Strategizing over Strategy

“In preparing for battle, I have always found that strategies are useless, but strategizing is indispensable” might be a frank reformulation of the famous quote by Dwight D. Eisenhower1. Still, the truth of the increasingly complex business environment is that plans and strategies are invalidated faster and faster. Few CEOs nowadays honestly think that their 5-year or even 3-year strategy is going to last.

Nevertheless, many CEOs nowadays have forgotten that “… strategy has two equally important aspects, interrelated in life … The first of these is formulation; the second implementation … in real life, the processes of formulation and implementation are intertwined. Feedback from operations gives notice of changing environmental factors to which the strategy should be adjusted. The formulation of strategy is not finished when implementation begins. A business organization is always changing in response to its own makeup and past development. Similarly, it should be changing in response to changes in the larger systems in which it moves and in response to its success or failure in affecting its environment.” Andrews 1971 2

20 years later after Andrew’s book, i.e., 30 years ago, the management thinker Henry Mintzberg3 further discussed the difference between the intended strategy and the realized strategy created by responding to internal and external changes (see figure to the right). He argues that only a small proportion of the realized strategy is deliberate while the emergent part increases over time. 

Every part of running an organization has become more complex over the last thirty years, which means that organizations must continuously strategize to transform changes to emergent strategy.

In its simplest form that means that the strategy-process changes from a perceived linear stage-gate process to a continuous iterative strategizing  process as illustrated below:    

The first consequence of thinking like this is that a strategy is never new – it is rather an improvement of what was already there. If you think about it: Was there ever a new strategy except when the founders of the company first met ‘in the garage’? Whatever followed that day was adjustments to an existing strategy, organization, products, adjusted customer focus, etc. No matter how radical a new strategy seems, it always contains a continuation of an existing business.

Another consequence of replacing long strategy-periods with continuous strategizing becomes clear as strategy iterations are getting shorter, i.e., the strategy is adjusted more often due to changes/feedback: The people who’re strategizing must be closer to daily business to shorten the feedback loop. The easiest way to get the feedback into the strategy loop is to involve people from the organization who are in the feedback loops with customers, namely those who are in continuous contact with them directly or through IT-systems. 

The top-down multi-year-strategy-process was easy to understand, but it has become irrelevant.

The ambition of this article is to make it very concrete how strategies can become more like a living organism than a static document, and make it clearer how strategizing involving large parts of the organization continuously and rapidly can adapt the strategy relevantly. This should be an indispensable capability of every organization.

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Agile Teams must be Cross-functional AND Quad-coloured

Cross-functional teams are the ideal of Agile cross-functional teams because of their ability to deliver high value continuously. Dependencies outside the team are proven to be the number one impediment to value creation1. Today we don’t just define cross-functionality as developers with different skills: the DevOps movement has brought operations into the teams, and BizDevOps is a common term for bringing business into the teams as well. I am a big believer in fully cross-functional teams, and I believe they can take direct responsibility for business development2.

However, it’s not enough that teams are cross-functional if we desire to create as much value as possible with the resources we have available. It’s not enough that they are efficient within their bubble (e.g. project); portfolio management should make sure that they have the optimal responsibility. We must avoid the vicious cycle of portfolio management. The teams should not only be able to do all the necessary tasks. They should have full lifecycle responsibility for the product; they are developing to maximise their value creation from a holistic perspective.

At the team level, this means that all teams should be Quad-coloured. This article will explain the concept of Quad-coloured teams, which is derived from The Portfolio Circle3. If you’re not familiar with The Portfolio Circle, you should read that article first. 

This article will also make it clear how the Portfolio Circle and Quad-coloured teams have a significant impact on how we must think about Portfolio Management in the future.

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The Vicious Cycle of Project Portfolio Management

Project portfolio management is in most organisations all about the strategic projects. Naturally, the focus is on getting as many of these, mostly far too many, projects through the development organisation as possible and spending as little resources on minor functional improvements, upgrading systems/platforms, and fixing bugs as possible because that is considered less valuable. It is rarely understood that the starvation of these other tasks leads to less overall value and congestion of portfolio planning. In other words, strategic portfolio management is an enemy of itself: too many large strategic projects lead to starvation of other tasks, which again leads to even more strategic projects, more starvation, and a vicious cycle starts.

This article will introduce The Portfolio Circle, which is a more holistic understanding of portfolio management, and it will explain why this is a necessary approach for those organisations who want to maximise value for their customers as opposed to just executing single projects.

The goal in developing this model has been to reduce the complexity of portfolio management, and through deliberate simplicity, create a level of understanding that can contribute to a more holistic use of the resources available to create value for users and customers.

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