Note: For those of you who read ‘The end of purpose?’ article, this is a tweaked version of the back half, without all the purpose stuff, so you can save yourself 1O minutes :)
This is the first of a ‘Strategy Masters Series’ that will explore different types of Strategy, it covers how to think about a core organisational strategy whether you are a start up or a global diversified corporation.
Others to follow will look at Innovation, Leadership, Commercial Creativity (Marketing, Brand, Comms), Personal (life including professional domains and careers), Organisational Culture and others.
If you want to read the previous Strategy Masters Series ‘Foundations’, which covered core themes like ‘Strategy as a Theory’, ‘Creativity and Psychological Empowerment’ and ‘Persuasive Storytelling’ you can find those articles here at Funny, it worked last time.
Finding a better theory
Of all the frameworks I have used from my Oxford academic world, there is one I keep coming back to: an idea explained in Todd Zenger’s 2013 HBR article: ‘What is the theory of your firm?’. (really worth a read by the way). It intuitively felt right when I first read it and it has continued to help answer a lot of questions theoretically, but also practically.
He argues that ‘Corporate strategy’ should be considered as a theory. That theory, if it’s a good one, is consistent overtime, it explains why the organisation is structured like it is, why is it difficult to imitate/copy and how the parts work together. It explains why, when an organisation changes its theory in the wrong way, things can go very wrong. His principle example is that of Disney, and how during the 15 years post Walt Disney’s death, the management seriously considered selling off parts of the business, and then decided instead to hire Bob Iger as CEO and that he returned to the Walt Disney’s original theory. He shows that you can track Disney’s subsequent return to success down to that decision. It’s a compelling argument, and I have found the idea of seeing strategy as a theory a potent frame to think about business (and life, but more on that another time).
But what do I mean by a theory in this context and why is it helpful?
A good theory has certain criteria:
Explanatory: It has to be able to explain a whole range of possible situations, and is supported by evidence.
Falsifiable: You can design experiments that could prove it wrong. This is important because it ensures that the theory is not simply a tautology (a statement that is always true) or a metaphysical claim (a statement that cannot be tested).
Comprehensive: It should be able to explain a wide range of phenomena. It should not be like a ‘special-purpose theory’, which is a theory that is only able to explain a specific phenomenon, not the whole. (I suspect this is the realm of purpose washing and tokenism).
Unifying: Ideally, if it’s really good, it can connects different areas of knowledge and provides a unified understanding of the world.
Parsimonious: It is simple and elegant, without unnecessary complexity.
But it also needs to have two other things if it’s going to be practical in an organisation:
Theories, by their very nature are able to evolve. They are iterative, when a situation arises that proves they need to change, they change.
Predictive, full of Foresight, Conviction and Emotion: it must have a belief about the way things should be, about how the world is going to evolve (in every sense: technology, nature, culture), about how the needs of the individual and the collective are going to change and what role the we could play (in that change).
If looked through the the lens of a theory, the opportunities (deeper meaning, the glue that binds, guides and reinforces, a clear role in critical ESG agendas) and challenges (tokenism, inconsistency across different parts of organisation, lack of clear connection to the actual business and category it is in) are easier to respectively embellish and remove.
The idea of a theory therefore provides a frame to both diagnose the problem with purpose and find a better alternative. What we now need is to define what a great organisational theory needs to do:
The three G’s of a powerful strategic theory
The simplest way I have found of defining what a good strategic theory able to help in business must have is the three G’s: Generalisable, Generative, Growth.
Generalisable: A theory that is able to explain the whole, but also the individual parts, so that wherever it is found, it is able to both inspire and guide - people know what to do and what not to do. In organisations, that’s everything from decisions about organisational structure, vertical or horizontal integration, revenue targets, the ESG approach (if that’s not at the centre already), its new product and service development, its comms, all the way down to how it keeps and recruits its people.
Another way to think about a good strategic theory that is generalisable, is that it has both depth and breadth.
Generative: It naturally reinforces itself, creating new ideas, both within its current state but can also bridge into new ones. In organisations that means ideas designed to exploit what it is currently good at (so smaller, incremental ideas), that help sustain and optimise the status quo; as well as ideas able to explore what the business could look like in the future, as the world inevitably changes, building on current capabilities and resources but not always being bound by their current use.
Again, building on the idea of a strategic theory needing breadth and depth, this means it also needs to have natural energy and reach.
