Chris Bradley, Martin Hirt and Sven Smit know a few things about strategy. They spent years leading the McKinsey strategy practice and I still remember great talks by Sven about the very long-term trends and by Chris about the seven methodological steps to a great strategy.
I was interested when they published a book. And even more when I saw it had cartoons and a great introduction about why so many strategies include massive upfront investments that at statistics fail to return the high anticipated profits, hence the hockey stick metaphor.
The authors make a strong point that strategy is exactly the wrong topic for human brains: we have some many perception and decision biases that many irrational behaviors are actually… extremely rational. Thus, the introduction is a great fun read with amazing insight on all the games in the strategy room and why people play them. If you spend thousands of hours defining strategies for top companies globally, you are bound to recognize some situations and learning from a few.
The good part about what to do comes at the end of the book. The authors advise 8 interesting practices based on experience:
- See strategy as an ongoing journey rather than an annual exercise. Great ideas may come on any day. And the stress of the yearly budget exercise may not be the right environment to foster breakthrough insight.
- Debate real alternatives rather than getting to yes. Organize a real deep discussion rather than try to demonstrate a point in a logical way through a careful selection of facts that demonstrate to smarlty crafted story. This will allow you to gather collective intelligence and avoid many cognitive biases.
- Pick your 1-in-10s rather than spread peanut butter. The authors argue for big moves all along the book. They observe that many companies mostly do like usuals while the players that have really changed category often went through big bets.
- Make big moves rather than approve budgets. Strive to think about how to beat the market rather than having a euro or recruiting allowance validated. The core of the game is to find the actions that will place you ahead of the curve, not expense or payroll. Great ideas will always find funding.
- Manage liquid resources to avoid budget inertia. Keeping buffer funds to reinvest and putting your money on your future activities rather than on your past glories are two ways to avoid becoming irrelevant as we keep repeating the past.
- Run open risk portfolios rather than sandbagging. Sandbagging is taking buffers here and there and underpromising to overdeliver. It is smart, but quickly sucks any ambition out of the discussion. Open portfolios recognize the risk levels inherent to each action/
- Take a holistic view on performance rather than believing people are their numbers. The authors suggest we take statistics into account when we evaluate performance. Failing is not the same in an easy situation or in a highly volatile environment. Great success may also be sheer blind luck.
- Force the first step rather than plan for long term. Companies that get things done have a clear next immediate step in mind. The rest will follow and will evolve. On the contrary, planning years in advance may lead to inaction and complacency as to our ability to foresee the future.
Thus, this book includes a sharp diagnostic about why strategy is usually biased by human behaviors and a solid set of suggestions to make the hockey stick work by forcing the bold moves to be smart ones. Though not the best read available, it is interesting enough and a solid share of experience by experienced professionals who typically charge their services 400 times the price of the book per day!
Note: the middle of the book offers a statistical view on the odds to beat competition that may remind specialists of the statistical analyses in From Good to Great or The Granularity of Growth. It probably has academic value but is little help you manage a single corporation, unless you run a very large Private Equity fund and can play a statistical game. It then offers ten rules for a great strategy. Though interesting, these ten rules appear less compelling than the Ten Timeless Tests of Strategy or Ten rules of business growth, two other Mckinsey publications.