Platt Perspective on Business and Technology

Developing strategy from a solid foundation 12: thinking through and developing strategy from the fundamentals 1

Posted in macroeconomics, strategy and planning by Timothy Platt on July 5, 2015

This is my twelfth installment to a series on strategy as it is developed in practice, and on where it is developed from (see Business Strategy and Operations – 3, postings 490 and loosely following for Parts 1-11.)

I began this series with a brief opening discussion of some of the general principles that would go into developing a clear and consistent overall strategy, that would meet current existing needs and that would be adaptable to change, and that could be acceptably presented to those who would have to live with it and its consequences (see Part 1.) And I add here that I just began discussing this complex of issues there, primarily addressing what might be considered just one element of what has to be considered a larger analytical process: underlying assumptions.

I then progressively worked my way through a somewhat lengthy case study example of how specific strategy is set and implemented, and progressively refined and changed over an extended period of time, and as circumstances and perceived needs change. I chose to pursue an example from the public sector for that, and developed this case study as an historical narrative as to how United States policy and practice have been formed and how they have evolved in maintaining troop levels in their national military defense force. That case study, lengthy at least for this blog, was developed through the course of this series’ Parts 2-11 beginning in the United States’ pre-independence colonial period and continuing on to today and to the policies and practices that have been developed for conducting the still ongoing War on Terror.

As I noted in Part 11 of this series:

• I chose that as a working example because this aspect of US government policy has been ongoing for so long, that it offers both a wide and rich diversity of working example details. And it illustrates how real world strategy and operations are messy in those ongoing details, where case studies as written up for didactic purposes are essentially always much cleaner and simpler.

The real world is rarely clean and simple and free of messy, inconsistent-seeming details. I chose this case study as a working example to make it and any conclusions that I can draw from it more real-world relevant.

I stated at the end of Part 11 that I would in effect write this installment as a continuation of Part 1, doing so with that case study example in mind. And I begin that process here and by noting that while I did at least briefly address the issues of underlying assumptions in Part 1, I also made note of one of the more commonly used analytical approaches for developing strategy, and one I add that I have both used and written about as well: the standard and by now effectively traditional strengths, weaknesses, opportunities and threats (SWOT) analysis.

I bring the SWOT analysis approach into this series in large part as a point of comparison to a second analytical approach that I will be more fully developing here in this series. And as a foretaste of that discussion I note that underlying assumptions are one of the core elements of that analytical process. So I will delve more fully into that set of issues as well as the other core elements of this second analytical approach after citing and selectively discussing SWOT analyses, in order to put that discussion into perspective. And I will discuss both of these strategy setting analytical approaches in terms of this series’ case study in this.

With that orienting outline as to what is to come here in this series, I begin with the basic SWOT analysis, and by noting that this is a fundamentally static systems modeling tool. A well-crafted and carefully and thoroughly executed SWOT analysis identifies and examines all of the pertinent and significantly impactful strengths and weaknesses that a business holds within its own systems, and does so coordinately with a matching identification and analysis of all pertinent outside-connecting opportunities and threats faced. And this analytically developed understanding and insight of the forces and factors that a business faces is then used to map out a best path forward that can maximize the potential benefits of strengths and opportunities faced, while limiting the impact of any weaknesses and threats faced.

Any strategic understanding and any overall strategic plans developed from this would be carried out and vetted for effectiveness over time, and through recurring SWOT and related analytical reviews. But these perhaps regularly recurring statistical analyses are in effect snapshots of where this business is, in each successive Now in which they are individually carried out.

Now let’s consider this in the light of my case study example. And to bring it into clearer focus for this phase of this overall discussion, I point out that I have primarily if not exclusively discussed US troop strength maintenance policy and its execution, as they have arisen in times of immediate and direct overt conflict. One of the greatest challenges that the establishment of long-term consistent troop strength policy has faced in this, has arisen from the fact that the United States has also faced periods that if not entirely free of outside conflict, are at least primarily seen as such by the majority of US citizens – and voters. And the peoples of the United States have traditionally held within them an isolationist streak and one that can come to dominate when there is no real and compelling outside threat to deal with. And this isolationist streak represents a recurring viewpoint that goes back to the beginning of this country.

I made note in this series’ case study of the fact that approximately one third of all colonists in the thirteen British colonies that became the early United States, simply wanted to be left alone when the conflict that led to American independence broke out. After the American Revolution and after British forces left, isolationism firmly took hold and a large majority of the citizens of this new country actively wished their new government and country to avoid “foreign entanglements.” So very little was maintained in the form of an organized, equipped, trained national military force. And then the British came back in what became the War of 1812, and the young United States was caught fundamentally unprepared for dealing with foreign military forces and even as they arrived on American shores.

