Virtual Roundtable – Summary of Discussion on Common Strategy Traps and How to Avoid Them

The aim of the Beyond Default Roundtable discussions is to give experienced practitioners in strategy and change an opportunity to share their experiences, challenge conventional wisdom, brainstorm ideas and network with peers who have the same interests and challenges.

In November 2021 a group of executives, consultants and academics met virtually to discuss the common traps many fall into when developing and executing strategy and how to avoid them. The discussion was led by David Trafford, co-author of Beyond Default and moderated by Chris Hallam, founder of CH Coaching Solutions.

As the Roundtable followed Chatham House Rules, the summary below only attributes information that is in the public domain.

Moderator: Welcome everyone and it’s good to see some new faces. Let’s start by asking David what he means by a strategy trap? My mind went to all sorts of places when I thought about it, including Machiavellian plots and business espionage. So, David what do you mean by a strategy trap?
Discussion:
Let me start by reminding everyone how the dictionary defines the word trap. As a noun, it’s a device or enclosure designed to catch and retain animals; a situation in which people lie in wait to make a surprise attack; a container device used to collect something; a light two-wheeled carriage pulled by a horse or pony; an informal description of a person’s mouth, as in “shut your trap”; drums or percussion instruments used by jazz musicians; a type of hip-hop music typically characterised by dark tones and rhythms; and a place where drugs are sold. When a verb, it’s to trick or deceive someone into doing something contrary to their interests or intentions.

In the context of this discussion, we’re not suggesting that strategy traps are intentionally set to catch people out. They’re a set of circumstances that can catch you out. Something happens that you didn’t expect and you find yourself asking “how did I get here?”.

Moderator: I’ve fallen down all manner of rabbit holes when it comes to strategy. Could you give us an example to get us started?
Discussion:
Probably the most common trap is assuming colleagues have a shared understanding of what is meant by the term strategy. Unfortunately, strategy is a term that’s overused and often misused. But it’s not only the term strategy that’s misunderstood, it’s also the language that’s used when developing and executing strategy. For example, the distinction between purpose, targets, outcomes and objectives is often confused. All too often people think they agree, when actually they don’t. It’s a serious trap because it can result in misalignment, confusion and conflict.

Moderator: Is avoiding this trap something as simple as getting everyone on the same page with a definition of words, a bit like you did at the beginning of this discussion? Is it a simple step that organisations often miss?
Discussion:
Yes. I find the best way of avoiding this trap is to spend time talking about the terms being used. Not necessarily drafting a glossary – though I have done that on occasions – but asking colleagues “what do you mean by this term?”. My experience is that shared understanding only comes through meaningful conversations, where all parties actually listen to the answers being given.

Moderator: Does this ring any bells for anybody in terms of work you’ve done where, right off the bat, there’s been miscommunication and lack of understanding?
Discussion:
One specific example I have is when explaining a strategic vision to different stakeholders across an organisation. Strategy statements are often written in a way that people simply don’t understand. They’re either too complex, miss the point or use confusing terminology. The result is that when people try to implement the strategy, they either fall flat on their face or fail to do what’s expected. Assuming you have a clear strategic vision, you might want to communicate it differently to your employees as you would to potential shareholders, customers or suppliers. Thinking through context-sensitive communication of your strategic vision is important, and reinforces what David was saying.

Moderator: Does anybody else have any thoughts around this?
Discussion:
I think another trap is confusing a goal or outcome with strategy. You see lots of organisations saying that our strategy is to become XYZ, and they then think they have a strategy. The steps for taking you to XYZ are often missing. If you’re starting off with the view that your defined goals or outcomes are your strategy, you’re dead from the get-go. And I see this surprisingly often.

Moderator: Everyone was nodding their heads at what you said. It’s one of those things that, unless you reflect on it, people will do it again and again because the outcome is the thing they coalesce around. Would anybody else like to share their thoughts on this or other traps that you’ve got scars from?
Discussion:
One of the traps I’ve seen recently, particularly in the legal sector, is the strategy that lasts for a precise period. You often see firms saying ‘this is our 2019 to 2022 strategy’ as if somehow it was valid from the first day of 2019 and expires on the last day of 2022. It seems to me to be akin to the confusion that strategies are only for the long term, something in the future. Something we don’t have to worry about now, rather than a response to the challenges that we face now as an organisation.

