be swimming in blue and red oceans, playing to win, painting with a palette, crossing chasms, battling market forces, building platforms, and growing hungry as strategy eats culture for lunch.

It’s confusing! What’s a leader to do? Especially when the board wants to review the strategy refresh at next quarter’s meeting.

Learn to use tools that help you create clarity out of complexity

Here’s why I highlighted the tools topic earlier. Strategists need help in making sense of a complex company, industry, and evolving market forces. This work requires the application of the right tools for the situation.

While every practitioner has their favorites, I find three different tool sets to be head and shoulders above the rest for creating clarity and helping groups navigate the confusion surrounding working on strategy. I use these tools both independently and interdependently to help assess a situation and form a strategy.

1. Find the ‘kernel of your strategy’

Richard Rumelt’s “kernel of a strategy,” described in his fabulous book Good Strategy/Bad Strategy (Profile Books, 2011), is the best tool I’ve uncovered for getting teams on the same page about strategy.

The kernel, as Rumelt describes it, includes the diagnosis, a guiding policy, and key actions. Teams work until they cultivate a clear assessment of the situation—the diagnosis. The guiding policy follows the diagnosis and clearly articulates what the firm must do given its situation.

Expect to spend a good deal of time cultivating an accurate diagnosis and even more time working on the guiding policy. (See the tool sets described below for help with this important work.) Effectively, when finished, you will have identified the firm’s base strategy given the circumstances. The key actions are the steps and investments essential for bringing the strategy to life.

2. Learn to HOP

In another foundational book, Escape Velocity (Harper Business, 2011), Geoffrey Moore describes a framework of frameworks with his hierarchy of powers (HOP). This tool set challenges teams to think of their business in a series of cascading layers starting at the top with category choice and proceeding through the company, segment, offer, and execution layers.

The challenge for the management team is to assess their situation vis-à-vis each layer, and identify unique areas to compete, innovate, serve, and win. Although Moore, the author of several outstanding strategy books, offers many more tools, the HOP is excellent for helping teams view their situation and opportunities through different lenses. I adapt Moore’s HOP as one tool set to help me create my diagnosis and guiding policy.

3. Paint with a palette

In Your Strategy Needs a Strategy (Harper Business, 2015) by Martin Reeves, Knut Haanaes, and Janmejaya Sinha, this team from Boston Consulting Group suggests that the proper analysis of your external environment and market segments is along the dimensions of predictability, malleability, and harshness.

Depending upon your markets or segments characterization, theres a palette of five core strategy approaches and distinct actions that guide your choices. This tool set is extremely helpful in suggesting guiding policy and jump-starting defining coherent actions.

Three views. The synthesis is up to you and your colleagues

No magical machine or silver bullet framework automatically spits out the correct answer for your strategy. Its a process of exploration, assessment, and ultimately, soul-searching decision-making for an organizations leaders.

The three strategy tool sets I’ve described above—the kernel, the HOP, and the strategy palette—are invaluable aids in helping you reduce the noise and find signal clarity in market and company conditions. Use them independently and, ideally, use them interdependently as you strive to build a shared view of your firms situation and options with your team members.

The bottom line

There are countless traps in the work of creating or refining an organizations strategy. My counsel is to find the tools that help you create clarity and that promote a common language. Choose your tools carefully, practice with them diligently, and remember that they are only as good as the hands wielding them.

First published Aug. 26, 2021, on the SmartBrief blog.


About The Author

Art Petty’s picture

Art Petty

Art Petty is a mentor, consultant, coach, trainer, and educator with a focus on helping clients develop as high-performance professionals and helping owners and executives build high-performance programs and teams. Petty’s workshops in leadership, project management, quality, strategy & execution, and marketing challenge participants to gain new skills and immediately apply insights to solving problems in the working environment. Petty works closely with associations in data warehousing, financial technology, and youth development for speaking and workshop delivery.