This is the last in a series of five posts devoted to a DIY guide on running a strategy sprint.
You now have developed the heart of strategy…your where-to-play (W2P) and how-to-win (H2W)choices. Now it’s time to make the choices regarding the capabilities and systems that give rise to and support your strategy, and then reverse engineer your entire cascade of choices to tease out the leaps of faith you’ve made.
Day 2 Objectives
The four main objectives of the day are:
- Capabilities choices
- Management systems choices
- Reverse engineer your strategic logic
- Construct an initial experiment
Here are resources that will help you:
Here’s my agenda template, easily tailored to your requirements:
1. Brief review of the day’s objectives (5 minutes)
2. Revisit yesterday’s work, confirming strategic choices (5 minutes)
3. HEAT MAPPING, round one (20 minutes)
One of the things I like to do is a quick “temperature read” of which way participants are leaning. By now, of course, there is strong intellectual investment in each core strategic direction. But to avoid possible counterproductive siloing or segmentation, I arm each participant with three dot stickers, and ask them to place those dots on any strategy they find compelling that ISN’T theirs. (This assumes that the work is visual…on flip charts, whiteboards, or the Playing-to-Win Canvas.) I further ask them to place the dots on the specific part or parts of that strategy that are most intriguing. They can allocate their dots in any manner they wish…all in one place, spread out, it doesn’t matter.
This exercise accomplishes a few things simultaneously. First, it requires participants to spend a little more time with the other strategies being considered. Second, it produces a little bit distance between participants and their own thinking, which breathes a bit of objectivity into the effort. Finally, it enables everyone to see at a glance where the collective wisdom is beginning to settle.
And sometimes, it motivates participants to escalate their thinking, because I let them know a second dot round will occur once full strategies have been developed.
4. DISCUSSION/INSIGHTS (15 minutes)
Allow participants to unpack what they just experienced. What are they wondering about? Did the exercise produce any surprising insights? Did it spark any new thinking? Do they have any questions of the other teams?
5. CAPABILITIES NEEDED (45 minutes)
You likely won’t need all of this time to list needed capabilities. But you will need some time to revisit and possibly tweak your W2P and H2W choices in light of needed capabilities.
Keep in mind that you’re not trying to just list your current strengths, you’re trying to list the key capabilities–activities you must engage in and perform well–required to produce the competitive advantage(s) you’ve laid out in your H2W choices that will enable you to win where you’ve chosen to play.
The reasons you don’t want to limit yourself what you’re currently good at is two-fold: first, your strengths may not represent or give rise to a competitive advantage. Second, they may be irrelevant to customers and channels
Finally, don’t confuse a competency with a capability. There’s a competitive aspect to a capability. For example, Southwest Airlines would not list flying airplanes competently as a capability, because they do not need to fly a plane better than their competition.
6. Break (15 minutes)
7. QUICK PITCHES (15 minutes)
As in the previous day’s agenda, short team reports keep everyone informed.
8. MANAGEMENT SYSTEMS (30 minutes)
These are the processes, structures, and rules that build your capabilities, reinforce and measure your organization’s strategic choices. If you don’t establish management systems that support your strategic choices to this point, your strategy can still fail. Reason: you still need the systems that build your capabilities and that reinforce and measure your strategic choices in order to see a strategy through.
These systems include things like: CRM systems, innovation methods, performance management processes, customer referral systems, etc. Management systems are the checks and balances on your other four choices, because they tell you whether or not your strategy is working.
9. HEATMAPPING, Round 2 (15 minutes)
Conduct round two of the heat mapping exercise, giving each person three dot stickers with a different color than those used in round one, so shifts in interest become more easily observed.
10. DISCUSSION/INSIGHTS (15 minutes)
As before. Round of applause…the strategy cascade is complete!
11. Lunch break (60 minutes)
12. REVERSE ENGINEERING, part one (30 minutes)
It’s now time to tease out the assumptions in your strategic choices by asking strategy’s magic question: What Must Be True (WMBT)?
The first step of reverse engineering is to identify, for each possibility, the conditions that would have to be true for it to be a great strategy. You’ll do that in six basic areas: segments, channels, customers, capabilities, costs and competition, as shown below.
