How to Develop Strategy

Many people have a notion that the answer to the question "How to develop strategy" rests in analyzing reams of market data, plugging it into matrices, applying a few rules and hey presto, out pops the strategy. All we need to do is follow the process and the wise words of the strategy gurus and we’ll be certain of success.

Not according to two of the leading strategy gurus, Hamel and Prahalad:

"They’re partly right. We don’t have a theory of strategy creation. There is no foundation beneath the multi-billion dollar strategy industry. Strategy is lucky foresight. It comes from a serendipitous cocktail."

Consider this statement from Henry Mintzberg:

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

He goes on to warn against: "costly misadventures caused by applying formal techniques, without judgement and intuition, to problem solving.”

You may have noticed I highlighted a couple of words there! Let me reinforce them with a few words from Bruce Henderson:

“Business thinking starts with an intuitive choice of assumptions. Its progress as analysis is intertwined with intuition. The final choice is always intuitive. Were that not true, all problems would be solved by mathematicians.”

Okay, enough of the quotations. The message is clear - intuition and judgement have a major role to play in developing strategy. This is not the same as saying that you just move forward with your strongest hunch.

We have to educate our intuition.

How? By collecting data, analyzing it, asking the right questions, creating new perspectives through the use of models and theories. What we end up with is lots and lots of ideas and possibilities. Recent research into how we make decisions has suggested strongly that our rational minds are not good at making decisions involving lots of variables. We are better going on gut instinct. And this is where intuition comes in to the question of How to Develop Strategy.

Which means that there is still a role for strategic leaders - providing you have the questions, models and theories to ask the right questions and develop superior insights and perspectives. Have a look at our pages on strategic perspective and the strategy development courses that we run.

And if you ever meet someone who is certain that their view of the world is right, just quote Bertrand Russell to them:

“The whole problem with the world is that fools and fanatics are always so certain of themselves, but wiser people so full of doubts.”