All senior level executives and managers are asked to develop and present a strategy, whether global strategy, regional strategy, or simply strategy for a team or department they oversee. Many managers create long slide presentations with lots of data to justify why their strategy is right. However, the most persuasive managers talk about all the reasons their strategy might be wrong.
Every strategy looks perfect in PowerPoint. You can justify any course of action with a reasonable argument, and you can always find data to back up a desired conclusion.All strategy depends on key assumptions, whether explicitly stated or implied. Click To Tweet
No one can possibly know everything or predict the future with complete accuracy, so there is always the chance of an assumption being wrong. Successful managers identify risks to their strategy and manage those risks as part of their strategic plan.
For example, a strategy might depend on an assumption that there are only three major competitor brands in the market. But what if a non-competitor company suddenly expands into the market and becomes a competitor? The strategy may no longer be valid in that case, and may need to be altered mid-course. For example, when convenience stores in Japan like Seven-Eleven started offering freshly brewed coffee, what did that mean for coffee shops like Starbucks, Dutour and the like?
You identify risks to strategy by asking “What if…?” type questions about your assumptions. So for example, if you were developing strategy for a Japanese insurance business, a key assumption might be that the competitors are well-known and the business is relatively predictable. However, what if Google Japan started offering insurance products, which given Google’s massive data capability and mountain of cash, is not unimaginable? What would such a move by Google mean for the strategies of companies like Meiji Yasuda Life, Nippon Life, and other Japanese insurance businesses?
Once you have identified a risk, what can you do to manage it? You have four options: (1) You can take preventative action to reduce the risk from being realized, (2) you can plan contingent action should the risk be realized, (3) you can plan a combination of both preventative and contingent actions, and (4) you can do nothing and simply live with the risk and its consequences.
While it may seem counterintuitive, talking soberly about what might go wrong and what you plan to do about it inspires confidence and trust. A capable manager can always appreciate your mastery of processes to help ensure strategy stays on track when things go awry during execution—and as we all know, things do go awry.
So how should you talk about what might go wrong when presenting strategy?
- State your strategy and the rationale behind it succinctly. No strategy, no matter what scale or complexity, should not require more than a few sentences to explain. A manager who cannot succinctly explain his or her strategy will be viewed as not having a grasp on his or her business.
- State the major assumptions upon which your strategy is based. What is it about your business environment that must hold true for your strategy to succeed? Three to five major assumptions should suffice.
- Describe how you will validate each assumption. What will you monitor? How will you measure it? By when will you know whether or not your assumption is correct, or is it an assumption that requires continuous monitoring?
- Restate each assumption as a risk. Remember, ask “What if…?” type questions.
- Describe how you plan to manage each risk. What preventative and contingent actions are in your plan? Or do you feel it is reasonable to live with a risk and the consequences should the risk be realized? Explain why.
The most persuasive managers do not simply justify why they are right. They describe a convincing plan for in case they are wrong. Your strategy can be persuasive by doing the same, and you can demonstrate that as a strategic manager, you are a cut above the rest.
A version of this article was published in Japanese in the Smart Time column of Nikkei Sangyo Shimbun on August 10, 2017.