Moderator: That’s interesting. It doesn’t have a sell-by date and it’s not necessarily a single static thing. David, what are your thoughts?
Discussion:
Thanks for bringing this this one up. One of the reasons people fall into this trap is they confuse a strategy and a plan. A strategy is not a plan, and a plan is not strategy. They are two very distinct things that serve very different purposes. When we think about a plan we think about activities over time, which could be three months or five years. And if we want to give the plan more importance, we call it a strategic plan! It’s another example of a lack of common understanding of terms. A plan – even if it’s called a strategic plan – is not a strategy. As many of you will know, my view is that a strategy is how you change the trajectory of an organisation, from one taking it to its default future to one that takes it to an improved future. The purpose of a plan is to map out the activities that need to be done overtime to execute the strategy. Hopefully there will be alignment between the plan and the strategy, which isn’t always the case – which is another trap.

David, isn’t it the case that things can change while you’re executing your plan, things come along (like a pandemic) and as a result your strategy inevitably needs to change. Yes, that’s why I talk about strategic intent and trajectory rather than visions or end-destinations. We now live in an increasing VUCA world so we can’t possibly know what things will be like in three or five years. For example, in the coming years we’re going to see the pace of change increase due to our collective response to climate change. Organisations will find that the context within which they operate has significantly changed. The best they can do is to set out a trajectory based upon their current understanding of the exogenous forces that are defining their context. Keep an eye on which are getting stronger and which are getting weaker, and then try to adjust their trajectory accordingly. Your strategic intent doesn’t necessarily change, but the trajectory for realising the strategic intent could.

Moderator: My background is in financial services and the banks were very good at defining their strategy, irrespective of the context. The context was massively changing because of increased regulation, dis-intermediation and the fact that human beings didn’t want to do things the way they’d done them previously. Yet the banks build strategies despite the changing context. Is that a trap that you’ve seen David?
Discussion:
Yes, this is a very common trap and the way I describe it is ‘looking where the light is shining’. In Beyond Default we described this trap with the story of an old man who had lost his car keys. The story goes that one dark evening a passer-by saw an elderly gentleman searching through the grass under a lamp post. He asked, “Have you lost something? Can I help?” The man replied, “I’ve lost my car keys.” Feeling sorry for the old man, the good-hearted stranger joined the search. After a while, and with no success, he asked, “Where were you when you lost your keys?”. “Over there by my car,” the man gestured. The passer-by was puzzled and asked, “If you lost your keys over there, why are you looking for them over here?”. The old man replied, “It’s dark over there, and the light’s much better over here.” The trap is we don’t take the trouble to try and understand context, especially when it’s changing. It’s much easier to map out a strategy based upon what we can see, what we know, and what we think we understand, ie where the light is shining!

Moderator: Is it a case of organisations not facing what they know to be true because they can’t bear the truth? I don’t think the banks wanted to realise that there was going to be massive competition from thousands of small banks across the globe. They wanted to think that there would continue to be four or five big players in the market and things would be stable forever.
Discussion:
I think the sad truth is that even if they’d accepted that the context was changing they didn’t know how to respond. And one reason is that organisations reward their executives on a very short-term narrow basis. They are incentivised on what they are expected to deliver over the next 12 months. And while these people are smart enough to know what’s going on outside their organisation and that the Enterprise as whole needs to tackle the changing context, they don’t know how go about it. There are simply too many obstacles. The trap is thinking that the best strategy for the Enterprise is the sum of individual, divisional or functional strategies, which is rarely the case.

Discussion: I was wondering what people’s views are on whether, because of the uncertain world we’ve been talking about and the differences in expectations about who gets involved in strategy, whether strategy is something for a narrow group of people or should it be organisational wide? If we go back to how Shell did things in the 1970s, strategy was developed through a series of scenarios rather than having a singular unifying plan? Furthermore, there’s the whole agile movement. So I wonder whether strategy needs to change in terms of how it’s formulated and how it’s used?