Growth: The theory must be able to do all of the above, but also be willing and able to change itself when the world shift in a way that requires it, or, if it feels the need to shift the world to its will. This is about knowing you are right, but also knowing you might not be. In people this is most obvious in great leadership, where the traits of authority and humility complement and check each other, but it is also critical at an organisational level as well, the ability to be on the watch, to be able to recognise when things aren’t working and be able to accept, embrace and act.
This has a functional dimension: it means a good strategic theory needs to be both consistent but can and will change its shape when needed. It also has an emotional one too: humans, organisation and therefore the theory that shape them, have a need to move forward, to progress. Because in words often attributed to American Author John C. Maxwell, ‘You are either growing or you are dying’.
The TAPI model
Finding a framework able to be generalisable, generative and that can evolve and grow, is not an easy thing to do, but I found intuitive system that seems to work in the situations I have tested it in, it has four parts: Theory, Action, Principles and Identity.
A theory born of two convictions
It begins with defining what a theory in this context must have: conviction.
Why conviction? When you have a conviction, it’s something you feel deep in your bones is right, it has an energy, it has a force. Because of this, it naturally shapes action, it is has a glue, it has a magnetism that pulls things in.
This is probably the place where my thinking has most evolved. For a long while I had this naive notion that you could capture everything that a theory needed to be in one pithy sentence. But I realised that it needed to have two parts, one more emotional and one more practical, and therefore you needed two convictions:
Core Conviction: It lights the fire
A belief about your place in the world and the lives of those you want to help. What you want to be to them and why that’s important. About what business you are really in.
There is no moral dimension to this, there can be, there often is, but it just has to be important to the person, or people concerned.
Here lies the Theories emotional depth: It must light a fire.
And lighting a fire is not easy, it needs to be able to do three things:
It insight-generates: Does is re-frame something for you, does it cause a re-appraisal of something you thought you knew? (the ‘Ah yes, that’s the way of it’, or ‘I hadn’t thought about it like that’.)
It emotion-induces: It moves you in some way, this can be from intrigue through to ‘Hell yeah, sign me up!’.
It story-launches: You naturally start to go places with it, imagine what that could mean for you, or us.
Functional conviction: It lights the way
If the Core Conviction lights the fire, we also need a corresponding conviction that lights the way, defining how it is delivered, in the day to day: In the key capabilities, expertise and activities, and how those compliment and reinforce each other to create a rare value that is difficult to imitate.
Here lies the theories functional depth, breadth and reach.
These two convictions shape everything else, they are your Theory.
What does this look like? I have picked one of my favorite organisations founded by some brilliant people: The Iron Clad Pan Company (really worth a look if you haven’t heard of them - ironcladpan.com).
Iron Clad’s Core Conviction: If you want to make cookware that will be used 100 years from now, you also need a planet to use it in.
Iron Clad’s Functional Conviction: We can sustain value-creating growth by building to and from our Three Generation Guarantee® - the world's longest legally-binding product replacement warranty. It is what unites our values of Family, Food and Planet. We create a reinforcing system focused on forging a sustainable culinary bond between generations, building awareness and engagement with communities through long term partnerships with chefs, recipe book authors and production companies.
Ask you’ll see, their functional conviction defines the shape of what Porter would call an ‘Activity System’, where each part compounds and reinforces the others, which makes each part stronger and the whole harder to replicate by someone else.
Action
Now the tyre must hit the road… if the two convictions are your organising theory that is uniquely you, this is what that actually looks like in practise, in the everyday. For organisations this is about capabilities, resources, products and services and partnerships.
The overall shape of the activity system helps define the actions focus and the balance of priorities. It asks, how critical is this part to the others? What weight should they have in the system? What are complimentary or potentially destructive activities to the healthy operation of that system? And lastly, the ability to ask, is this still the best system to use? Are those parts the right parts?
This get’s us into that systems ability to grow, for that we must consider the theory and the action as always being in beta, it has to be able to able to do three things, Felin and Zenger’s Sense-Shape-Seize:
Sense: changes that could be important. For organisations this is tracking evolution of technology (in and outside the organisation), of culture and the evolving needs of its customers and the planet.
For both these can be quite functional in the day to day, the products and services, the roles we play in different places, in new capabilities and resources to be acquired. It can also be in the bigger plays, where the core Theory itself is questioned.
