TBM 271: Diagnosing Your Company's Strategy Problem

Say you are an individual contributor or manager in a company. Or maybe even a director or VP. From your vantage point, it feels like no one in your company is being strategic. The answer to everything is, "But why can't we do both?" No one seems willing to make a decision.

From your vantage point, the strategy seems to be, "Try to do as much as possible, and see what sticks." You walk into meetings, praying someone will say something smart, like, "OK, based on our insights here, and our convictions, we're going to hold off on that, and try to do a great job here." But it never happens. Every discussion seems to be overly focused on hyper-adjudicating micro-allocation shifts and capacity scenarios, rather than offering a genuine perspective.

To do your job well, you need someone, anyone, to take options off the table. Yet, it constantly feels like people are adding more and more things onto everyone's plate.

In this post, I want to give you a way to diagnose what is going on. Too many people default to a simplistic explanation like, "We just need a strategy." Well, yes, that helps, but it is critical to diagnose why the strategy you're satisfied with isn't emerging.

Let's divide up the problem into three pillars:

Information and Insights

First, you have information and insights about your context, and some coherence in terms of how people process that information, and the insights they glean from those insights. This includes information and insights about your customers and competitors, of course. But it also encompasses information and insights about your internal operations, your capabilities, and how these capabilities compare to those of current and future competitors. For some companies, the key issue is a lack of situational awareness, a lack of humility to accept the current situation, or the inability to tolerate uncertainty when it exists (and fabricating certainty).

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Strong: We share an honest, up-to-date view of what is happening with customers, competitors, and our capabilities, and we adjust as things change.

Weak: We rely on outdated facts, guesses, or made-up certainty, and ignore signs that our picture of reality is wrong.

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The Game and Options

Next, you have knowledge about the game you are playing and the strategic options at your disposal, as well as a shared understanding of that game and those options. You can have people with deep, encyclopedic knowledge of strategic games and options, but they can't agree based on the available information. Or you can have people who agree vehemently, but they're simply wrong about the game and options.

Part of knowing the game and its options is understanding that you'll sometimes not know the game, sometimes you can shape new games, and occasionally new dynamics enable new, untested options. In other words, unlike sports, there isn't always a fixed game with a relatively constrained set of options.

In business, you have your choice of games, you can shape/change the rules, and you can invent new options for playing the game. It is very important to note that companies are not monoliths, and the idea of a supreme, rationally acting corporate organism is a myth. So game/option awareness also involves realizing that a company ecosystem is a collection of game-playing actors and domains. Understanding one aspect, such as the game your bank might be playing, doesn't necessarily make you an expert at deeply understanding the technology-for-banking game your technology group is playing. Or vice versa.

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Strong: We agree on the game we are in, understand the rules, and see the real options (including when we can shape the rules or invent new ones)

Weak: We are unclear or disagree about the game, treat the rules as fixed when they are not, or miss chances to create new options.

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Now What?

After sensemaking and game/option awareness, you have the "OK. Now what?" The Now What? may be naturally constrained by the context, game, and options. But it may also be constrained by competing agendas, goals, levels of risk tolerance, and other factors.

Predictable near-term gains can be a boon for investors, while taking bigger bets might offer a big upside if things pan out, or a big fail if things go south.

Many companies 1) have good insights, 2) agree on those insights, 3) the game is fairly obvious, 4) their options are fairly obvious, but 5) there is no clear "winner." They are in a logjam and stalemate, and often NOT because they are incompetent or suck at decision-making, but rather because there are no "good" options (each option will cause pain). It is easy to romanticize big, bold, strategic bets when you don't have to sit there and explain to investors why they should be excited about the risks involved. You can see here how the dimensions are related, because the Now What? is so heavily connected to game/options and situational awareness.

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Strong: We make firm calls, take distracting options off the table, and commit our energy to what we choose, even when it means trade-offs.

Weak: We stall, tinker at the edges, and keep piling on work instead of focusing on fewer, better bets.

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Connecting these three dimensions is probably a meta-dimension that roughly boils down to integrating these areas regularly. Many companies end up losing because they stubbornly hold on to a view of their context, their game, and their "old" way of aligning from 5-10 years ago. And plenty of companies get carried away with reactive course corrections because of the latest tech fad, macro environment shift, etc.

So What? Our Strategy Is Non-Existent!

How do you put any of this to use?

