Strategize First, Analyze Later
The people who gravitate to strategic planning functions and strategy consulting firms tend to be highly analytical. That, I believe, is a problem. To be sure, analysis is important but in the end, strategy is and will always be a creative process.
Strategy is not the inevitable outcome of a process of analysis: it is a choice of where a firm wants to play and how it will win there going forward. Yes, a working knowledge of the industry and its likely evolution, the customers and their likely preferences, the firm itself and its potential capabilities and cost structure, and its competitors and their likely responses and actions should inform that choice. But it is simply not possible to predict that many things about the future through analysis unless you simplify the features of the solution space to an extent that makes it analyzable — and at the same time irrelevant. It guarantees strategic failure.
To develop a compelling strategy, you have to begin by staking out the territory you want. That is an act of choice and imagination. After you’ve made the choice, then it is the time for analysis: figuring out exactly what you have to do to get to where you want to be and to be able to play the way you need to in order to win.
Great strategists, therefore, have two sets of personal capabilities — and this insight comes from my brilliant friend Hilary Austen. One set, of course, is what we understand by analysis: the capacity to intelligently manipulate quantities. That is to take quantitative data and perform useful manipulation of it using rigorous methodologies — regression, correlation, analysis of variance, and so forth. To be sure, this is an important capability — but it is a necessary, not a sufficient capability for strategy.
The other set is what you need to lead with: the appreciation of qualities. This is the ability to perceive and appreciate the meaning of small differences in the features of a given variable. For example, this means being able to understand why customers behave as they do, by observing their actions and engaging with them in new ways. And having the ability to imagine what current behavior could mean for their behavior in the future. The appreciation of qualities is harder to measure and track, and seems less rigorous than does analysis. But unless the strategist has this capability, his analytic muscle is no help at all.
The emphasis that strategy professionals place on analysis puts the metaphorical cart before the horse. I have been doing strategy for over three decades and I can’t point to any truly compelling strategy that arose from analysis alone.
Strategy is not the inevitable outcome of a process of analysis: it is a choice of where a firm wants to play and how it will win there going forward. Yes, a working knowledge of the industry and its likely evolution, the customers and their likely preferences, the firm itself and its potential capabilities and cost structure, and its competitors and their likely responses and actions should inform that choice. But it is simply not possible to predict that many things about the future through analysis unless you simplify the features of the solution space to an extent that makes it analyzable — and at the same time irrelevant. It guarantees strategic failure.
To develop a compelling strategy, you have to begin by staking out the territory you want. That is an act of choice and imagination. After you’ve made the choice, then it is the time for analysis: figuring out exactly what you have to do to get to where you want to be and to be able to play the way you need to in order to win.
Great strategists, therefore, have two sets of personal capabilities — and this insight comes from my brilliant friend Hilary Austen. One set, of course, is what we understand by analysis: the capacity to intelligently manipulate quantities. That is to take quantitative data and perform useful manipulation of it using rigorous methodologies — regression, correlation, analysis of variance, and so forth. To be sure, this is an important capability — but it is a necessary, not a sufficient capability for strategy.
The other set is what you need to lead with: the appreciation of qualities. This is the ability to perceive and appreciate the meaning of small differences in the features of a given variable. For example, this means being able to understand why customers behave as they do, by observing their actions and engaging with them in new ways. And having the ability to imagine what current behavior could mean for their behavior in the future. The appreciation of qualities is harder to measure and track, and seems less rigorous than does analysis. But unless the strategist has this capability, his analytic muscle is no help at all.
The emphasis that strategy professionals place on analysis puts the metaphorical cart before the horse. I have been doing strategy for over three decades and I can’t point to any truly compelling strategy that arose from analysis alone.
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