Water is fluid. It finds its way around obstacles, through cracks and crevices, over the surface of stones and sand, even between the layers of rock itself. It seeks the path of least resistance — in this case a crack — and finds it. Water conforms to the contours of whatever is holding it; a bottle, a cup, a hole in the ground. This means that water is responsive, adaptable, and agile, qualities that have been associated with it by many spiritual and occult systems.
In the context of business strategy, what can be learned from water? It seems an unlikely metaphor for organizational situations, which have historically been defined by rigid processes and hierarchies of decision-making. Nonetheless, we find liquid-like behavior within organizations, particularly during their annual strategic processes.
When teams are developing strategies, they are observing what is happening within the industry, taking stock of the capacities of their organization, and figuring out what “shape to take” during the following year. This, fundamentally, is a responsive behavior, however it only occurs once per year, with quarterly revisions at best. How, then, could businesses become more responsive and fluid given the times of great change that they are now occupying?
Provisional Scenario-Based Stances
In typical strategic development processes, a team will map out what is happening in the market, generally what they think will happen that year, and then develop a course of action based on their ability to respond to the situation. While this kind of approach has much in common with traditional scenario planning approaches, the key difference with something like the Dutch Shell approach or the Bruadarach Method is that a range of agreed-upon possible futures is developed before any strategizing is done. This elevates the level of discussion to include potentialities, options, caveats, and bet-hedging, all informed by structured forward thinking.
A report containing these possible futures and relevant information about their development is an excellent way to inform senior decision-makers, board members, advisors, and important stakeholders about what your teams are seeing and what changes seem most likely. The kind of mindset this creates is called a “provisional scenario-based stance”, with provisional meaning that these futures are only possible, and scenario-based being a reference to the multiple possible futures that are being considered during strategic processes.
Revisit Strategy More Often
A very simple way to become more fluid would be to rethink your annual strategic process wherever possible, however the tradeoff here would be internal confusion and strategic inconsistency. A happier medium is to identify contingencies within your annual strategy that would trigger a partial revisit of the relevant aspect of that strategy – for example, perhaps you may decide that a major product release from a competitor would catalyze a small strategic revisit of your product line. By being aware of this, the organization can respond to unexpected developments as they occur, instead of just waiting for annual processes or reacting in the moment. Limiting the contingencies to an agreed-upon number, like three or five, will help keep this practice from spiraling out of control.
In his book “Reinventing Organizations”, Frederic Laloux documented the practices of organizations from around the world who have started to rethink their hierarchies to great effect. Nursing teams in the Netherlands, freed from a great deal of bureaucracy, were able to allocate time and resources more effectively based on local requirements. An auto parts manufacturer in Europe has managed to almost completely eliminate their hierarchies. Valve, the software giant behind Steam and Half-Life, has wheels on every employee’s desk to allow them to relocate to whichever project they feel they can add most value on. Even the classic “20% free time” rule implemented by some innovation giants is an expression of this, as it allows employees to become autonomous agents within your company.
The key here, and the great fear of leadership, is that employees will not be using this time in the best interests of the company. This is a larger conversation to have about hiring practices, company culture, and even firing practices. It is definitely true that not all organizations could manage decentralized decision-making, however this is likely because not all employees have been properly motivated and empowered to do so. More companies, especially tech innovators and remote-friendly organizations, are moving towards these processes more and more, so Laloux’s book may be a valuable addition to your reading list.
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Note: One of the original inspirations for this comes from a venerable yet insightful post about wargaming strategy, which I have somewhere in my archives – email me if you’re a Warhammer or tabletop player.