Chapter 12. The Hierarchy of Strategic Thinking
“Why would an organisation not want to see the landscape they’re competing in?”— Simon Wardley
Players in a competitive environment (a game, a war, in business) have a clear Purpose — to win. And if you asked an experienced chess player or a General how they intended to win they’d point to a visual representation of their situation, (such as the board or a map of the Landscape) and explain why these moves here are better than those moves there. Yet, if you asked a business leader how they intended to win their answers would be quite different. Few would be able to point to any kind of visualisation of their Landscape and explain why these moves might be better than those moves. A lot of answers would be buzzwords (diversifying, transforming, AI) accompanied by hand-waving and “best practices”.
In the world of business PowerPoint slides (from reassuringly expensive management consultancies), strategic options chosen from the top right corner of 2x2 matrices, case studies and detailed spreadsheets showing a positive return on investment are deeply comforting. Bundled together into “the plan” it’s signed off by the board and then rolled out to staff for execution, with the implicit suggestion that any failure now is on them. Yet, it’s long-been known that in a competitive Landscape ‘no plan survives first contact with reality’[1] as one is not in control of all the variables. Furthermore, following well-trodden paths (the plans created by those expensive management consultants) may feel safe, but is ineffective in a competitive[2] because getting ahead requires discovering new paths. And when exploring the best tool you could hope for is a map.
Picture this: You find yourself in a foreign city where you don’t speak the language. You ask your multi-lingual hotel receptionist for instructions about how to get to a certain address where you have a meeting that day. The receptionist proceeds to write a detailed set of instructions about how to get there: Turn left out of the hotel, walk to the second set of traffic lights, turn right and keep going until you come to a T-junction, turn left there and keep going past the park on your right until you see a large red building, and the address you’re looking for is opposite that. You set off, following the instructions to the letter. But half way there you find the street you must take has been closed for some reason, meaning you can’t follow the route any further. What do you do? You can’t ask anyone as you don’t speak the local language. You could try to imagine where a detour would take you, but the risk is you become hopelessly lost if you get it wrong. You could retrace your steps and go back to the hotel for alternative instructions, but this means you’re going to be late.
Fortunately, hotel receptionists don’t put you in such a situation. They give you a map, circling where the hotel is and putting an X for where you need to go. Then they show you the options: You could walk along this route, (which they trace out on the map), you could take the metro (pointing out the nearest destination stations), or we can call you a taxi they’ll say. What they have given you is a visual representation of the Landscape you’re in (a map of the city), options for how to move through it to get to your destination and a way of tracking progress as you go (“I should see the park on my right now”). Then, if the route is blocked for any reason, you have a tool that’ll help you find alternative routes yourself. This is the immense power a simple map of an unknown Landscape gives you. And now it’s possible to create such a powerful map for your business Landscape too.
WHERE before WHY
Before we dive into the mapping method created by Simon Wardley let’s start with the ‘Hierarchy of Strategic Thinking’ that sits at the heart of this approach. This states that:
- Before you decide WHO must do WHAT by WHEN (tactical decisions)
- You must first agree HOW you’re going to do something (operational decisions)
- However, before you can decide HOW you will do something you need to agree WHY you’re making these moves here and not those moves there (strategic decisions)
‘Strategic decisions’ — such as, why are you entering market A instead of B, or why are you building product X instead of product Y — are some of the hardest questions to answer because they’re about the future, which is an uncertain country. Therefore, in order to answer the ‘WHY of strategy’ we first need to be able to identify WHERE our options for action are first.
Identifying multiple WHERES (ex, different markets, different products) creates options, which prevent us from getting stuck on the first idea that makes sense. With multiple options we can start to compare and contrast them, discussing which moves will achieve our purpose or mission[3] better. We can then communicate our strategic choices more convincingly as we can now explain why we chose these moves over those moves: ‘We’re entering market A/developing product X because we have these advantages’ or ‘this gives us those possibilities that markets B and C/products Y and Z do not’. By comparing viable options and showing our thinking for choosing A or X over something else our people can understand what we’re doing and why, which is the the first step in creating alignment.
