Stop Fighting The Shadow Strategy That Really Runs Your Company
The surprising power of starting where you are
“The current set of strategy choices — regardless of how they were made and whether or not they are written down — has possession. Because it reflects what the organization currently does, it is the most familiar, the most comfortable, the most habitual.”
Roger L. Martin, “Where to Start with Strategy”
“Finally,” the senior executive beamed. “We’re going to break down these silos so we can all win together.”
I saw a brief glimmer of hope that we might finally make some much-needed changes. But fifteen years of consulting had taught me that hope can seem brightest just before reality comes crashing in.
Sure enough, two months later, one after another, five of the top seven senior leaders made a series of decisions that doomed the entire transformation.
The unseen hand
So instead of charting a bold new path, we ended up making choices that strengthened existing silos and old ways of working.
Tech did what was best for them, and the business lashed back, setting us farther back than where we’d been before.
And this was the first time I understood:
There’s the bright, shiny new “perfect” strategy people get excited about.
And then there’s the real, hidden strategy that controls what everyone does.
Until we can understand it, nothing will ever improve.
A way to take control
Sadly, my story isn’t unique, and plays out daily across almost every organization and industry.
Every time a bold new strategic initiative is kicked off, some form of unseen organizational gravity warps every it back into predictable patterns.
But it doesn’t have to be this way.
Why should you care that a hidden strategy is controlling you?
Fully 84% of companies are fighting an uphill battle against strategic misalignment, which most only find out when they try to introduce something new.
It begins when management adopts the latest “perfect” management “flavor of the moment” approach.
Think back to the hapless scrap heap over the past 20 years that saw the celebratory arrival and just as speedy dismissal of:
Lean/Six Sigma
Quality
Digital
Agile
Scaled Agile (“SAFe”)
Balanced Scorecard
Objectives and Key Results
While individually and collectively, these can all be helpful approaches, any attempt to follow a new management strategy fad will fail.
Because their past choices will inevitably keep returning to sabotage them.
The toll of ignoring hidden strategy
Once we stop ignoring the signs and remain alert to these hidden counterproductive patterns, we’ll start to see them everywhere, and finally start to understand:
Why we must stop trying to force new strategies onto long-standing, engrained ones
Why most change initiatives just bounce off our organization's immune system
The futility of focusing on documented processes instead of paying attention to what’s really controlling our organization’s habits and behaviors
Taken together, it’s time to wake up and recognize that there are now, all around us, a multitude of choices that weave an organizational web of invisible barriers that imprison us like divers stuck in an undersea wreck.
The Rare Change Maker
It’s true that every once in a great while, some dynamic leader who understands the power of strategy emerges.
Through sheer skill and force of will, they manage to expose the hidden strategies and agendas, and prompt a major turnaround, as AG Lafley did at P&G or Alan Mulally achieved at Ford.
But rest assured, it’s the exception, and leaders frequently fail more often than they succeed.
The Myth of the “Official” Strategy
The real cost of ignoring our hidden strategy means we’re constantly facing endless resistance to any attempt to get better.
Working at cross-purposes, teams end up working hard on things that cancel each other out. Some push the new strategy, while others resist and protect the habit-driven status quo. Factions get pitted against one another, creating wasted effort and exhaustion as we constantly fight the pull of our organization’s inertia.
”Trying harder” only makes this worse.
If we never take the right steps to understand what choices are controlling our organization’s habits, we’ll continue to mistakenly believe we’re following the “official” strategy.
The Truth About Company Strategy
Accept it: Your real strategy is never what's written down in that fancy PowerPoint or what’s posted on your slick marketing website.
Instead, it's what’s expressed through the millions of tiny choices, the gravitational pull of organizational daily habits that control everyone’s behavior, from executives in the C-Suite, through middle management and on down to your employees on the front lines, interacting with customers every day.
Just as NASA needed special math and a major mindset shift to learn about Earth’s gravitational pull and how to harness it to launch rockets into space, organizations need to adopt a new approach and a set of tools to harness their own strategic inertia.
If we’re to understand what we’re doing, we’ll need a new lens to understand our company strategy’s true structure.
