Source: Roger L. Martin, 2024
I'm fortunate to work with exceptional clients who are home to some incredibly bright minds. And I don't believe it's a coincidence. Rather than offering ready-made solutions, I help them navigate strategic thinking, and it seems smarter clients appreciate this approach. But I digress. The crux of the matter is that collaborating with such sharp individuals stimulates my own thinking in invaluable ways, as was the case during a recent interaction with one client that led to a significant breakthrough. Subsequently, this insight has proven beneficial for two more clients. Hence, I feel compelled to share it here, in what I've titled "Is or Is Not The Opposite Stupid on its Face: A Key Distinction in Strategy."
The Setting
In a meeting with one of my exceptional clients, a global leader in its industry, I found myself discussing Information Technology (IT) strategy with the COO. Also present were the CEO and an executive overseeing line businesses. The COO, boasting deep expertise in IT strategy, had crafted a comprehensive document outlining various choices and their rationales.
Upon reviewing the document, I had three immediate reactions. Firstly, every choice and its underlying logic seemed sound—a testament to the COO's astute analysis. Secondly, the sheer number of items raised concerns about focus. And thirdly, I questioned what truly constituted 'strategy' in this context.
An Epiphany
During the discourse on the IT strategy document, I had an epiphany—or at least, that's how I perceived it. It might not have been revolutionary, but it was a novel perspective for me. Subsequently, this insight proved valuable for this client and two others. Hence, I'm inclined to label it as such.
I realized that the document contained two distinct types of items. The key differentiator hinged on a question I've previously pondered: Is the opposite choice evidently foolish?
For some items, the answer was a resounding yes. Take 'suitability,' for instance—the imperative for IT solutions to cater to internal users. Pursuing unsuitability would be nonsensical by default.
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Conversely, for other items, the answer was no—the opposite choice wasn't inherently foolish. For instance, 'modularity'—while favored by many—wasn't universally adopted, yet it didn't impede competitors' success.
This realization allowed me to categorize the items swiftly into those where the opposite was 'stupid' and those where it wasn't.
What's the Significance?
Items falling into the latter category met my criteria for Strategic Choices. They represented genuine alternatives to competitors' approaches, offering the potential for meaningful differentiation. Conversely, those falling into the former category didn't meet this criterion. However, that doesn't render them insignificant. Instead, they represent Operating Imperatives—actions deemed essential to remain competitive, albeit not distinctive.
Strategic Choices necessitate bold decision-making aimed at gaining a competitive edge. Conversely, Operating Imperatives call for diligent replication of best practices prevalent in the industry.
When addressing Operating Imperatives, rigorous benchmarking against industry standards is crucial. This is where strategy consulting firms thrive, offering insights gleaned from extensive industry exposure. Conversely, Strategic Choices demand creativity and uniqueness, eschewing imitation in favor of differentiation.
Maintaining a balance is key. While the number of Operating Imperatives can be relatively lengthy, Strategic Choices should be limited—ideally, between three to five—to ensure focused investment and sustainable differentiation.
This distinction has proven instrumental in strategy formulation, fostering inclusivity while guiding decision-making. While not everyone may directly relate to Strategic Choices, most can identify with Operating Imperatives, recognizing their role in laying the groundwork for competitive advantage.
Throughout the strategy development process, it's crucial to maintain clarity on the differentiation between Strategic Choices and Operating Imperatives. Each demands a distinct thinking approach—creativity and uniqueness for the former, replication for the latter.
When seeking external counsel, exercise caution. Consultants may tout extensive industry experience, but their ability to deliver innovative Strategic Choices may be limited. Instead, prioritize benchmarking against non-competitors, ensuring ethical strategy development.
In conclusion, focus on cultivating Strategic Choices and benchmarking Operating Imperatives responsibly to drive ethical, effective strategy development.
