Are We Clear? Clarity, Strategy, and Prosperity, by Mark Chussil
“The purpose of writing is to inflate weak ideas, obscure pure reasoning, and inhibit clarity. With a little practice, writing can be an intimidating and impenetrable fog!” — Bill Watterson (1958-), author of the comic strip “Calvin & Hobbes”
Based on a recent discussion on the Business Strategy & Competitive Strategy Forum of LinkedIn.com, many strategists must fight their way through intimidating and impenetrable fogs of strategy.
One brave warrior, weary of the fog, asked this clear, straightforward, and provocative question:
Where is the evidence that a clear strategy makes a company more likely to succeed?
Many opinions were offered. Rather than summarize and paraphrase others’, I will share mine. I’ve gently edited what I originally wrote to include stuff I should have included before and to make me look smarter now than I did then. Here we go.
That brave question is stunningly difficult to answer.
We can quickly dispense with any suggestion that clarity is enough by itself. A clear-but-lousy strategy is still a lousy strategy. Clarity might help such a strategy perform better than lack of clarity, and it might not, but even if it helps, that’s small comfort.
I worked for 15 years at The PIMS Program (Profit Impact of Market Strategy), created by the brilliant Sidney Schoeffler. SPI had a multi-year database of thousands of real-life businesses contributed by hundreds of businesses around the world. The PIMS Program was perhaps the largest, most comprehensive effort to learn what’s different between businesses that perform well and businesses that perform badly. The research succeeded. However, whether those differentiating factors were the result of clarity, strategy decisions by the business, strategy decisions by competitors, or just plain serendipity, could not be known even with that monumental effort (note 1).
I did research on the PIMS database with Prof. Robert D. Buzzell of Harvard Business School on how much of their performance-potential businesses actually achieved. The short answer: not much (note 2). Even strategies that seem to succeed often performed worse than they could have. Our research on how much success is possible reminds us that the strategy-clarity issue begs the question of how to gauge success. Performing better than competitors? Better than targets? Better than last year? A high percentage of potential performance? A rising stock price?
Let’s not stop with clarifying success. Let’s also clarify clarity. What do we have when we have a “clear” strategy? Agreement on each person’s role in operating a strategy? Step-by-step instructions? Does “clarity” mean execution, in the sense that it’s difficult to execute an unclear strategy well?
This is getting complicated. But wait, there’s more! And don’t worry. I see, of all things, a useful bumper sticker in our future.
Back to the idea of a strategy that succeeds. My recent work on strategy analysis, using decision tournaments or decision tests, makes clear something that’s intuitively obvious though often ignored: our performance is only partly under our control. Competitors’ strategies are relevant and can be more impactful than our own. What Netscape did made a difference to Netscape, but what Microsoft did made a bigger difference to Netscape. By most measures Netscape did not succeed, but what exactly was its failure? (note 3)
I’ve conducted many business war games with companies around the world over the last 18 years. Over and over I’ve seen seasoned strategists surprise themselves with the ideas they come up with, and when they have executed those strategies they have done well. This is hopeful for the clarity question because in war games strategists test and live through their strategy decisions, leading to an unusual level of clarity and consensus. Still, cases and “experience” are anecdotal; they’re not proof that clarity matters. Plus we have a survivor-bias problem: companies with clear strategies that failed aren’t around to tell us their stories.
Which brings us full circle to why the question is so difficult to answer. It’s difficult to satisfy a request for evidence because it is extraordinarily hard to set up an evidence-based test. We have good hints (PIMS), we have simulations (decision tournaments), we have anecdotes (business war games and other stories). We also have questions about the nature of success and clarity. But as far as I know, we don’t have evidence that links clarity to success.
The bottom line: A bumper sticker
I’ve found that when one question is too hard to answer, it’s helpful to ask a different question. Remember the bumper sticker that said “If you think education is expensive, try ignorance”? In this case, the bumper sticker would be this: “If you’re not sure it’s important to have a clear strategy, try an unclear strategy.”
So, here’s the best answer I can offer. Clarity is good, but as an effect, not a cause. To me, the well-intentioned desire to cause clarity by issuing marching orders can lead unintentionally to rigidity. Clarity as an effect of rigorous strategic thinking, stress-testing, war-gaming, and the like, is more successful. I don’t have data to prove it, but at least that interpretation is consistent with my experience, analysis, and research.
If you’re not sure it’s important to have a clear strategy, try an unclear strategy. Assuming, of course, that it’s a non-lousy strategy.
Notes
1) That’s not a flaw in the design of the PIMS database or the research conducted on it. If you think about what would be required to tease apart the necessary variables — and we thought about it, a lot — you’ll probably come to the same conclusion we did, which is that it’s extremely hard to do in any practical way. Moreover, knowing why strategists did something was not the program’s objective. The objective was to know the consequences of what strategists did regardless of why they did it.
2) The methodology is too complex to describe here but it’s available in a Sloan Management Review article that Prof. Buzzell and I wrote, “Managing for Tomorrow.” See Buzzell, R.D. and Chussil, M.J. (1985) “Managing for Tomorrow,” Sloan Management Review, Vol. 26, No. 4, pp.3–14. That article and research also supported a chapter in The PIMS Principles by Buzzell and Bradley T. Gale.
3) One could argue that Netscape should not have tried in the first place. On the other hand, some people did make money. AOL bought Netscape in 1998 for stock valued at $4.2 billion. (AOL received $750 million from Microsoft in 2003 as a settlement in an antitrust lawsuit.) Then again, other people lost money. Netscape was disbanded in 2003.