Tag Archives: strategy

Three Myths About Strategy

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There are lies, there are big lies, and then there are myths. And myths are the worst of the three.

Myths present a subtle trap, which is what makes even smart people fall for them. They are usually based on a plausible half-truth, and they do not immediately lead you astray if you start to act on them. It’s only with the passage of time that you realize that you’ve made a mistake, but by then your wrong choices can’t be unmade and the damage is done.

We encounter myths in most realms of human endeavour, and the discipline of strategic thinking is no exception. Here are three of the most pernicious ones I’ve encountered in a long career studying strategy and advising companies about it:

Myth 1: Strategy is about the long-term

Why it’s plausible

In some industries, the basis of competition can remain unchanged for decades, and leaders who stick to their strategy through downturns as well as upturns and ignore surface noise do very well.

Why it’s wrong

It is precisely when long-held assumptions about an industry are challenged that strategic changes happen. And you will need to make those changes very quickly. Thinking about strategy as some kind of long-term commitment can blind you to that need Strategy is not about the long term or the short term, but about the fundamentals of how the business works: the sources of value creation, the drivers of the cost to deliver it, and the basis of competition. To get a grip on strategy, we do not need to lengthen the time horizon of our thinking, but its depth. Far from being about things we are going to do in the future, strategy is about what we are going to do now in order to shape the future to our advantage.

Myth 2: Disruptors change strategy all the time

Why it’s plausible

It looks as if Amazon and the platform giants like Google and Facebook keep changing strategy because they use the massive amounts of cash they generate to innovate, bringing out new products and services every year. Innovation is easily confused with a change in strategic direction, and sometimes it does indeed trigger such a change.

Why it’s wrong

In the case of Amazon and the rest of Big Tech, most of the innovative new products and services reflect a single, consistent strategy, one that’s been familiar to business people since at least the 1960s. That’s when Bruce Henderson, the founder of BCG, observed that in many businesses, costs decline by a predictable amount with every doubling of cumulative volume. The implication was that by pricing ahead in anticipation of those cost declines, a company could sacrifice current margins to gain share, achieve market leadership and then reap the gains. The strategy was captured in the imperative: ‘Cut price and add capacity’. That’s basically what today’s platform businesses are doing – though do they use more jazzy vocabulary like ‘blitzscaling’ or ‘hypergrowth’ and add some twists. For today’s platform businesses for instance, the imperative could be called ‘Give it away and add users’. But it’s just a more radical version of a strategy that’s more than half a century old.

Myth 3: Competitive advantage is dead

Why it’s plausible

There is evidence that the time period over which advantage can be sustained is shortening, which suggests that achieving defensibility is harder, which in turn implies that barriers are more flimsy and easier to surmount. One market observer notes that average tenure in the S&P 500 has fallen from 33 years in 1964 to 24 years in 2016.

Why it’s wrong

Reports of the death of competitive advantage are vastly exaggerated. The competitive advantages of Amazon, Alphabet, Apple, Facebook and Microsoft are so massive and the barriers to overcoming them so high, that public discussion of them revolves around the use of regulation to break them up to reduce their power. In a very short time, it has become hard to imagine how market forces alone could tame them. The full truth is not that competitive advantage is dead, but that you need to rely on multiple advantages rather than just the one. And part of the reason that Amazon & Co will be hard to unseat is that they have realized this. They are not betting on a building a single big wall, but on building up lots of smaller ones.

The Art of Strategy

In our uncertain world, fundamentals are changing so we need to think about them, whether they are valid in the short- or long-term. Think how you can deploy the capabilities you have and build new ones you need to defend your competitive position. Be on the lookout for the emergence of unexpected events at the customer interface that point to opportunities that can be deliberately exploited. Play to win the short games that will enable you to prevail in the long ones. Think deep to act fast. Strategy is still what it has always been: the art of taking action under the pressure of the most difficult conditions.

Psst: Do you want to learn the art of making strategy come alive? “Stephen “Art of action” Bungay is coming to Stockholm on Sept 4:th. We are a bunch of Crisper’s going, take the chance and join up you too!

