Designing Strategy

Use this five-step design thinking process to design a more competitive and innovative strategy

The lifespan of multinational corporations has never been shorter. Half of today’s S&P 500 firms will be replaced over the next 10 years in what will be the most turbulent decade in modern history.

The old model of top-down corporate strategy is broken. It often misaligns organizations, gives shallow, mostly ignored direction and lacks followthrough.

The caricature of senior executives isolating themselves at a strategy retreat, building a vanity deck and expecting it to land when they return feels antiquated. Call it a dog-and-pony show or a group hug but what you can’t call it is effective for driving change in complex environments.

The conventional approach to strategy fails for five reasons.

1. Fails to encompass complexity. There’s too much going on to think a handful of people in a room for a few days will be able to understand all the crucial factors influencing an organization’s success.
2. Leaves out most stakeholders. The competitor, employee, and customer’s voices are missing from the room. They all have insight into the market, values, alternatives, and trends shaping an industry, which must be considered.
3. Static and rigid. In a rapidly changing world, a strategy document that proposes what a firm will do for the next five years is dangerous.
4. Hard to implement. Proposes initiatives without addressing the organization and human factors that go into implementing them.
5. No buy-in. New initiatives must involve those implementing it. Otherwise, they’ll resist the apparent risks without any obvious rewards for them.

Blending Design Principles and Strategy

Design thinking is a process for solving complex problems. It involves gaining an empathetic understanding of the people involved in the problem you’re trying to solve, defining that problem, ideating solutions to it, building testable prototypes of those ideas and then testing them—iterating, and repeating previous steps as you gain new information.

With a few tweaks, the design thinking process is perfect for designing a strategy.

The Steps of Strategy Design

1. Dialogue: Consult with stakeholders throughout your value constellation.
2. Vision: Construct a clear, inspiring intention statement for your organization.
3. Explore: Work through different approaches to realizing your vision.
4. Create: Build out the broad actions your firm will take, then drill down into the specifics.
5. Implement: Rigorously collaborate to embed the strategy throughout the organization.

Step #1: Dialogue

Strategy made without consulting your stakeholders is brittle. Your products won’t align with your customer’s needs. Your competitors will surprise or confound you. Your employees will disagree with you, reveal information you didn’t know or just not be motivated.

Any strategy process must start by speaking with your value constellation. You’ll find valuable insight into trends and changes your industry is facing. You’ll peer deeper into the actual value your customers derive from your offering and opportunities to deliver more value.

Approaches

1. Who else is involved? (innovation ecosystems)
2. What do we already know? (world-café dialogue)
3. What can others contribute? (hackathons or workshops)
4. What do our customers think of us? (interviews, observation, or research)

Step #2: Vision

Once you’ve gathered insight from your value constellation, you’re ready to build out your vision. A vision is a statement that declares where your organization is headed. President Kennedy said it best in 1961 with,

“I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to the earth.”

That statement is an excellent vision as it contains a specific timeframe, a clear goal, and an inspiring mission. The NGO Solar Aid’s vision is,

“To eradicate the kerosene lamp from Africa by 2020.”

Approaches

1. What’s being taken for granted? (orthodoxies)
2. What’s possible? (strategic foresight)
3. What are others tackling? (sustainable development goals)
4. What’s on the edges? (extreme users)

Step #3: Explore

There are far more promising opportunities out there than resources to pursue them, which is why you must explore a range of options before deciding on a direction. The purpose isn’t to make one specific binding decision but to fluidly traverse a range of choices to narrow your range of options.

Approaches

1. What approaches could we take to realize our vision? (strategy palette)
2. What’s missing from the market today? (10 types of innovation)
3. What drivers are shaping our industry? (drivers of change)
4. What if we made a specific decision? (scenario writing)

Step #4: Create

With your vision and insight into your available choices, it’s time to select your path and drill down into the specifics of following it including your focus areas, specific projects, available resources and a roadmap to your vision.

Approaches

1. How could this perform in different conditions? (wind tunneling)
2. How does this fit together? (strategy cascade)
3. How do we break this down into projects? (ambition matrix)
4. How do we expect this to happen? (theory of change)

Step #5: Implement

Most strategy becomes outdated and ignored. A living strategy is one that permeates the organization’s psyche and structure. To fully implement your strategy and realize your vision, you must have everyone onboard and a purpose-built organization.

Approaches

1. How can we best organize to realize our strategy? (organization design)
2. How can we change our organization to reflect that? (levers of change)
3. How can our strategy best live in our organization? (design artifacts)
4. How can we best manage within our organization? (agile)

Supercharge Your Strategy Velocity

The process of market disruption is endless. Only through a responsive, tightly aligned strategy and a relentless focus on customer value can you thrive through disruption and outlast your competitors.

To that end, think of your strategy as a hypothesis. A constantly updated best guess, rather than a static document you rigidly follow. Let’s call this rate your strategy velocity—how fast strategy permeates throughout your organization. Imagine an organization that moves in perfect synch, with every member aligned towards a shared vision of the future. It’s possible.