Here is a way to think about two of the most useful and popular strategy frameworks around
Some of the best writing on strategy in the last 20 years or so is captured in two books that tend to be widely recommended reading if you want to get up to speed on strategy. These two books are "Good Strategy, Bad Strategy" by Rumelt, and "Playing to win" by Roger L Martin. (Both books are highly recommended by us at Rhubarbs)
Good strategy bad strategy teaches us about the state of strategy in the world. And to be frank it paints a pretty bleak picture. Anyone who has spent any time inside a large-ish organization will recognize some of the signs of a bad strategy that Rumelt identifies. Rumelt also identifies signs of a good strategy, what he calls the "kernel". The kernel of a strategy has three components according to Rumelt:
A diagnosis where we describe and simplify the problem we are facing
A guiding policy that points us in the direction of a solution
Coherent actions that let us carry out the guiding policy
In a previous post, we introduced the OODA loop as perhaps the most basic incarnation of a strategic framework. OODA stands for "Observe" "Orient" "Decide" "Act". In the presence of uncertainty, the OODA loop changes Decide into "Hypothesis" and Act into "Test". (Note: this is a significant oversimplification of the OODA loop as originally developed by John Boyd)
It turns out that the kernel Rumelt identified, can be directly translated to stages of the OODA loop. Observe is where we identify the challenge. Orient is where we formulate the guiding policy. Decide and act is where we implement coherent actions. It is essentially shorthand for getting to the "act" part of the loop at least once.
By understanding that what we are dealing with is a run-through of the OODA loop, we can start to apply good strategy in a broader sense. We can also use this connection to understand that the kernel is a very good way to think about how we communicate our strategy and whatever information comes out of the OODA loop. Next time you see a strategy document, keep the kernel in mind and it will be a lot easier to get a general understanding of what the strategy is meant to achieve. It might also help identify why the strategy may be difficult to understand or difficult to buy into. If you are in the process of developing a strategy the kernel gives you the perhaps simplest way of getting started.
In the book Playing to Win the key idea (arguably) is the so-called strategy cascade. The cascade runs through five specific decisions. Winning Aspiration, Where to Play, How to win, Must have Capabilities, Enabling Management Systems. Again this can be described as a number of OODA loops. The first OODA loop helps us decide our purpose i.e our winning aspiration. The second "Where to play", the third "How to win", the fourth, is which capabilities we need, and the fifth is which management systems we need. In each instance we Observe i.e gather information, we Orient, I,e understand which options are available to us, we Decide which option we go for (or set up a hypothesis), and then we Act and implement (or test in experiments). At each OODA loop, we can revert back to a higher level and make changes. Let's say we identify an interesting place to play. A simple example could be that smart phones could be an interesting market. In the next loop, we are unable to find a way to win, we cannot device a way to beat Apple and Samsung. We can then bring that observation back to the where to play loop and adjust or look for a new place to play based on that observation and that "How to win" - OODA loop.
Roger Martin's Playing to Win strategy cascade (Roger publishes great articles on medium, read them here https://rogermartin.medium.com/
The OODA Loop is the most general concept in strategy and most if not all useful strategy frameworks can be distilled to an OODA loop in some shape or form. Does this make strategy frameworks such as Playing to win or Good strategy Bad strategy kernels useless? Far from it. Having more specific guidance on how to use the OODA loop is very useful and can reduce the complexity and ambiguity that can come with trying to apply a general OODA loop for strategy development. It can also be easier to explain both a strategy cascade and a strategy kernel to outsiders. According to Boyd, The OODA loop is supposed to be executed at an ever higher tempo for us to increase our chances to win. Having frameworks as a part of how to observe orient decide and act can help the tempo to increase as they are adopted and internalized by organizations.
The OODA loop is key to what we call business agility which is the basis for strategic competitive advantage over time.