Note: This is an exert from a longer article by Bungay in Harward Business Review. You can read the full versionhere.

Stephen Bungay on Agile Strategy

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Last month, we had the pleasure of bringing Stephen Bungay to Crisp in Stockholm to share with us his wisdom and insights on how to use Strategy under uncertain conditions.

I find this topic interesting, since the interative nature of Agile can trick management into believing either that they do not need to have a direction, or that a few abstract statements would serve the purpose.

In my mind, nothing can be further from the truth. In a dynamic, fast paced environment, more attention needs to be focused on finding, communicating and revising your direction. The question then becomes, “How can we do a good job of it?” Stephen has studied how leaders do this (from the military to Formula 1) and has translated the strategies to fast-paced business environments. Interestingly, he notes, “Strategy is not a science. It’s a practice, which each generation needs to rediscover.” I think we would do well to do the same within Agile environments.

Apart from Stephen’s “Art of Action” class, which was highly recommended, we also hosted an open evening on the topic “Keeping Direction” which combined the practical experiences from LEGO with Stephen Bungay’s insights. The slides for the talks are available in PDF from the links below:

Also check out Sami’s excellent podcast with Stephen at http://www.bosslevelpodcast.com/stephen-bungay-and-strategy-under-uncertainty)







What is Crisp?

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If you enter the Crisp office you will see these two A3 papers on the wall (click picture for bigger version)

What is Crisp

Crisp Strategy

Here is an english translation of these pictures.

The first picture is titled “What is Crisp?”. It defines our purpose.
The second picture is titled “Crisp strategy”. It defines how the company works and why.

Both papers are hand-drawn using a lead pencil. Why? Well, so we can change it easily! Anybody can change & improve it. Usually we do it at our internal conference (twice per year), and do a consensus vote to ensure that everybody agrees that the change is for the better.

How we discovered our identity

Once upon a time we were more like a normal company. And like most normal companies we didn’t have a very clearly defined vision and strategy. Every conference we would spend lots of effort around a big conference room table attempting to define these things, but the only results would be a bunch of wiki pages (our intranet) with lots of different options and ideas. No clear decisions. And by the time we got to the next conference nobody remembered what we said last time, so we’d have to dig up those old wiki pages. So even if the vision and strategy had been good, it wouldn’t have been useful because it was too wordy and buried in a wiki so nobody remembered it. Ever been there? I bet you have :o)

After a few years of doing this I decided to try something different. An experiment of sorts. Here was the idea:

  • We already have a vision and strategy. It just isn’t described in text. So instead of trying to define a perfect vision & strategy, let’s try to discover the one we already have and put words to it.
  • Make it physical, draw it on paper rather than on the wiki. That way it really exists. We can look at it, point at it, take it with us, change it. And there is only one master copy, the physical one. Any photos or replications are just that – replications.
  • Draw it in pencil, so it is clear that this isn’t perfect or final. It is something that can be improved over time.
  • Limit the space. If we can’t fit so much stuff, we have to pick our words and pictures carefully. And as an added bonus it is easier to remember (and therefore easier to relate to).
  • Make it highly visible. Put it on the wall in a prominent location in our office, bring it to all conferences. Put photos on the front page of the wiki.
  • Get buy-in. Ensure that everyone agrees that this is our vision and strategy.

I decided to limit it to one single A3-sized paper. Eventually it turned into two, but never mind that for now.

The first A3 was supposed to answer the question “What is Crisp”. Our identity and, in a sense, our vision. To answer this question I decided to meet everyone at Crisp individually (about 15-20 people at the time) and ask the simple question “Why are you here? <working at Crisp>”, and wrote down the first words that came out of each person’s mouth. I met just about everyone, and called the people I couldn’t meet.

