Saturday, July 4, 2015

Strategy: Art or Science?

While reviewing the readings for week 2, the question struck me as to whether strategic planning was more “art or science”.  The readings implied the obvious answer of “both”, as it was evident that the authors were extolling the use of strategic planning frameworks (the science) but not at the expense of creativity (the art). 

I happened upon an article in HBR that further discussed this topic.  Lafley et al note that, despite the scientific approach that most organizations use to produce detailed and thoughtful analysis, “operations managers in most large and midsize firms dread the annual strategic planning ritual” [1].  The prevalent thought amongst these managers is that “strategic planning does not produce novel strategies” but instead “perpetuates the status quo” [1].  Alternatively, anti-scientific processes in the mold of idea- generating “jam sessions” are thought to spur innovative thinking, but can result in wasted effort as these ideas may not be translatable into actionable strategy.
 
The authors counter with the notion that “conventional strategic planning is not actually scientific” [1]. They argue that while science involves detailed analysis, it also comprises the generation of novel hypotheses and custom-tailored tests for these hypotheses; two things that they believe are lacking in conventional strategic planning.  To that end, they propose a framework for adapting the scientific method to strategy development, summarized as follows:
  • Converting an issue to a choice to be made so as not to get bogged down in contemplating the issue at hand.
  • Generating strategic courses of action that the firm could take based on the choice they are facing.  It should be noted that these options are designed to be creative but detailed in terms of the outcomes they are designed to produce;
  • Specifying the conditions for success or otherwise, what would have to be true for each option to be successful;
  • Identifying which conditions are most likely to be barriers to success for each option;
  • Designing tests for the barrier conditions to assess whether or not they should lead to rejection or adoption of a course of action;
  • Conducting tests of the barrier conditions; and
  • Choosing a course of action.
I find this methodology interesting as it is similar to the western military estimate process: mission analysis; evaluation of factors; development of courses of action; “war gaming”; and, selection of the course of action.  Contrarily, I am not convinced that this approach is intrinsically scientific.  Rather, I think that elements of the process are designed to negate some of the traps that one can fall into with strategic analysis; namely, the introduction of pedantic details that, while important to a business, obfuscate the goals of strategy development.  This is implied by Kaplan and Beinhocker who state that it is a mistake for companies to combine strategy reviews with discussions of budgets and financial targets as the latter tend to narrow the focus of the review on numbers and short-term issues [2].  If this pratfall works its way into strategic planning, it is likely to be perpetuated and hence, become the status quo for the organization.

All told, I believe it is important for an organization to have a well-defined strategic planning process that produces specific artifacts; however, elements of the process must leverage the intelligence and creativity of their planners and business managers.  In the military, we term this as “operational art” where courses of action are nested within a rigid thinking process but provide the flexibility for the commander to extend his knowledge of warfare in new ways that don’t emerge linearly from doctrine.  Doing so provides the best mechanism for the balance between scientific and artistic approaches to strategy development.

Sources 

[1] Lafley, A., Martin, R. L., Rivkin, J. W., & Siggelkow, N. (2012, September). 
Bringing Science to the Art of Strategy. Retrieved from Harvard Business Review:

[2] Kaplan, S., & Beinhocker, E. D. (2003). The Real Value of Strategic Planning. MIT Sloan Management Review, 44(2)

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