This pattern of widespread isolationism after conflict, leading to unpreparedness in the face of new emerging defense needs has recurred many times. And skipping ahead to the 20th century, to cite a more recent example of this and of its consequences, the United States became highly isolationist again and with very active politician-led and citizen group supported demands for isolationist government policy – after the end of World War I and leading right up to the day and time that Japan attacked Pearl Harbor, bringing the United States fully and directly into what was now a full-blown World War II, and particularly when an emboldened Nazi Germany immediately declared war on the United States too.

• What would be the expected outcome if a business were to conduct a very through and careful SWOT analysis of itself and its contexts and if it were to develop its strategic planning and its overall operational priorities out of that, and if it then simply were to follow those initially optimized strategic plans and priorities from then on and without further review of this same sort?
• With time, the strengths, weaknesses, opportunities and threats context that this business’ carefully developed strategy was based upon, would change. And even if these changes were slow and gradual and even if they proceeded along consistent lines in a simple and even largely predictable evolutionary way, that business’ strategy would drift out of relevance and out of meaningful effectiveness. That is why businesses pursue three and four and five year plans, and re-visit their SWOT and related reality check analyses that they have conducted in the past, updating them with new analytical reviews on a recurring basis.
• But change can be sudden and disruptive too. The Pearl Harbor attack took place on one day: December 7, 1941. The War of 1812 formally began and certainly on the United States side on June 18, 1812 even if acts of aggression had been occurring, leading up to this formal declaration of war for some time prior to that. But this did not come to a real head and become a compelling issue for most Americans until the British military actually arrived. So even conflicts that rise to the level and scale of being formally declared wars do not always completely cleanly trace to one single date and time in history or to one event – but even if they do not suddenly arise their active commencement can lead to sudden change in both need and perception. But such conflicts often do just seem to suddenly arise; the Spanish American War, also touched upon in this series can be firmly traced as an immediately and directly impactful conflict to the sinking of the USS Maine on February 15, 1898. And more recently, the entire War on Terror as a global conflict, can be traced in large part to the single day event of the September 11, 2001 attacks of al Qaeda.
• Disruptive changes in circumstance can render even a very recently completed SWOT or similar static analysis, fundamentally irrelevant and meaningless moving forward. As an aside I add here that I was working with a large healthcare-related nonprofit in the United States when the September 11 attacks took place. They had recently completed an annual strategic planning exercise and their leadership was confident that they were strategically and operationally prepared for the year to come and beyond – until that first hijacked commercial jetliner flew into one of the World Trade Center towers, and it was realized that this and the hijacked plane crashes to follow were all part of a single vast terrorist attack and campaign against the United States and the American people. This made all of their planning up to that point in time irrelevant as these executives and their nonprofit as an organization found themselves facing an unexpected and unplanned-for contingency: one in which virtually every single dollar of discretionary spending that would have been offered by the American public and that would have gone to traditional nonprofits, was now going to be redirected to post-9/11 aid and recovery efforts.
• In the context of my case study for this series, each of these events led to dramatically new and even fundamentally unpredictable context changes – and a need for fundamental reconsideration and reframing of troop strength maintenance policy and practice. Static tools, and even if consistently and recurringly repeated can and do fail when disruptive change happens. They can fail, perhaps more gracefully over time when that is due to slow and steady evolutionary change in a business or organization and its context. But they can fail just as completely and at least seemingly even more so in little more than an instant in time – within a few hours of one day too.

My goal here is not to replace or supplant static tools such as the SWOT analysis, but rather to add at least consideration of more dynamic alternatives to the strategic analytical tool kit. I have already identified one element to one such approach here, beginning in my Part 1 series start: assumptions and thinking through and understanding what they are and what they imply. I am going to continue this discussion in a next series installment where I will at least begin discussing a more specifically dynamic, cyclical process of analysis that can be organized into:

1. Goals,
2. Assumptions, stakeholders and constraints,
3. Consequences,
4. And back to a next iteration consideration of goals again.

More static tools such as SWOT analyses would be used, for example, in clarifying and determining assumptions and constraints, and in helping to identify relevant stakeholders here, but they would be used in the context of more explicitly dynamic analyses, to at the very least respond more effectively and rapidly when disruption prevails. I will begin discussing this analytical approach in my next series installment with the issues of goals and of priorities. Meanwhile, you can find this and related postings at Business Strategy and Operations – 3 and also at Page 1 and Page 2 of that directory. Also see Macroeconomics and Business and its Page 2 continuation.

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