A Framework for Emergent Strategy

For most managers, in stable businesses, strategy is not something they have to pay much attention to. However, when change comes, or, as in the case of the COVID-19 pandemic, change is thrust upon them, it is the manager who has to help plot a path forward. To help our customers with strategy, Container Solutions, the company I founded, created a framework that is made up of the following:

• A practical definition of strategy. What is it? How does it emerge?

• A model for the strategist. In ancient times, the strategist may have plotted a campaign in a tent and later oversaw operations on horseback. What does the modern strategist look like?

• Strategy patterns. Sometimes, the best course of action is to gather information. At other times, you should make a big bet. Strategy patterns help you to decide what to do and when. They achieve this because they are context specific.

• Strategic actions. Like a well-written novel, strategy moves forward through actions. And like a novel, these actions will only truly make sense in hindsight. What are these actions and how do you design them?

A Model for Emergent Strategy

Strategy never comes into existence fully formed. Today, for example, we know that part of Ikea’s strategy is to produce low-cost furniture for growing families. We also know that, behind the scenes, Ikea innovates with its products and supply chain. Once upon a time, the founder of Ikea did not sit at his kitchen table to create this strategy. And he absolutely did not use a Five Forces template or a business-model canvas. What happened was that, once the business had started and as time passed, events shaped Ikea and, of course, Ikea shaped events.

Likewise, at Container Solutions, we realise that strategy is always a work in progress, a process that evolves over time. This is best captured by the business-management expert Henry Mintzberg’s model for emerging strategy. It comes in five parts.

• Intended Strategy. The intended strategy is what you want to do. In fast-moving environments, your intentions are really nothing more than hypotheses to be tested against reality. If the founder of Ikea did sit down in his kitchen, it would not have been the strategy he came up with. It would have been the intended strategy.

• Deliberate Strategy. The parts of the intended strategy that survive contact with reality go on to live in the deliberate strategy.

• Non-Realised Strategies. The parts of the intended strategy that don’t survive contact with reality become the non-realised strategies.

• Emergent Strategies. As time passes, new ideas come into play. The emerging strategies that seem sensible and fit into what you can achieve are integrated into the deliberate strategy.

• Realised Strategy. After time has passed, and only in hindsight, can we see what our realised strategy was. It will be a combination of the deliberate and emergent strategies.

Henry Mintzberg’s model for emergent strategy.

This model shows that strategy is a process. It is not a plan or an edict handed down from on high, but rather the cumulative results of many, many actions. Within the design of these actions, there is space for strategic thinking. But as you try to shape events, you have to accept that events shape you, too. Our shaping and reaction to these events will have a bearing on our strategy. In some ways, our shaping and reaction is our strategy.

A Strategist (Tries to) Shape Events

Our ability to judge situations, to read underlying patterns, and to align coalitions around our vision are crucial to our success. Even though the notion of a singular strategic mind, like a James Bond villain, is a myth, it doesn’t mean the idea of the strategist is totally dead; why would anyone engage with strategy if they thought they couldn’t shape events or at least take advantage of them?

Strategists tend to have the following characteristics:

• Empathy. From working-class uprisings to the creation of challenger banks like Starling, the strategist usually represents and works for a group of people. You can only do that if you understand your people. When we started Container Solutions, we felt we represented all the angry and frustrated engineers, which we once were, as well as all our angry and frustrated potential customers who were sick of ‘consulting as usual’. It was these two groups that we chose to speak for.

• Understanding of Reality. A large part of the strategist’s work is trying to help the group they represent move into the future. In order to do that, they need to have a firm grip on reality. When President Kennedy said in 1961 that, by the end of the 1960s, the United States will put a man on the moon, he was not being a fantasist. He had a firm understanding of reality and knew, given the state of technology, that this was not beyond their reach. Kennedy’s goal was not to invent time travel.

• Imagination. You can’t plot a path to a yet unspecified future unless you can imagine what both the path and future might look like.

• Voice. It’s no good imagining what can be, having empathy, and understanding your group if you cannot articulate yourself.

• Vision. Strategy is about getting a group from A to B. We understand the group we lead, we know they don’t like the state of things at point A, and we thus do what we can to get them to point B. We have to know what point B might look like. This is why vision is a crucial skill for the strategist.

Taken together, these five characteristics give us a model for what the strategist must do. Most people do not have all five characteristics. For example, politicians can have a strong voice but a terrible grip on reality. They run the risk of strategy by soundbite. A trade union leader might understand their people but may not have any skills in envisioning the future. The model helps us to come to terms with what we (and our strategy) might be missing.

Half-Baked Strategists

In our recent work helping our clients to adopt Cloud Native, we have observed two common archetypes. We call them half-baked strategists. Neither of these archetypes are bad. In fact, at different points in our careers, myself and everyone else at Containers Solutions have been one or other. This is exactly the reason we use these archetypes; they are relatable. We call these half-baked strategists the angry engineer and the fantasist.

The Angry Engineer

The angry engineer often speaks for the group they represent. They understand a part of reality, usually to do with technology. However, they have one black hole in their understanding: they don’t realise that people don’t like being shouted at. Over time, the angry engineer alienates those who can help them most: managers. This means that while their popularity among engineers may grow, they are ineffective at creating real change.

The Fantasist

The fantasist is often a leader or a manager. They may be prone to whimsy. They may manage ‘by shiny thing’, which means they are susceptible to conference talks about Spotify and Netflix. After seeing such a talk, the fantasist returns to their offices and declares to their teams, ‘we are going to do tribes’ or ‘we’re going Cloud Native’.