You’ll have a few for each. You’re trying to list the conditions that would make the strategy a good one, NOT necessarily all the many assumptions.
13. REVERSE ENGINEERING, part two (15 minutes)
Once a few key WMBTs have been generated, it’s time to remove some. It’s likely that some conditions that have been listed are “nice to have,” but not essential. SO, participants should review all the conditions with this question in mind: If this condition weren’t true, and everything else were true, would we still move ahead with this strategy?
If the answer is yes, remove the condition.
When you’ve culled all the nice-to-haves, have participant attempt to get consensus on this question: “If all these conditions were true, would you support this strategic possibility?”
If the answer is yes, you’re ready to move on to the next step. If anyone answers no, ask the person what additional conditions need to be included for him or her to say yes.
14. REVERSE ENGINEERING, part three (15 minutes)
When you have the final list for each strategy, ask, “Of all the things that would have to be true for us to be confident in this strategic possibility, which conditions do we most worry aren’t true?”
Each team will end up with a list of two to four barriers that they can test, in order of concern. Ask all team members to state which conditions they are most worried about, and have them create a list. If for some reason it’s hard to reach agreement, give everyone three votes. Counting up the votes, order the barriers from most to least worrisome.
If you’re using the Play-to-Win canvas, stack all the WMBT Post-its, putting the most worrisome WMBT on top of the stack, one stack for each of the six designated spaces. Then have teams reach consensus on which of the six WMBTs is the riskiest…the “leap of faith” assumption that could be a strategy-breaker.
It is the “leap of faith” WMBT that will be used to construct an initial experiment.
15. QUICK PITCHES (15 minutes)
16. Break (15 minutes)
17. FINAL HEATMAPPING (20 minutes)
This is third and final round of heat mapping. Use a third color.
18. TEST DESIGN (30 minutes)
The whole reason for reverse engineering is to increase the likelihood of success, by teasing out the assumptions made regarding the future, then constructing experiments to test the thinking. Your strategy at this point is little more than a set of guesses. Educated, of course, but guesses nonetheless.
They MUST be tested. It’s not much different from a startup with an idea…which is just another form of a guess to test. And like in a startup situation, you’re not trying to validate your strategy as a good one, but rather to validate that it isn’t a bad one. It’s a nuance, but a critical one.
The heat map will indicate which strategy the larger team finds more attractive. And that is precisely where the testing should start. Those tests, of course, should be aimed at the most worrisome, “leap of faith” conditions.
Roger Martin advises three levels of tests…not all are necessary, it’s just a categorization, and the goal is to pick the simplest, quickest, cheapest test that is also the most appropriate. In other words, you don’t necessarily have to start with a guerilla style test, even though it’s listed first here:
1. Guerrilla-style tests. These are the simplest, lowest cost, and fastest. They indicate if investment in more-expensive tests is needed. In some cases, they may produce enough confidence for you to move ahead without further testing.
2. Small-scale tests. These often require new data, low to moderate investment, and more time. They can provide reasonable levels of confidence in a strategic possibility, but may also indicate the need for more-definitive tests.
3. Definitive tests. These often include pilot and large-scale in-market tests and require the highest level of investment—and produce the highest level of confidence.
A test has a few basic elements:
- What Must Be True statement. What is your “leap of faith?”
- Primary concern. Why is this worrisome?
- Test objective. What is it you want to learn?
- Experiment description. What is it that will be done?
- Hypothesis. If X, then Y.
- Standard of proof. What is the success threshold? What is the pass-fail metric?
I like to ensure that those most skeptical be integrally involved in test design. If skeptics aren’t confident in a strategic choice, it’ll be tough to move forward. Skeptics tend to naturally design something that builds their confidence.
19. FINAL PITCHES (15 minutes)
As before, focused now on initial tests.
20. DAY 2 CLOSE (as needed)
That’s the strategy sprint! And like after any sprint, you’re winded. So take a breath. No decisions need be made at this point, other than who will take responsibility for generating a short strategic brief capturing each strategy on a page or two, complete with reverse engineering and initial thoughts regarding testing.
Timing on tests can be determined when you’re back at headquarters. At some point in the future, the final strategic choice can be made, once the test results have produced a level of comfort everyone can agree on.
When the time is right…pull the trigger and rock ‘n roll!