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Why strategy matters. More than ever.


Towards purposeful differentiation

The traditional approach to strategy involves three, simple steps: analyse, plan, execute. Great for a world without instant access to people, data and markets. In other words, a pre-digital world. But with the rise of AI, automation, machine learning, mobile internet, blockchain and cloud computing, not only is the traditional approach to strategy irrelevant, it’s absurd.

Anyone in business can see that strategy is evolving; that it is becoming more flexible, adaptable and iterative. In a world where technology is outpacing customary strategic planning cycles, there is a growing realisation that medium- to long-term planning is pointless. Risky, even. And with this realisation comes a new-found understanding; of what strategy is, and is not.

Strategy is not planning. Nor is it goal-setting. Or tactic-tracking.

It is the purposeful direction of people.

‘Purposeful direction’ implies choice; the choice to go one way and not another. And that’s precisely what strategy comes down to: choosing to take a position towards purposeful differentiation.

In a McKinsey interview with Microsoft CEO, Satya Nadella, Nadella speaks about the company’s purpose in terms that are unmistakably human:

“One of the key things, I feel, is that just like individuals, companies have an identity. I even talk about it as a soul. It’s that collective purpose that a company represents. In Microsoft, we talk about our mission as being empowering every person and every organisation on the planet to achieve more. Every one of those words, for me, telegraphs that soul.”

Nadella is describing Microsoft’s purpose; the position it has chosen in response to its role in the world. And it is not distinct from its strategy.

As CEO, Nadella’s job is not to arrange plans or devise tactics, it is simply to direct purpose. And no one understands this better than Nadella himself.

Strategy is more relevant and more important than ever because, as the pace of change accelerates, organisations are struggling to make the right choices. For many companies, the challenge isn’t even about making the right choices, it’s the inability to make any choices at all. Very quickly, the problem becomes systemic: No decisions, no strategy, no purpose.

But why are organisations failing to make smarter, better decisions?

One reason, is overly-managed and stifled organisations. Gary Hamel and Michele Zanini’s grounding research into corporate bureaucracy reveals that “the average first-level employee in a large organisation is buried under eight or more layers of management”.

Another barrier to effective decision-making is exclusivity. Most organisations – small, medium and large – restrict decision-making to the realm of upper management. Often, at this level, decision-making becomes defunct; either because top-tier individuals are more concerned about self-protection and maintaining the status quo, or because cross-functional decision-making is hindered by silos and silo thinking. Either way, nothing kills purpose and passion faster than bureaucracy and entropy.

But there’s an out. And it’s disarmingly simple: Organisations don’t change for the better – people do.

So, gather your people. Don’t leave anyone out. Invite people to participate in shaping the company’s strategy. Chances are, something new and wonderful will emerge: A strategy for a singularly powerful and shared purpose.