Moderator: Anybody got any immediate thoughts on this?
Discussion:
I think this really gels with a lot of thinking on strategic agility, which is quite well documented by Doz and Kosonen on the back of their book Fast Strategy and their California Management Review article The Dynamics of Strategic Agility: Nokia’s Rollercoaster Experience. It says that a lot can be learned from the journey Nokia went through with their handsets, both in terms of an approach to strategy by sensing external forces and through engendering leadership unity. Bringing the whole resources of the organisation on to the trajectory you want to move to. It’s a process of continuous dynamic realignment. I think this is finding its way into lots of different enterprises, particularly the forward-looking ones who want to be more agile and so strategic agility is part of that.

Moderator: My initial reaction to the first point is that maybe organisations are not doing strategy right in the first place. And on the second, I think getting the resources of the organisation aligned to the target trajectory is something David would call a key aspect of collective leadership. I see collective leadership as one of the key drivers for getting strategy right, where leaders collectively coalesce around the strategy as its developed.
Discussion:
I’d like to come back to a point on scenario planning. In my experience it’s not widely used, and is possibly misunderstood. My understanding is that it was used to stimulate people’s creative thinking about strategy, not to predict that a particular future will happen. I think it’s very helpful in stimulating thinking around the influence of exogenous and endogenous forces.

Moderator: Anybody else got any thoughts on how the way we create strategy needs to change because of the crossover between the world of agile and scenario planning?
Discussion:
Maybe we try to construct certainty when we should be using strategy to help us engage with uncertainty. I think that’s where the clashes between strategy and plans happen in many respects. The risk – or trap – is trying to engage with uncertainty by pretending there is certainty. People don’t like change in general, they like certainty and they like to know what’s coming, so it requires an entirely different skillset and ways of thinking, and confidence to engage with uncertainty. In many respects uncertainty is now normal, this just requires a new way of being or operating.

Moderator: It’s interesting what you say about embracing uncertainty. I wonder how many organisations who thought they were good at business continuity planning had a pandemic scenario like the one we’ve been going through. I’m guessing it’s a very small number because they would have looked at that scenario and said no, you’re crazy, that’s never going to happen.
Discussion:
As a business psychologist you look at what strategy means subconsciously. What people understand from what they think the strategy might be opens a wonderful lens to their way of thinking and how they look at the world. Also, strategy is only one part of the whole system that we’re working in. There is no strategy. You have, like David said, strategic intent, but this strategic intent is always there for everybody within a system and it’s just a matter of how people interact to form a project and take action. It’s the constant interaction with different groups of people with different kinds of thinking that brings them to life with the strategy and the strategic intent.

Moderator: That’s a great point. I’m a behavioural psychologist and agree with what you say about how the triggers that fire in your brain when you hear the word strategy will be different for individuals. David and I have had quite a lot of conversations around the skills, the psychological and cognitive skills, that you need to be able to take an organisation to a place that it currently isn’t headed. These are rare and often not practised in organisations. I guess the reason agility and agile thinking started to get a lot of traction is that they recognise uncertainty. They recognise that things change rapidly and that you need to be able to react. I’m sure David would say that this is a result of the influence of exogenous and endogenous forces that are continually changing your context.
Discussion:
I’ve been using some of the principles David’s introduced me to with a client whose strategy team is nontypical in that they are young, involved in media and youth education, and probably understand what ‘trap’ means in a hop pop sense. The trap that really gets us is maintaining the distinction between strategy and planning. The realisation I’ve had in the last half hour is that when I was head of strategy in a large company some years ago I was probably head of planning. There was a kind of a strategy, but it was really a big execution plan with strategic intents within it. I certainly notice with my media client that they like to get into planning because that’s what people bring to the process. It’s all the things that they wanted to do, the whole backlog of stuff that they know needs to happen in order for the organisation to progress. The challenge as a facilitator and guide is that it quickly goes from “we’ve got the strategic intent” to “how much money do we need and can we get this kind of resource?”. We inevitably think like that because we’re all quite practical people.