What You'll Learn
In this piece, we’ll address three key areas to become aware of if we want to start recognizing and dealing with these forces, and use them as a platform for powerful strategic change:
A fundamental insight about organizational behavior and the ever-present gap between “official” and “actual” strategies
Why understanding this hidden system first may be the most valuable change management technique you’re not using.
How reverse-engineering your true strategy opens the door to progress, allowing you to craft a different set of choices that work with, not against, your organizational DNA
1. When the Real Strategy Strikes Back
While hidden strategies seem invisible, rest assured, they’re just as solid and real as though a brick wall was running through the center of our office.
And many people who refuse to accept them just keep running into them face-first because you’ll never find them documented anywhere.
They can only be understood by working backward from the underlying choices that shape company habits.
The naive reformer
From time to time, some (usually new) optimistic executive grabs the reins and attempts to introduce sweeping change by introducing a different approach.
Take Amy, a product leader at a Fortune 500 company. After a few key successes, she suggested moving the entire organization over to the “Product Operating Model.”
Every time Amy and her team tried to bring in some change or innovation, the hidden choices controlling the battle between “IT” and “The Business” would activate the organization’s immune defense, attacking every great idea she brought to the table.
Eventually, Amy left to thrive in another organization where they were ready to embrace her client-centric and product-driven operating model.
Despite the vast improvement the new model represented, Amy simply didn’t see how entrenched the legacy hidden strategy was, and why she never stood a chance to pivot her company to a better way of working.
2. Digging to Uncover What Really Drives Your Company
But there is one way out.
Forget starting another doomed initiative as overly optimistic “architects,” trying to build “perfect” new strategy structures on shifting foundations we don’t understand and that will never support the changes we seek.
If we want to be successful, we’ll need instead to become “archaeologists,” starting from a point of laying bare what is. Only by digging up the old can we step back and compare it to the new on a level playing field, allowing people to consciously decide whether our hidden strategy serves some real purpose and whether it makes sense to keep following it.
From this comparison, we’ll be free to make a different set of choices that align with how our organization really operates.
But first, we’ll have to find and expose the shadow strategy controlling your company.
Don’t start with your own company
One of the most effective tools for understanding existing strategic choices is to map them across the five boxes of the Strategy Choice Cascade, which you can download in Notion format here.
Like other skills, reverse engineering can take some time to learn and practice. But before tackling the thorny potential of our own strategy, it’s best to get comfortable by reverse-engineering an already well-known company’s strategic choices.
Pull together a cross-functional group, including people from business, tech, UX, and product, and pick an example of a successful company you’re all familiar with.
Revealing strategic success
Using the five boxes of the Strategy Choice Cascade, begin mapping out your best guess for that company’s choices across:
Winning Aspiration – What does “winning” mean for them?
Where to Play – Who do they seek to reach, across which demographics or geographical regions, and through which channels?
How to Win – What unique value do they provide?
Capabilities – What strengths do they use to deliver against their “Where to Play” and “How to Win” choices?
Management Systems – What operational and measurement systems are they using to stay on track and continuously improve their capabilities?
(You can see OŪRA Ring’s strategy reverse engineered here.)
This shouldn’t take your group more than a couple of hours. After you’re done, discuss what you’ve discovered.
The key here is to collaboratively work together to understand the structure of effective strategic choices.
You may want to reverse-engineer one or two other companies, but once you have a feel for the Strategy Choice Cascade’s five boxes, it’s time to tackle your own organization.
Reverse-engineer your hidden strategy
Now that you have a feel for the process, it’s time to regroup with your same cross-functional strategy team, open a fresh strategy template, and start decoding your own company’s strategy.
Our goal here isn’t to refer to anything written down about our strategy, but to act as the aforementioned “archaeologists” or “private investigators,” observing, listening, and capturing the hidden strategy choices we see at work.
Going deeper
The Strategy Choice Cascade template is a great way to capture these strategic choices.
As a clearer picture finally starts to emerge, don’t be surprised if it differs radically from what’s typically celebrated as your company’s “official” strategy.
Your strategy group can now see something no one else in your organization has ever seen: the choices that are controlling your company’s day-to-day behavior and habits.
3. Aligning Your Team Using the Revealed Strategy
Now that you understand the strategic choices at work, the goal will be to begin working with, rather than against, your organization’s real DNA.