I figured that it can’t be a coincidence that such a group of inspiring & talented people end up at the same company, there must be some kind of common set of values. And much to my relief, there was. So I simply wrote down the values that everyone seemed to have in common, the values that attracted them to Crisp and kept them there. I also tried to define a scope – as in “what is Crisp, and what is Crisp not?” After all the interviews it was pretty clear – we are IT consultants. We do all kinds of stuff within IT, we work within lots of different businesses (banking, gaming, media, etc), and in lots of different roles (developer, coach, manager, trainer). But it is all IT related, and it is all somehow related to consulting.

So I wrote this down, drew a cute and simple visual representation of these words, and voila – the first A3 was done. I’d say the whole process took less than a couple of days of actual work (but several weeks of elapsed time).

Next step was to seek buy-in from the whole group. Without that, the whole exercise would be useless.

I found a very useful trick for this. Instead of asking “what do you think of this, is it OK?”, I said “Here is our identity. Can you think of a better description?” That way there is no way we could end up with nothing. Either my version is OK, or someone will propose a better one and I could ask the whole group to vote which one is best. After a couple of iterations of meetings and minor modifications we had a version that the whole group accepted and liked. We had an identity!

How we discovered our strategy

I realized that something was still missing though. The “what is Crisp” A3 was a very important statement, but it wasn’t very concrete. It didn’t say anything about how the company actually worked, how we succeed, how we differentiate from other companies, etc. So I decided to create another A3 for that. It felt important to separate them though – the first A3 is about Why, the second A3 is about How. I realized that we had been pretty successful as a company so far, and that it wasn’t really clear to most of us HOW we had succeeded. I was convinced that this knowledge would help us continue to succeed (or succeed even better) in the future.

So I pulled out another blank A3 sheet and wrote “Crisp Strategy” at the top. This one turned out to be easier than the first. I started thinking about what had made us succeed so far, and talked to some colleagues. The list became quite long, so I turned it into an FAQ and prioritized the list. I then started pasting items (physically!) on to the A3 paper, in priority order, until it was full.

As a side note, I had recently read two very inspiring books:

With these books in mind, I drew a Cause-Effect diagram in the bottom right corner of the A3, illustrating two positive reinforcing loops that I believe have had a strong impact on our success as a company so far. In fact, I wasn’t really aware of the loops until I actually drew the picture!

Loop 1 (left side):

  1. Competent & motivated consultants do a better job, which leads to happy customers
  2. Happy customers give us a good reputation
  3. Good reputation increases our motivation further & attracts new competent people to our company.
  4. GOTO 1

Loop 2 (right side):

  1. Competent & motivated consultants do a better job, which leads to happy customer
  2. More and happier customers leads to higher profit
  3. Higher profit means people can afford to spend time learning new things (instead of trying to make every hour customer-debitable), and feel more safe doing so.
  4. Taking time to explore and learn new things together makes us more motivated and more competent!
  5. GOTO 1

(hey, when was the last time you got to write a GOTO statement :o)

Consequently, we should focus on keeping ourselves and our customers happy, not focus on making money. Good reputation and profit is simply a side effect of keeping ourselves and our customers happy. This was an eye opener!

By the way, I’ve found cause-effect diagrams to be useful in all kinds of situations, so I wrote an article called Cause-effect diagrams: a pragmatic way of doing root-cause analysis.

What was the impact of making our identity and strategy explicit?

The two A3s came up on the wall in spring 2009 and have been part of our culture ever since. When visitors come to our offices I see colleagues point to the A3s and describe them. We do training courses in our office fairly regularly, and every time at least a couple students start asking about the A3s and get very inspired. I’ve been invited several times to help other companies do the same.

When we have important decisions to make in the company, or problems or conflicts, I often hear people refer to our core values and use those as a guide to resolve the decision/issue/conflict.

We bring both A3s to our internal conferences and put them up on the wall there. People gather around it, talk about it, sometimes propose improvements or discuss our current strategy. The papers become a focal point.

Now a days one our primary metric is “Nöjd Crispare Index” (in english: “Happy Crisper Index” or “Crisp happiness index”). Scale is 1-5. We measure this continuously through a live Google Spreadsheet. People update it approximately once per month.