Therefore, the ‘hierarchy of strategic thinking’ is:
- WHERE before WHY
- WHY before HOW
- HOW before WHO, WHAT & WHEN.
Yet many leaders make ‘tactical’ decisions (WHO, WHAT & WHEN) with no thought as to WHY they’re doing this beyond, ‘that’s what everyone else is doing’. These leaders jump straight from Purpose (ex, “we need to win!”) to critical Leadership decisions without ever considering the five critical factors identified 2,500 years ago in The Art of War. The result is a ’tyranny of tactics’ — roll outs, KPIs, OKRs — all designed to bridge the ‘execution gap’ (i.e. the perceived inability to execute plans)[4], which itself is created by a decision-making process that fails to answer the most important question in strategy: “WHY are we doing this?”
Fig.24: Leaders’ short-cut contributing to the ‘execution gap’
Two Types of WHY
‘Strategic thinking’ is about answering the all important WHY question — but there are two types of why and organisations usually only focus on the first type — the ‘WHY of Purpose’ (why are we doing this). This is usually answered in the organisation’s vision or mission statement (ex, “we aim to be the leading provider of X in Y markets for Z clients”). If the organisation is smart there will also be some reason given to support this aim, (ex, “… because we believe in A or we’re trying to make B come about”). For example, Tesla’s ‘WHY of Purpose’ is to: “Accelerate the world’s transition to sustainable transport”.[5] This vision is then cascaded throughout the organisation to align projects and teams around this higher objective:
- Grand Purpose — “Accelerate the world’s transition to sustainable transport”
- Project Purpose — “Build an [electric] sports car [that’s] competitive with gasoline alternatives”
- Team Purpose — Make “big leaps” in various technologies to achieve the ‘Grand Purpose’.
A good ‘WHY of Purpose’ therefore can inspire people by showing them a glimpse of an imagined future. However, this isn’t the end of your strategic thinking process as there’s a second type of why that also needs addressing — the ‘WHY of Movement’. This answers the question: “WHY are we making these moves here rather than those move there”. For example, to accomplish its ‘Grand Purpose’ Tesla will need to continually respond to emerging opportunities and threats (technological breakthroughs, unexpected competitor moves, regulatory changes, fluctuating costs of financing) and make choices about which moves to make: Why should we build this model and not that one? Why should we invest in researching this technology and not that one? Why should we build this in-house but outsource that to others?
Unfortunately, much business press today attributes success to unsatisfactory factors we can learn nothing from, like the “genius”[6] of Elon Musk or some magical ingredient, like culture. But, by studying the “WHY of Movement” — exploring why these moves were made over those moves — we can learn something more rather than continually trying to imitate what someone else did, at some other time, in different conditions with a different set of capabilities. This is because strategy is about making moves that exploit conditions in your Landscape to your advantage that helps you achieve your overall purpose. But this requires being able to see your Landscape first, understand how it’s changing and identifying WHERE your options for action are.
Fig.25: Combining the “Strategy Cycle” and Wardley’s “Two Types of Why”
In chess or weiqi players can see the board (their Landscape) where all the action takes place. Now they can compare moves and understand why, here, Queen to h4 is a better move than pawn to c6.
Fig.26: The Why of Movement in Chess
In war maps Generals use a map to see the physical Landscape where the battle will take place. Now they can now identify threats and opportunities and see where they can attack or must defend.
Fig.27: The Why of Movement at Borodino (1812)
Yet, in the business world, there have been no practical tools for clearly seeing the Landscape, rendering most leaders blind and forcing them to make critical decisions based on little more than numbers, narratives and gut instinct. Some leaders — seeking a way out of this dangerous impasse — fall for those peddling certainties, claiming that all they need to do is “go Agile”, “transform digitally” or “do what Elon would do”. No strategy should be built on such fragile foundations as there is a better way.
1 “No plan of operations reaches with any certainty beyond the first encounter with the enemy’s main force” — Helmuth von Moltke. Kriegsgechichtliche Einzelschriften (1880)
2 See Book One, Introduction.
3 Missions are the subject of Book Six.
4 See Book One, chapter 1.
5 Tesla — https://www.tesla.com/blog/mission-tesla
6 For a critique of this approach see Book One, chapter 10
