So what is a Framework for strategy? and why do you need it?

So what is a Framework for strategy? and why do you need it?

Everything you believe is needed for changing a business from current state to future state!

by Mark Blackwell, Arkaro (mark@arkaro.com)

The article “What is the definition of strategy?” demonstrated the widespread confusion that exists in the strategy terminology. For any team wanting change a shared understanding of definition is critical in both strategy design and implementation. This extends to all the other components in the Framework…

… But wait… What is the Framework .. or Strategy Framework?. .. Why do we need it?

The Framework can be thought of as everything needed for changing a system (e.g. a business or part of a corporation) from a current to a future state, including the description of that future state. The Framework includes the strategy rule and its counterparts like missions, goals, plans, metrics and so on, as well as the diagnosis of why these components are designed as they are. The Framework might be called by some the “master plan” (though in the Emergent Approach™ term “plan” is reserved for future actions). The Framework provides structure and completeness to the strategy development process.

Let us look at the components of the Framework. Each component has a distinct function—there is no overlap among them.

System

The concept of a system (e.g. a business) is important when understanding the scope of the Framework. System relates to the organisation that is aiming to change to achieve aspirations. This allows us to have nested Frameworks to reflect the multiple systems within an organisation. For example the business system Framework may be parent to the sales system Framework and both have their own strategies.

Values

Several of the framework components bring focus to the strategy design by constraining the range of actions and decisions available to the organization. Values are the articulation of what cannot be violated no matter what. Core values are an example. The purpose of an organisation may be found in its values.

Aspirations

Aspirations describe your desired of future state; your desired outcomes that require change and innovation. The three types of aspirations used here are:

· Vision

· Mission

· Goals

but all are not necessarily required.

Visions are the highest-level aspirations: inspirational, open-ended and broad, and therefore do not necessarily require specific measurable outcomes. However, whilst broad it still constrains the organisation on what it can do. Visions are often inspirational when describing the aspirational state.. For example, Intel’s current vision statement is “If it is smart and connected, it is best with Intel”

Mission. Typically, an organisation has many possible ways of achieving the vision. For strategy development to be workable constraint are required. The mission acts as a constraint on how the vision is achieved. It is a rule to narrow the scope of strategy design. A mission may have once been a strategy rule, but the rule is now considered to be so enduring that for practical purposes it can be thoughts of as a fixed aspiration in the strategy design process. An example would be Intel’s rule to build CPUs rather than RAM. This may have once been a strategic choice but for the planning future is considered to be a fixed and therefore binds choices that can be made in strategy development.

Goals are tangible, usually measurable, and specific aspirations in support of the vision and mission. Examples might be grow earnings 10% in 2 years, or launch the new product line by quarter 4”. The Emergent Approach to Strategy™ makes no distinction between goals and the terms objectives, targets, deliverables, or aims. In contrast to the more detailed “sub-goals” associated with plans below, goals must be achieved to secure the desired outcome.

Diagnosis

Rumelt described Diagnosis as “What’s going on”. Diagnosis conveys the need to uncover and sometimes model what’s going on and what might go on in the future.

There are four components to diagnosis;

· Value propositions

· External constraints

· Bottlenecks

· Scenarios

Value Propositions are the products and / or services a business offers to address customer needs more effectively than alternate choices available to help with “getting the job done”. By comparing to alternatives available to customers they become part of the diagnosis to inform bottlenecks and aspirations. Extending the concept, tools such as SWOT, Porter’s Five Forces Analysis and others can help develop the value proposition and identify bottlenecks.

External Constraints can be imposed from the parent system (e.g. the business system Framework is a parent to the sales system Framework) or by laws or other commonly accepted standards. External constraints, like all components of a diagnosis, are hypotheses and the associated assumptions should be recognised. If the assumptions change, the component likely changes.

Bottlenecks are that which is in the way of achieving aspirations, an unwanted type of constraint. Busting the bottlenecks to the overall aspiration is the purpose of strategy. Busting the bottlenecks to the lessor aspirations is the purpose of tactics. Early efforts to hypothesise what might be the bottleneck(s) helps to avoid a “boiling the ocean” diagnosis – a point that should be well remembered when using diagnosis tools such as SWOT or Porter’s Five Forces Analysis.

Scenarios are different possible external environments in which an organisation operates and lives as it follows in its Framework. Scenarios consist of conditions and events that cannot be influenced or can be influenced only slightly by the business. Scenarios are plausible, not necessarily probable, not predictable, yet potentially quite impactful on results. Scenarios are in some ways, simulations of the external environment.