Moderator: David, your thoughts about the whole agile debate and the points just made?
Discussion:
When I did my PhD nearly 40 years ago it was on approaches to the design of modifiable software. We knew way back then when the use of computers was pretty new that we were in danger of creating electronic concrete that would be difficult to change. The whole agile movement grew from these early days in software, but got hijacked by people who didn’t really understand what it was all about. For many it was seen as a way of making software requests without really thinking through what was needed. The thinking then moved on to agile IT architectures, using middleware and APIs (Application Programming Interfaces), the agile organisation and agile strategy. There’s nothing wrong with this thinking, but it’s an always-true that organisations need to be better at change. Change that’s driven by the influence of ever-changing exogenous forces. With regards to scenario planning, in Beyond Default we talk about scenario futures, rather than scenario planning. The reason for this is that we believe the focus should be on understanding how exogenous forces are impacting the future. The aim is not to create a playbook where, if future XYZ happens you turn to page 63 to find out what to do. It’s about getting a better understanding of how the future might unfold and, equally importantly, why. This requires the engagement of not only senior leadership, but other leaders across the organisation and beyond. It’s about collectively thinking through what’s going on in our world, understanding how the future might unfold and then how we might respond in terms of change in trajectory.

Moderator: One of the thoughts you’ve just triggered when referring to collective leadership is all people feeling the pain equally. It feels that the way strategy is created and presented in organisations is often done in a razzamatazz cascade sort of way, where if it fails it’s because people at the bottom failed to create a good plan rather than the people at the top creating a poor strategy that they couldn’t engage with. It feels to me that there isn’t that shared pain on strategic failures. Do you see this David?
Discussion:
What I have seen all too often is that the strategy is set by one individual. I once did an assignment for a UK challenger bank where the chairman was the only person who could say anything about strategy. He made it very clear to me that he didn’t want me to look at the strategy, only how it could be executed. I believe this is a trap as there needs to be collective creation, understanding and ownership of the strategy. It’s got be an ongoing process where your strategic intent might not change, but your trajectory does. It’s like if you want to cross a river, that’s your strategic intent. Your trajectory will depend upon the strength of the current, the speed of the wind and the power of a motor in have in your boat. If any of these changes you’ll need to change your trajectory. Unfortunately, throughout my career the success rate of strategy development and execution hasn’t really improved. Most strategies still fail as they don’t deliver what was intended at the outset. So, I do think there needs to be different approach to developing and executing strategy, one that reflects the current context.

Discussion: One half of me is totally inspired by the discussion the other half thinks about a meeting I have tomorrow where a poor person has been asked to deliver a strategy within four weeks. She was asked by the owner and the Board to come up with a strategy within a month, and she wants to review it with me tomorrow. No matter how intelligent she is, or how good the slides are, there’s no hope. There is hope that she might have a good meeting and get a pat on the back, but there’s no hope, not evenly remotely, that any resulting strategy will work. It’s a self-repeating thing that company owners and Boards want to see something happening and after the strategy presentation wrongly feel that things are moving!

Discussion: Just to David’s point about most strategies failing, I was wondering whether there are any studies that indicate whether the reason is poor execution or unwillingness to execute, versus the strategy itself being flawed. Which leads me to another question: do we see a day when strategy creation, not execution, is not done by humans but by AI?

Moderator: Maybe AI might be better at analysing exogenous forces and how their interaction changes context. Does anyone have a view on this or David’s point that most strategies fail?
Discussion:
I’ve not seen any studies that answer that question specifically, but my opinion is that it’s the development of the strategic vision and communication of the strategy that goes most wrong, and of course if they go wrong then, by definition, the implementation is not going to work.

Discussion: Relating to the previous point about leaders demanded that strategies are done almost instantly. Developing strategy takes time, it’s hard and it’s not comfortable if we want to do it right. It also needs to be inclusive. It’s got to be pulled together through a collaborative effort across the organisation and possibly beyond the organisational boundaries. So, it’s not quick and it’s not easy.