The fantasist, although often having a voice in their organisation, struggles to get their ideas off the ground. This is because they are not credible. They can’t build working coalitions because they don’t speak for their group. They speak only for themselves. By doing this, the fantasist breaks an important rule of thumb: because all of the power of strategy comes through coalitions, it has to be other focussed.

The fantasist breaks another rule of thumb: They focus on the future. Strategy may end there, but unfortunately that is not where it begins. Strategy begins in real life, with real people, who have real problems. It doesn’t begin with the pipedreams of bored executives.

The Angry Engineer + The Fantasist = The Strategist

In the successful strategic projects we have seen, the following happens: the angry engineers and the fantasists join forces. One way or another, they find each other, and then they find a way forward. We can—and, with our clients, often do—short-circuit this process by using patterns.

Strategy Patterns

Strategy patterns form a bridge between expert strategists, those who have walked the walk, and those who are less experienced. They accelerate the production of new strategies, reduce the number of arguments that arise from uncertainty, and help groups to align on their next actions. By using patterns, those less experienced can benefit from knowledge they haven't had time to build on their own.

At the same time, patterns give experienced strategists a rubric that lets them teach strategy. This is handy because experts often can’t teach; they don’t know exactly how they do what they do, their hard-won lessons having long been consigned to their subconsciousness.

Let’s look at an example pattern. Strategy is clearly about making decisions. Good decisions require information and time for analysis. In fast-moving environments, information and time are the two things that you don’t have.

In lieu of time and information, one pattern that helps with decision making is Value Hierarchy. This pattern asks you to organise your values into a hierarchy and base all of your decisions on that. For example, Disney theme parks value both safety and fun. However, in their value hierarchy, safety comes before fun; their business wouldn’t last long if everyone was enjoying themselves but their rollercoaster sporadically decapitated people.

Another example comes from an amazing company that uses Cloud Native. Starling is a challenger bank that has exploded onto the finance world, rewriting the rules for digital banking. Over at Starling, in order to distribute decision making, they relied on a value hierarchy. They said that security, resilience, and scale were all important but that security was more important than resilience, which was more important than scale.

It should be obvious that the Value Hierarchy pattern is a shortcut for more experienced strategists to help their less experienced colleagues. Certainly, when I teach this pattern, those who have never been responsible for decision making in times of uncertainty instantly get this. This is the point of patterns; they are information formatted in a way that’s easy to transfer.

Using Patterns to Design Action

Psychologically, strategy can be extremely painful. In this regard, there are two common mistakes that people make. Because uncertainty is so psychologically uncomfortable, people want to get out of it as soon as possible. In order to do this, they move quickly. In doing so, they forget intermediate, risk-reducing actions and instead ‘go big early’. In this case, the psychological pain of uncertainty manifests itself as bullishness. This is the first error.

The second error is to focus entirely on small, incremental changes. This is common in unsafe environments where mistakes are punished. In such an environment, incremental changes are seductive; they are often valuable and cost very little. But radical breakthroughs do not come from incremental, stepwise changes. In fact, incremental, making stepwise changes was the preferred approach for most of the banks here in London, where I live. And what happened? These banks continuously annoyed their customers until Starling came and blew them all out of the water.

Therefore, when it comes to strategic actions, one type of manager may want to ‘go big early’ whilst another would be too terrified to start. Neither approach will work. The secret to succeeding with strategic actions is to use the Gradually Raising the Stakes pattern. When we teach this, we usually draw this on the whiteboard:

We then talk about strategy as a type of gamble. However, we explain that with Gradually Raising the Stakes, we systematically stack the odds in our favour. We do that by combining it with three other patterns: No Regret Moves, Options and Hedges, and Big Bets.

• No Regret Moves. These are moves with little or no cost. No regret moves can include learning, speaking to users, and whiteboarding. This is because the goal, when surrounded by uncertainty, is to create knowledge and as much situational awareness as possible. It is situational awareness that drives better decisions or lets us plan experiments we can test later.
   
• Options and Hedges. These moves are a little bit more costly and include hypothesis testing. For example, we may move from speaking to users, a No Regret Move in any scenario, to doing a sensible proof of concept (PoC).

A PoC is a typical option; it’s going to cost something. However, if the PoC works, then we have found a way to serve our users’ needs. If it doesn’t work, we have disqualified one option and we can try again.

• Big Bet. Once we have exhausted a number of options and have figured what is working and what is not, we are ready to take a Big Bet. If we do this after making a number of No Regret Moves and executing a number of Options and Hedges, then we would have stacked the odds of success in our favour. We are now ready to gamble. If we tee up a Big Bet without the previous risk-reducing actions, we are likely to fail.

Conclusion

The framework we use includes framing strategy as a learning process, viewing the strategist as a multi-skilled role that is usually filled by a team, and using a pattern language that allows us to design action. Actions, in our world view, increase knowledge and therefore reduce risks.

In this article, met a few of these patterns. Value Hierarchy helps us to make decisions. Gradually Raising the Stakes helps us get over the psychological pain of uncertainty using a series of moves known as No Regrets, Options, and Big Bets.

However, there are so many more patterns. They include Research Through Action and the Fuck It Bucket. All of our patterns can help you to navigate uncertainty. They have never been as useful as they are right now, as our community reels from the COVID pandemic. This is why we released all the patterns, ungated and for free, hoping that they could help people through this most uncertain time. You can find them all here.

About the author

Jamie Dobson is co-founder and CEO of Container Solutions, a professional services company that specialises in Cloud Native transformations. He is co-author of the new O’Reilly book, ‘Cloud Native Transformation’.  Follow him on Twitter: @jamiedobson