Tuesday, September 20, 2011

Strategic Planning Analogy #413: Should Strategists be Certified?

What if someone in the Middle Ages had decided that, henceforth, all artists would have to be certified? Under this scenario, only certified artists would be allowed to create art, and the art must be produced exactly in accordance with the accepted style and process found in the Middle Ages.

If this had happened, there would have been no artistic reformation and no modern art. In painting, there would be no Degas, no Monet, no Chagall, no Picasso, and so on. New media and new styles would have been banned—no photographic or digital art. The only music would be traditional classical music. No Rock and Roll, not even creative “classical” works by the likes of Stravinsky. Books would have to be hand written. There wouldn’t be much use for all those cool Apple products, because there couldn’t be much of any digital content. Not allowed, because it wasn’t certified.

Under this certification scenario, there would be a lot less artistic chaos…and a lot fewer artistic experiments gone bad. But think of all the great creativity which would be lost. It’s not a very good trade off.

Certification may be a good thing for accountants, but it’s not a very good idea for artists. And I don’t think it’s a very good idea for strategists, either.

From time to time, someone comes up with the idea of trying to certify strategic planning. I understand the motivation of wanting to eliminate bad strategic planning through certification. But certification implies that it is easy to identify what good strategic planning looks like and to codify a single way to do it for all situations.

That’s like saying that it is easy to identify what good art looks like and codify it, and freeze it for all situations. The quality of art is not based on a particular certifiable technique that can be codified. No, the quality of art is based on how the work of art impacts the emotions of the audience (something that cannot be codified). Similarly, the quality of a good strategic plan is not based on the technique, but how well the strategy is received in the marketplace.

There are three reasons why I believe that certification of strategic planning is a bad idea.

Reason #1: There is No Agreement on the Proper Approach to Strategic Planning
There are many different schools of thought on how to do strategy. In the book Strategy Safari by Mintzberg,Ahlstrand, and Lampel, the authors list 10 distinctively different schools of thought on strategy. These are not just small variations on a common theme. No, some of these approaches tend towards being exact opposites of each other. The approaches come from such wildly different perspectives that it sounds like they are all living on different planets.

For example, there are those in the positioning/deterministic camp which is very much a top-down approach. The idea is to first choose a position and then let the tactics follow by default. On the other extreme is the emergent approach where you look for tactical openings which then boil up into a position by default. This is a bottom’s up approach. I talked more about these approaches in an earlier blog. These approaches are so radically opposite that it would be difficult to certify both as correct, for to do one approach is to violate the principles of the other.

Depending on who is doing the certification, there will probably be a bias towards a small subset of the ten approaches (and a discounting of the rest). Otherwise, there would be no guiding principles to certify against. But which ones would you choose?

Strategic Safari also shows that each school of thought on its own has weaknesses. There is no one single best way. Good strategic planning should borrow from them all. This is starting to sound more like an art than a science. Artists are okay with lots of schools of thought. They see no reason to narrow the field to one way of doing things. And that’s why you cannot certify artists.

Can you imagine if accounting had all of these major variations in thought? How would you certify someone as a CPA if the profession had no agreed upon philosophy or approach? No, the CPA works, because there is enough unity in the profession to point to an agreed upon way to get things done. That does not exist in strategic planning, so you cannot apply what works in accounting to strategic planning.

The book Strategic Safari is dedicated to those "who are more interested in open fields than closed cages." Certification tends to close the cage, which is a mistake.

Reason #2: The Best Approach Varies Based on Circumstances
Another problem with certification is the tendency to standardize approaches—a sort of one-size-fits-all prescription. My experience, however, has taught me that different companies can have extremely different strategic needs. As a result, they require extremely different approaches.

For example, let’s consider two different firms. One is in a mature, capital intensive industry with high barriers to entry and exit. The other is a start-up in a rapidly growing new field without barriers to entry or exit. The situations are so different that the strategic concerns would be very different. Therefore, the optimal approach would probably be very different (I spoke about this in more detail in an earlier blog).

For example, the mature company should probably be most concerned with two strategic issues: optimizing the productivity of the core business and watching for activities on the fringe which would threaten the entire core industry. By contrast, the start-up should probably be most concerned with establishing a position, finding funding, and figuring out how to survive the oncoming industry consolidation.

The strategic planning process for the first firm would likely be more regimented and financially oriented. The process for the second firm would be more free flowing and perhaps more marketing oriented.

This isn’t a case of one approach being right and one being wrong. It is a case of which approach is more appropriate for the situation at hand.

There’s a reason why there is a different certification for doctors of humans and doctors of animals. Their patients are too different to make one process apply to both. We have a similar level of differences in the variety of business patients.

Reason #3: Strategic Success is Based on Differentiation, Not Conformity
One of the goals in certification is to create greater conformity in the practice of the profession. Normally, conformity for a profession sounds pretty good. After all, rogue accountants can get you into a lot of trouble. However, we have already seen that strategists cannot agree on what to conform to. Worse yet, conformity itself might be a disadvantage for strategists.

Think about those artists again. If I create one unique painting, it may be highly valuable. However, if you have a thousand artists are all forced to make copies of that painting, you render all those paintings as practically worthless. A great deal of the value in art is the very fact that each piece is unique. Mass production diminishes the value. Therefore, making all artists conform to painting the same item the same way destroys value rather than creating it.

A similar situation occurs in strategy. If you find a unique, differentiated approach to the market, you may create a lot of value. However, if thousands of others identically copy your position and approach to the market, the value of being in that position plummets.

Strategy thrives on differentiation, not conformity. It is difficult for each company to find its unique position if they are all using an identical approach to strategic planning. Conformity in approach tends to limit outcomes, not increase them.

Strategists like Gary Hamel look for strategic success by destroying conventional wisdom rather than by conforming to it. Almost every great leap forward in business has come by those who rewrite the rules. I suppose you could write rules to standardize an approach for how to destroy standardized approaches so that you can re-write the rules, but I think it sort of misses the point of where one should focus their energies.

Although those who want create a certification process for strategic planning have good intentions, I don’t think certification of strategists is a good idea. The problems with certification of strategists are that:

a. There is no agreement in the industry as to what is the right way to do strategy.
b. The right strategic approach varies significantly between companies.
c. Conformity tends to hurt, rather than improve, strategic outcomes.

Even if it is impossible to certify a strategic planning process, could one perhaps certify a toolkit of strategic planning tools? Maybe, but consider this…great art depends more on the caliber of the artist holding the tool than on the quality of the tool itself. Willam McKnight, former head of 3M used to say, “Hire good people and them leave them alone.” To paraphrase this quote, perhaps we could say, “Hire good strategists and let them use their own approach to strategy.”

1 comment:

  1. Gerald Nanninga,
    I fully agree with you. Adaptability and agility are important ingredients of strategist. Strategy is a science and art and what applies to art extends to strategy. Yes, I agree with you