Discussion: This was the first trap we fell into when I took on my new role and wanted a new strategy. Now, nearly a year later, we’re in a very good place because of the quality time that we’ve spent on it. If you want a plan in four weeks that’s fine, but it’s not a strategy. With my current client, we’re trying to go as far as we can through a series of weekly workshops and actually we’ve made some pretty good progress, but it’s probably not a strategy. It’s not a strategy that you could go back and revisit in a quality way looking at the contextual stuff around it. I think that if you have to produce a plan – as opposed to strategy – you should go back to it every three months and check that the assumptions you made in the plan are still valid. If not, then change the plan. I suspect that’s what organisations don’t do.

Discussion: If strategy is a response to the challenges that we face, then we do need to do it as quickly as we can. What we also need to do is to change the view of the consumers of the strategy from it being ‘valid for a long period of time’. We need to say that the forces we’re trying to make sense of will change, so it needs to be a continuous activity where we’re tweaking the strategy based on what’s happening. We need to separate the planning and implementation of the strategy from formulation of the strategy itself and get people to understand that both of those will keep changing.

Moderator: So, we need to make it an adjective not a noun, something that you do rather than something that is a constant thing?
Discussion:
Yes. It goes back to Eisenhower’s thoughts on planning “plans are useless, and planning is very valuable”.

Moderator: I’m conscious of the time. We have a few minutes left so David, what are your thoughts on the points just raised and are there any other traps we’ve not covered?
Discussion:
On strategy success rate, there have been studies, but nothing over the past couple of years for obvious reasons. A study in 2017 by Brightline and The Economist Intelligent Unit surveyed 500 senior executives from companies with annual revenues of $1 billion or more. It showed that 90% of the respondents failed to reach their strategic goals, 59% admitted that their organisation often struggled to bridge the gap between strategy development and delivery, and 20% failed to meet their strategic objectives because of poor implementation. A 2013 study of more than 2,200 executives by Strategy& found that 44% didn’t understand the change they were asked to make. So, there’s definitely more work to do.

In terms of other traps, I’ve seen people assume that ‘the future is an extrapolation of the past’. If the world has not changed, this is not a bad approach, but if it has then you’re developing a strategy for an out-of-date context. Another is ignoring how the influence of endogenous forces can anchor you to your current trajectory. And another is assuming that the organisation is ‘programmable’ and can be easily changed through an implementation programme run by a programme office.

David, this reminds me of ‘the elephant and the rider’ in a change management toolkit from Berkeley that talks about when organisations are trying to change their leaders often act like elephant riders thinking they can steer the elephant when actually they can’t, and the elephant doesn’t care. What elephants care about is food, water and a clear path in front of them. If you’re going do anything as a leader you need to get off the elephant and clear the path, otherwise it’s just going to walk round in circles until it runs out of food.

Good one. I’ll mention three more then we must bring this great discussion to a close. The first is lack of critical thinking when making strategic choices. Choices need to be informed, but they also need to be based upon sound reasoning, whether it’s inductive, deductive or intuitive. The second is ‘not recognising your cognitive biases’ and the third is ‘relying on your winning strategy’. It’s when you assume that a strategy that’s worked for you in the past will work for you again in a completely different context.

Finally, avoiding these traps, and others, comes from experience and experience comes from application and practice. The reality is that most organisations don’t develop strategy often enough – even if they think they do – to build up the experience needed to avoid the traps we’ve been talking about.

Moderator: That reminds me of a quote from Brave New World by Aldous Huxley; “experience is not what happens to you, it’s what you do with what happens to you”.

Unfortunately we have to bring things to a close, I’m sure we could have gone on longer.

Thanks again and we look forward to seeing you all again at out next Roundtable in February.

Next Roundtable: Following suggestions on possible future topics, we decided on Establishing the Conditions for Successful Strategy Execution. It will be on Thursday 17 February 2022. More details are available here.

If you have any points that you would like to raise with David, please do so by emailing him at david.trafford@formicio.com.

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