Strategy as an act of creativity

And it implies mistakes and failures

And it implies mistakes and failures

Some years ago, I helped a large company formulate a new long-term strategy. The team did a great job, and the result of it — the meticulously elaborated strategic presentation — was presented to the board of directors. I was not invited to the meeting, but the CEO called me in the evening. He was very upset and disappointed — the strategic concept was turned down on the grounds that the team’s hypotheses about the future trends seemed “inconclusive” to the board members.

There is an old joke. What is the likelihood that today you’ll turn around the corner and meet a dinosaur? The “right” answer is 50% — you will either meet it or not.

Small businesses leaders can, generally speaking, do whatever they want. Typically, such companies are managed by founders, who make all the crucial decisions, and, at the same time, they are the ones who will pay for every mistake at the end of the day. But as soon as investors and/or a board of directors appear, a team gets a new task — to explain their actions to higher-ups and to prove that they are meaningful.

Investors’ representatives and board members are people who are responsible and accountable for their decisions. And on the one hand, they realize that the future is unpredictable (and strategy is always about the future), so we must accept a certain level of uncertainty when it comes to business decisions. We should be ready for a scenario in which our current assumptions will be proved wrong by reality (we’ll “meet a dinosaur”). But, on the other hand (and, as a person who has been working as a board member since 2012, I know very well what it means), they are the ones who are supposed to bring a fraction of rationality in the decisions made by founders, who are entrepreneurs by nature.

The latter sometimes makes them too logical and motivates them to push managers “prove” their theory about the future world. Add on top of that these people are responsible for their decisions, and you’ll see it all creates perfect conditions for hypercriticism and super-caution.

Henry Mintzberg is one of the most consistent critics of strategy as a result of a cognitive effort only. He believes that a strategy is an act of creativity rather than the result of calculations. He says:

“Strategic planning is not strategic thinking. Indeed, strategic planning often spoils strategic thinking, causing managers to confuse real vision with the manipulation of numbers.”

figures tell us stories about the past, not the future

Strategy is not a way to predict the future and prepare for possible changes. Strategy is a way to create the future in which team members would like to live and work. As such, a strategy concept must be evaluated from the point of view of creativity. We must not expect a team to “prove” that their ideas are “right” or based on solid facts only. If a team is going to do what they have never done before, failures are inevitable.

It doesn’t mean we should give any creative idea the green light. Some numbers underpinning the reasoning about the future are welcome. But we have to consider that all the possible figures tell us stories about the past, not the future. So, approving any strategy, we should be ready to have our anticipations disproved by reality. But it can be balanced by a high level of adaptivity. If a strategy is creative and it contains some ideas on how the team will test their hypotheses — quickly, cheaply, and safely — and adapt to new knowledge obtained in the process of testing, it deserves a chance.

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