Rules

Central to the Framework is the strategy . From the earlier article “What is the definition of strategy?” we have “the central rule of a Framework, designed to unify all actions & decisions around busting bottlenecks to achieving the aspiration”

Tactics are not the actions to implement strategy, and not the short-term in contrast to the long term for strategy. They are rules that apply to smaller scopes of the system, that is, rules to bust the bottlenecks to smaller-scope goals. Unlike the central strategy rule, tactical rules are more often used. They are usually called tactical policy, or even just policy.

Plans and Projections

Plans provide three benefits.

1. Break down aspirations into smaller manageable and auditable parts with sub-goals

2. Action – provide sequence and timing coordination among multiple organizations and agents. As simulations, plans give insight via feed-forward, as opposed to feed-back as metrics do.

3. Provide a reality check to the validity of the Framework including the aspirations. Roadmaps are a type of plan used to coordinate the actions of participants. For example a product launch plan enables internal functions (sales, marketing, regulatory, operations etc) to co-ordinate as well as external organisations (suppliers, distributors, customers).

A common error is to assume that plans and associated sub-goals is the strategy. Breaking down aspirations into smaller components does not create a strategy as it does not provide the business with real-time guidance on how to execute.

Projections (predictions, outlooks, forecasts) are usually numerical simulations (amounts of something and/or dates of events). A forecast of demand for products helps a business coordinate manufacturing investment. But, as in all types of simulations, believing in the certainty of any projection is a recipe for failure.

Metrics and Audits

Metrics (performance metrics, indicators) provide feedback on how the system is evolving while there is still time to do something about it. Metrics make visible the difference between what is and some believed to be desired reference state. The difference between actual and the reference state is a creative tension. The greater the difference, the greater the tension and in principle the greater the need for modification. Leading metrics may reveal this tension, and initiate response, before lagging metrics, often financial performance, are achieved. Milestone achievement, or performance-to-plan metrics, can be leading metrics.

Just because a metric can be measured avoid the temptation of reporting it creating a confusing array of data. Focus on metrics relating to the bottleneck to bust.

The Strategy Framework can be summarised

So what is a Framework for strategy? Mark Blackwell & Pete Compo, Arkaro

The Strategy Framework

It provides the tools needs to manage change and innovation. For those familiar with the Influence Diagram the following diagram visualises the relationship between the components of the Framework.

The Framework for strategy, Pete Compo and Mark Blackwell Arkaro

A final thought. Not every component is needed for every strategy process. It may not be important, for instance, to have all three aspirations. Values may not need to be written down. Projections may not be needed. A simple Framework might consist of a goal, a simple diagnosis of bottleneck and scenarios, a strategy to bust the bottleneck, and a few plans, tactics and metrics.

By working with your team in Agile-like sprints Mark Blackwell helps your team create strategy alternatives, choose the best strategy and establish a dashboard of metrics and triggers to drive execution.

Instead of the “do it for you” approach, Arkaro takes the “do it with you” method ensuring the team has ownership of the strategy but guided by experienced expertise and external objectivity to secure a quality outcome.

The efficient agile methodology allows Arkaro to support as a trusted partner while the strategy evolves and is implemented. Please contact Mark to learn more, meanwhile follow Strategy Insights blog posts on Arkaro’s LinkedIn page for regular updates on The Emergent Approach to Strategy™

Dr. Peter Compo Emergent Approach
Dr. Peter Compo

Dr. Peter Compo, author of the Emergent Approach to Strategy™ —scientist, engineer, and corporate veteran—spent twenty-five years at E.I. DuPont in a wide range of positions in R&D, product management, supply chain leadership, and business management—including director of DuPont Display Materials and Director of Corporate Integrated Business Management. Coupled with a background in music, Dr. Compo began to see the same adaptive patterns of innovation and successful change in all these areas. He also saw the need for a new approach to strategy and spent seven years integrating the science of complex adaptive systems with strategy theory and practice. The Emergent Approach to Strategy™ is the book he wished he had had at the start of his career.

Mark Blackwell - Arkaro
Mark Blackwell

Mark Blackwell founded Arkaro in 2016 following a career in organisations both large and small, covering a wide range of industries including animal health, specialty chemicals, advanced materials, food and feed ingredients.  13 years at DuPont included 8 years of consulting  roles across multiple businesses.  Expertise included Six Sigma, Integrated Business Planning, Product Line Management and Business Productivity. At this time Mark worked with Pete as the ideas forming Emergent Approach to Strategy™ were developed.  More recently Mark has provided feedback on the book prior to publication and is the first affiliated partner to deliver the Emergent Approach to  Strategy™