You’ve already taken the all-important first step in bringing everyone onto the same page by mapping out your current strategic choices.
We can keep momentum going by continuing on through the seven steps of the Strategy Choice Structuring Process:
Reverse-Engineer our current strategy & pick a problem to solve
Frame a “How Might We?” question
Generate strategic choice set possibilities
Ask: “What Would Have to be True?
Identify the greatest potential barriers to success
Testing & Transformation
Make a choice
Enhancing our strategy team
The group we gathered as part of the initial reverse engineering efforts will form the core of our “strategy team.”
Adding the right people to take on this journey will be crucial. We may want to include more a couple of other leaders or stakeholders, or other “Subject Matter Experts” (“SMEs”) along for the ride.
But we’ll want to keep it small (4-8 people) and cross-functional enough to move fast while bringing in different perspectives at different levels of seniority or areas of expertise.
Structuring our Strategic Choices
Our current choices mapped, the next step is to frame a problem– What is our company's greatest challenge?
From here, we’ll want to generate other strategic choice possibility sets, focusing on different approaches to “Where to Play” and “How to Win” choices.
The important point is never to “lock in” on any aspect first – either your “Where to Play,” before trying to find your “How to Win.” That will only shut down the creative process of coming up with matched sets of strategic choices.
Each piece of the Strategy Choice Cascade has to fit with all the others, so we’ll cascade each set of choices at each point as shown in the yellow boxes below.
Imagine the future
For each set, we’ll ask one foundational question:
“What would have to be true for this set of choices to be a good idea?”
For example, what would have to be true about our customers? Our company? Our competition? We can then spot potential barriers to each set of choices based on the conditions we identify.
From there, we can design lightweight, fast tests to understand whether those potential barriers might potentially be insurmountable.
You’ll Never Choose the Hidden Strategy Again
The final step is to choose which set to move forward with.
Once you have created 2-4 other strategic choice possibility sets, you can objectively compare them for the very first time on an even playing field with your current “strategy in use.”
Having run through this process multiple times, I’m always surprised how rarely people choose to go with their current strategic choices once they’ve finally surfaced them and compared them to other possible options.
Bringing our newly chosen strategy to life
The cross-functional strategy group that has so far reverse-engineered and designed new strategic choice sets will be crucial in bringing it to life.
Everyone in this group can collaborate to condense and crystalize our new chosen strategy’s story, focusing on consistency, simplicity, clarity, and brevity.
They can also help to identify key stakeholders across the organization who’ll be instrumental to the new strategy’s success and plan specific communication points with them.
We’ll then need to focus on the “Must-Have Capabilities” we’ll need to make our strategy real. What state are they in? Will we have to retrain? Hire new people? Outsource?
And finally, we’ll identify the “Enabling Measurement Systems” that will set our goals, allow us to stay on track, let us know how we’re doing, and continuously provide feedback so we can improve our capabilities.
Watching the Signs
As we bring our new, consciously-chosen strategy to life, there’s always the risk that we’ll once again veer off course.
One powerful technique we’ve already used that can help us assess how we’re tracking against our new strategy is to keep a close eye on our “What Would Have To Be True?” conditions:
Are our customers still responding as we hoped they would?
Is our company still able to reliably deliver against our strategy?
Has our competitors made any bold new moves in response to our choices?
As soon as any of these conditions no longer hold true, we’ll want to start the whole cycle again, beginning with reverse-engineering what we’re really currently doing.
Does it still resemble what we set out to do?
What’s our next biggest problem to solve?
By maintaining this cadence over time, we’ll be able to converge our hidden strategy with our real strategy and stay ahead of the constant changes in the market.
Takeaways & Next Steps
Remember, it’s our hidden strategy that’s really running our organization.
If we’re to make real change happen and chart a new course, we need to start with what is, not what we want. Otherwise, the shadow “strategy in use” will inevitably continue controlling our daily habits regardless of whatever shiny new strategy we want to adopt.
Uncovering our hidden strategy for the first time allows us compare it to other strategic possibilities, so we can make the best choice possible.
By remaining vigilant about the threat of our “shadow” strategy, we can avoid being complacent about our direction and maintain control over our organization’s destiny.
Strategy execution is the things you do, not what you say. The communication you give is the response you get.