Keeping an eye on the effectiveness of strategy is essential.  Clarifying what a win is and launching strategic steps designed to produce that win are essential to organizational success.  Evaluating effectiveness is just as important.

Have you ever slowed down long enough to evaluate whether your strategy is actually working?  Most organizations never really get around to it.  Why?  I’m finding Roger Martin’s The Design of Business very helpful in teasing out one of the most basic reasons.

It has to do with the fact that most organizations that have had any amount of success become really good at repeating the steps that led to their previous success.  In a sense, they’ve refined and perfected a set of procedures that successfully produce a certain product.  Martin refers to this as developing an algorithm (an explicit, step-by-step procedure for solving a problem).

The advantage that an algorithm offers is significant.  In the same way McDonald’s produces a quality product with very little variation, developing effective strategies that can be used again and again make it possible to repeat previous success.  The dependability of the algorithm reduces the risk that operator quirks will derail the effectiveness of the organization.  The organization can produce what the customers wants every time.

As long as what the customer wants doesn’t change.

What happens when what the customer wants changes?  You’d better go back to the drawing board and develop a new strategy.  What do most organizations do?  Keep running the same algorithm and hope the outcome was a fluke or that customers will come to their senses and return to seeing the world as it used to be.

“What organizations dedicated to running reliable algorithms often fail to realize is that while they reduce the risk of small variations in their businesses, they increase the risk of cataclysmic events that occur when the future no longer resembles the past and the algorithm is no longer relevant or useful (p. 43, The Design of Business).”

Scary?  Should be.  See yourself?  Hope not.  What do you need to do if you realize that your organization’s future no longer resembles the past?  Don’t hope for a mindset change on the part of the customer.  Go back to the drawing board.  Begin developing a better understanding of your customer.  Tip?  The people you’re currently reaching are not the customer you ought to be trying to reach.

Strategy When the Future No Longer Resembles the Past
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