Shape: the ability to take the insights sensed and create an appropriate response.
Seize: and do so in a timely fashion, before an opportunity is missed (by time passing, or by someone or something else) or challenge un solved.
These three S’s, they help do what we as individuals, as groups, as organisations often struggle to, challenge ourselves before someone or something does it for us. It forces us to ask difficult questions of ourselves:
What makes us special? Why does the world really need another one of these? How different are we really from what else is out there? Has the world changed and we just haven’t noticed? Do we know the situation has evolved but we just have our head in the sand? (the ‘ignore it and it will go away’ thing).
Principles
We then need to look at the principles that define how these actions are done: How do you do what you do? What will you not do - your red lines, your guard rails? How do you treat others, how do you treat yourself? Especially in terms of environmental, ethical and social concerns. If your actions can’t be done without going against your principles, then either the actions, or the principles need to change: it’s an integrity filter.
For an organisation this is about how you make things, how you treat the people involved in every aspect of the process and its management. It’s about how you want to think about the environment and your role in it. It results in people in the organisation knowing what to do when it matters most. Its values made tangible.
This internal integrity filter, it also plays another role: it challenges your organisational integrity before someone else does it for you, and trust me they will.
This is about collectively feeling whole (integrity’s root is ‘integer’ which means wholeness, or completeness), because when our actions are not inline with our principles, we feel it, as do others. It’s hard to be happy in the long run if there is an imbalance. It’s hard for people collectively and therefore the organisations they work for to feel happy when these are out of whack too.
This also requires asking some difficult, often awkward questions, especially so if you, or the organisation has been around for a while:
How can we do this and not make things worse? Could we be doing something else and make things better? If we can’t, should we be doing it at all?
It requires checking ourselves, it requires asking the obvious questions about the basic assumptions we have about our situations, what we do, in our categories, in our disciplines.
Identity & Idea
Who are you? What are you like? I have always found the word ‘authentic’ a bit tricky, but here it is useful: If integrity is that sense of consistency, authenticity is that sense that you are consistently true to what you are.
This is about your personality, about how you turn up, what you are like at your best, that thing we aspire to be more of, and its opposite, what you are like at your worst, that thing we wish to move away from.
There is another element of this identity: an organising idea. A manifestation of the theory and its convictions, it often emerges as an ad line or what is known as a brand idea, but it can be much more than that. It can be a symbol of the change the organisations wishes to create, it can be something tangible people inside and out can rally around. It can be the foundations of the stories the organisation tells itself and the world.
This idea also helps shape the equity assets that help make it feel different and distinct, help people identify it, from the logo to the language it uses, visual and verbal.
A close
So we have the TAPI framework, built from Theory and its convictions, we have Action and it’s ability to Sense, Shape and Seize allowing it to evolve, we have Principles that allow it to feel a sense of integrity and we have Identity and an Idea, which define who it is and what it wants to become.
Those convictions can have an environmental, ethical or social purpose, but they may not, but those must be considered in the principles of action.
These four elements, are like an activity system themselves, they are intrinsically linked, they flow from one to the other, they are symbiotic, they reinforce.
It should tell a story, one that is both compelling and logical, one that can and should evolve.
This story flow, this connected system, it also resolves what for organisations is called the ‘Strategy-Action’ gap. When you think of it in this simple, intuitive way, there can’t really be a gap because one can’t really live without the other, they are the other.
I have found it is hard to find places where these four things are not critical in the very personal, and in the very collective, as an organisation, as a movement. When they are missing, even one, the wheels fall off, or they at least start to wobble until amends are made.
If you want to see an example of a company that exemplifies this kind of model let’s return to Iron Clad Pans. They are not perfect, they don’t pretend to be, but they have a very clear conviction at their centre: If you want to make cookware that will be used 100 years from now, you also need a planet to use it in.
They have a clear sense of what they do (i.e. pans with a Three Generation guarantee, a remarkable legal achievement on its own), how they will do it (i.e. recyclable materials), and what their red lines are (i.e. polluting ‘forever chemicals’ (they are the antithesis of Teflon) and shipping at any cost, because there is almost always a bigger cost. Yes, they do some really nice marketing (‘The great pan exchange’: payment in Teflon pans), yes they have a lovely brand (their founders know this space very well), but the whole company is built to and from that core conviction.
That’s what this is about.