More Information and Insights

Suppose you are flying without a radar, or no one can agree on what the radar is telling you. In that case, even with the best strategists in the world who have a keen understanding of the game, no one will be able to make a decision (aside from demanding that you stop flying blind). The same thing happens to a highly skilled athlete when they face an opponent for the first time.

A top tennis player in that situation might think:

I don't know their strengths yet, so I'll probe. I'll send a few shots deep to the backhand, a few short to the forehand. I'll watch how they move and how they return under pressure. My goal is to read their game as quickly as possible.

That is "unknown opponent mode." They are still mapping the game and the options.

Now imagine the same player against someone they have faced ten times before:

Her backhand crumbles if I pull her wide and then drop shot. She tends to rush the net when she's down. If I hold serve for the next two games, she will press too hard and make errors.

Many people complain that their companies lack a strategy, but realistically, there's not enough information or convergence on that information to even form a strategy. In lieu of more information, the default is to preserve optionality and peanut butter spread, even if it seems inefficient. Your job then is to get more information into the room, and get more eyes on that information (which is a strategy unto itself).

Game Clarity (and Honesty)

The next thing you need to do as an individual contributor, manager, or director is to be honest with yourself about the "game" your company is playing. We imagine the game is to "win," or to "serve customers," or "survive and thrive." But realistically, in many cases, the game is to provide fairly predictable returns to investors, even if that means a slow descent into mediocrity.

In other situations, the game is a battle of games between the people in the company who will benefit from a big upside (and have a strong hedge against the downside) vs. employees who got their stock later, and who have no hedge. There are all sorts of games that humans in companies, along with their investors, competitors, and customers, play.

• The Big Flip. Drive up valuation for a sale or IPO before the cracks show, leaving someone else holding the bag.

• The Silo Defense. Protect your domain's resources and autonomy from being raided by other parts of the company.

• The Momentum Mirage. Keep feeding the perception of progress so morale and valuation stay buoyant.

• The Risk Transfer. Shift potential downsides onto other teams, partners, or customers while holding onto the upsides.

• The Lock-In Game. Design products, ecosystems, or contracts that make it costly or painful for customers to leave. (Investor-approved, customer-hated)

Yes, I am being cynical. But I am also being realistic. People put business strategy on a pedestal, as if everyone is playing the same noble game. In truth, plenty of the games people play have little to do with the official strategy.

And moving past the cynicism, a very real and common clash of games happens between founders, early investors, and later investors. Founders may want to hold on and push for a bigger upside. Early investors might share that view because they are already well-positioned for the payout. Later investors, however, may push for efficiency, predictability, and returns now. That is not just a difference in tactics. It is entirely different games being played on the same board.

Pay attention to narrative clashes and differences in perspective when it comes to the game and the options.

Now What? Realism

Finally, it is critical to realize how hard it can be to commit to a Now What? when there is incomplete information. This is where romanticized strategy and real-world strategy clash. Put yourself in the shoes of an average leader. One voice is saying, "Focus and make the hard decisions." The other voice is saying, "But that could kill the company. What if we can move forward with these three options at once? What if? What if we can be more efficient? What if AI will help us?"

Imagine having to be the person sitting in front of the board saying, "Well, you know, we ARE growing at a healthy 30% year over year, but you know what, we're going to let that slide to around 20% next year to make some big bold bets that we're SURE you'll love!" Very difficult.

The reality is that companies often keep multiple irons in the fire until one glows hot, and that becomes the signal to focus. It is a mix of luck and strategically placing your bets to hopefully yield results.

The key point is that you need to explore why your company's strategy is weak and how it's causing indecision and a lack of focus. It isn't always because people are "bad" at strategy (though that does happen), and it isn't always things that can simply be willed away with a good Miro board exercise.

Closing Questions

These are heavy topics. But depending on your assessment above, you can consider some tactics to nudge things in the right direction.

• Is there an opportunity to close the insight gap? Where is it hard to connect the dots? Where are people walking away with very different interpretations of the data?

• Often, different perspectives are good. If everyone instantly agrees on what an insight means, that could signal trouble. Is your trouble premature convergence, which leads to people half-heartedly agreeing?

• Assuming a non-cynical situation, a standard business "game," is anyone able to describe the game your company is involved in? And the options available? Are there different camps in the company? Factions? Why are the factions chasing different risk profiles and outcomes?

• What is keeping people from converging on the Now What? Is it a narrative clash? Or is it just a plain and "simple" difficult problem with limited strategic options? How might you help people converge on a way forward? Is it a matter of momentum? Visibility?