Nöjd Crispare Index

Here are the columns:

  • Name
  • How happy are you with Crisp? (scale 1-5)
  • Last update of this row (timestamp)
  • What feels best right now?
  • What feels worst right now?
  • What would increase your happiness index?
  • Other comments

We chart the history and how it correlates to specific events and bring this data to our conference.
Nöjd Crispare Historik

Whenever the average changes significantly we talk about why, and what we can do to make everybody happier. If we see a 1 or 2 on any row, that acts as an effective call for help. People go out of their way to find out how they can help that person, which often results in some kind of process improvement in the company. This happened last week, one person dropped to a 1 due to confusion and frustration with our internal invoicing routines. Within a week we did a workshop and figured out a better process. The company improved and the Crisp Happiness Index increased.

Crisp Happiness Index is more important than any financial metric, not only because it visualizes the aspect that matters most to us, but also because it is a leading indicator, which makes us agile. Most financial metrics are trailing indicators, making it hard to react to change in time.

As a result of understanding our own values better, we’ve dramatically changed our partnership contract between Crisp stock owners. We’ve literally made our own stock worthless (at least from a pure monetary perspective) – it is now pretty much impossible to get rich by buying or selling Crisp stock. This is by design, because we realized that the purpose of Crisp is not to enrich it’s owners – in fact a model that enriches the owners would conflict with our real goal – to be a home for IT consultants. So there is nothing stopping Crisp consultants from earning money (and some earn quite a lot). But Crisp itself is essentially a non-profit organization, and there is no monetary benefit to being an owner/partner.

We also learned about our growth plans and recruitment approach. The question “how big should we get” (as in how many people should work at Crisp) had come up several times in the past. Now we realized that this is not a parameter we should be controlling. We noticed that, with our model, we don’t have to actively recruit. People come to us instead.The size of our company is a consequence of two balancing forces: how many good people come knocking on our door, and how much growth pain we are experiencing. The “Crispare Happiness Index” helps us see growth pain.

When we interview new potential recruits we bring the A3s (or photo printouts in case we aren’t near the office) and talk through it. The response is usually very positive, they love it!

I’ve also noticed that many of us have internalized (memorized) the words on the first A3 and use them when describing Crisp to other people. We don’t all describe it the same way, but that’s OK. Different people emphasize different parts depending on their own priorities and who they are talking to. But nobody disputes the core values, they are the glue that keeps us together.

Why tell the world about this?

Why am I writing about this? Isn’t strategy something that a company should keep secret? What if our competitors find out? What if they copy us?

If these questions are in your mind then re-read the A3s and think again :o)

It’s the same reason I give away almost everything else that I do – music, books, articles, code, etc.


We do a lot of experimentation at Crisp, but all in all I’d say this particular experiment was the most successful one – i.e. highest benefit with least effort! Like most startup companies (Crisp was started around year 2000) we’ve had our share of internal conflicts. But having a clearly stated set of values and a matching strategy has certainly helped us avoid new conflicts. Or, more like, helped us identify and solve potential conflicts early while they are still small and simple.

Oh, and we learned a lot too. Which, of course, was one of the core values :o)

The important thing is not really the content of the A3 sheets. The important thing is how they were created, how they are used, and the fact that we now have an explicitly defined identity & strategy, which makes it easier to criticize and iteratively improve over time.
Perfection is a direction, not a place

What horizon for should I use for a goal?

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If we set the decision lenght of a goal too far – the goals will be eaten up by the imminent future and risk lose focus.

If the set the decision lenght too short, we risk "decision thrashing" (organisation loses faith in leadership because of constant change in direction, seemingly without thought). An example would be changing strategy more often than the strategy can be implemented.

So it is very important we set the goal horizon to a periodicity which allows organisation understand, assimliate and produce results.

Meeting a senior management member from Volvo brought this issue to light for me many years ago.

"How long time does it take when top managment changes strategy from the decision until the shop floor worker understand what it means in his daily work?" – he asked.
"I don’t know" – I replied.
"Three years" – he replied.