Image source: Harvard Business Review
From the pioneering work of Steve Blank leading to the Lean movement by his protege Eric Ries, we know the benefits of companies that operate by hypothesis and iteration. Startups embrace lean methodologies to help them capture product-market fit, and develop new features beyond an MVP. Instead of lengthy business plans and projections, lean firms operate by testing. We’ve seen similar insights helping engineering teams since the advent of Extreme programming, Agile, and later SCRUM. The basis of these movements derive from new understandings of human and organizational behavior. Why is strategy not dealt with the same way?
Enterprises can’t afford to skip planning extensively, given the number of stakeholders they represent. Strategy is therefore dealt in fixed terms by most companies. Research is conducted, a model made, and a plan is brought down from management to those that execute. Yet too often teams refuse to learn from their results, and how the plan actually performs in the world outside of theory. Enterprises would benefit from the ability to move faster, gain more scale and have greater impact. Instead when a sales plan or projection is unmet, it’s blamed on execution, instead of perhaps the strategy itself. In a world where competition and consumer preferences are constantly changing – how can you ensure that your business will maintain its edge?
Not only does disruption happen faster today, but it’s funded at a large scale. This leaves incumbents to figure out how best to approach innovation, or develop a new competitive advantage to use to their advantage. Yet that isn’t enough. Customers that had no alternatives before, rapidly move towards the myriad of startups or new divisions of larger firms, that can provide better services at lower prices, regardless of the legal structure or barriers to entry that used to help larger firms. The mix of global and local challenges makes it even more imperative that companies have adaptable strategies.
What works better is to plan your strategy as you would a scientific experiment. Isolate all your parameters as a mix of hypothesizes, and allow the real world to influence your strategy in real time. Too many companies today believe strategy is fixed, and execution is movable. But that doesn’t work in the real world. We need to be aware of how best to anticipate change by allowing ourselves to adapt to conditions as we learn them.
To read more about the topic, and find out what companies can do to create strategies based on hypothesis, read this Harvard Business Review article here.
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