[MUSIC]
I'm Jesper Sorensen and I'm a professor of organizational behavior at
the Stanford Graduate School of Business.
I teach a course called crafting and leading strategy.
Here are five key takeaways from that course.
[MUSIC]
We often think of strategists as people who articulate grand visions,
draw up a blueprint, and then tell their teams to make it happen.
That's wrong.
A strategy is a continually evolving course of action,
not a monument to your genius.
The difference between architecture and
strategy is that while the ground underneath a building rarely changes and
unforeseen ways, everything in your world is subject to change.
And that means that you cannot simply do a bunch of analysis, come up with an answer,
and then give people marching orders and wait to see the results.
You need to think about your strategy every day.
It is not a set it and forget it kind of thing.
[MUSIC]
Executives around the world lack confidence in their company's
strategies and in their own strategy skills.
One big reason for this is that they equate strategy with planning.
They believe that doing strategy requires uniquely rare expertise and insights.
But as Glen Carol and I argue in our book Making Great Strategy,
the core of any sustainably successful strategy is a logically coherent argument,
a story about how actions and investments lead to success.
We all engage in this kind of reasoning in our daily lives.
But too often when it comes to strategy,
we forget to apply our reasoning skills in a disciplined way.
Nobody knows your organization and your market better than you.
All that stands between you and a great strategy
is a disciplined reasoning that surfaces the most critical drivers of success.
[MUSIC]
Some years ago I interviewed executives at a large Silicon Valley company
to understand the challenges they were facing with strategy and execution.
One executives said to me, the problem is that we talk about the what not the why.
In other words, company leaders would issue a to do list of sorts,
grow market share by 5%, cut costs by 10%, invest more resources in marketing, etc.
But they were never clearly told how these things fit together.
What the underlying logic of action was supposed to be.
As a leader with a coherent strategy, you have a method to your madness.
Your strategy is your unique way of connecting the dots.
But if you only give people a to do list,
you force them to connect the dots on their own.
It can get much more likely that they will do something you do not want.
Instead, whenever you ask someone to accomplish a specific objective,
always help them see how it fits into the bigger story,
how it fits in the logic of your strategy.
[MUSIC]
As strategic leaders, we continually strive to improve our strategy,
to find ways to improve our organization's economic prosperity.
But how can we best do this?
The starting point is to embrace the idea that your strategy is your theory of
success, or your belief about how causes lead to effects and
how inputs lead to outputs.
But these theories only exist in the mind.
How do we know they are true or worth pursuing?
Well, we can start by recognizing that every time we act in accordance with our
strategy we are generating evidence.
Did our decision lead to the consequences we expected?
If they did, we can feel more confident in our strategy and sleep better at night,
at least for a while.
And if they did not, we may need to rethink our strategy.
Fundamentally, every strategist should think like a scientist, using evidence and
data to improve their understanding.
[MUSIC]
I like to ask students how they would know whether they have a good strategy.
They'll debate this for a long time talking about profit and growth and KPIs,
but it's a trick question.
The truth is you can never really be sure that your success is due to your actions,
as opposed to factors beyond your control or luck.
This messiness and uncertainty frustrates many people when it comes to strategy,
but here's a different way to think about it.
The uncertainty is the price of discovery and greatness.
Our strategy is an expression of how we think the world works.
But we should also embrace the idea that doing strategy is a learning process,
that is an opportunity for us to understand more about how the world works.
If we can embrace this uncertainty,
we'll be in a better position to make the world a better place.
[MUSIC]
I wrote this book called Making Great Strategy which my
adult kids love to make fun of especially the title.
And so every time we now try to do something like go to a restaurant or
talk about a problem in their job or anything like that, they're like,
well, it's because they didn't make a great strategy and
then they laugh laboriously, and so on so forth.
And by the way, I think only one of them has read the book, so.
[MUSIC]