A horizon for strategy.

How far can strategy see

No sensible sailor would stand on the bridge for a few minutes, see the ocean is clear for the next few hundred miles, then head back to the engine room for a day or two, trusting that nothing would change. They’re at the helm all the time, looking around and making corrections as the conditions change, objects appear, and new circumstances emerge. So why do we do it with our businesses?

In recent weeks I’ve met with a number of organisations who are approaching the end of their five-year strategy and are starting the process of developing their next one. While they were all keen to talk about the process they wanted to follow, I was keen to hear about the process they’d been through over the previous three or four years, because they were all remarkably similar.

Most had changed or evolved their original goals because of what they’d learned, but none had gone back and actually changed the strategy, they’d just amended their expectations within the annual budget cycle. Most had completed the main initiatives within their strategies some time ago, and had extended them or added new ones that had emerged to meet new needs or opportunities in the intervening time, but again, none had gone back and amended their strategy. And why would they? It feels like a pointless administrative exercise to go back and change a document that’s already served its purpose.

But the issue is this: when I asked each of them, “To what extent were the big strategic decisions you took last year, big investments, reorganisations and the like, shaped by your current strategy?” The answers ranged from “Not at all”, to “Very little”. After two or three years, the world had changed, their understanding and assumptions had evolved, their initiatives for exploring new opportunities had completed and drawn their conclusions, and their strategy documents, which were once practical and actionable, were now disconnected and “directional” at best.

By the time of our conversations, none of the organisations I was speaking with still had a relevant, useful, living strategy. For several years, the leadership had been making it up as they went along, driven more by the annual budget cycle than the ambitions of yesteryear, and compensating for the fact that the horizon they had seen several years before, upon which their strategy was based, had changed a great deal since they went back to the engine room.

I’m not saying that your strategy shouldn’t look five years ahead, or ten or twenty if your industry runs on long investment cycles. I’m saying that you can’t wait for the end of the cycle to develop the next one, in fact, leaving it more than a year or two means that your strategy, and your strategic decisions, will increasingly drift apart.

Strategy is a theory. A hypothesis that, if we do these things, we will get these outcomes. And like any hypothesis, it will be reshaped by reality. To remain valid, useful and relevant, it will need to evolve, adapt, and perhaps fundamentally change, many times over, between the point it was designed and the future it envisioned.

If there’s value in looking at a five-year horizon, then look at that horizon every year, because if one thing is certain, every time you look, you’ll see new hazards in the seas ahead, and new lands of opportunity beyond them.