Strategy

Should You Build Strategy Like You Build Software?

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Strategy is a mechanism through which a company makes sense of the world around it. It is a collection of ideas about how the company intends to win, the source code upon which everything else depends. Because strategy can only capture a company’s best thinking at a given point in time, the author argues that strategy, much like a software program, needs to be updated and refined as people gain new experience and knowledge.

With traditional approaches to strategy development,the author argues, planning is optimized for the original targets; it is difficult to change directions once implementation is under way. Adaptive processes, by contrast, help companies create and adapt strategy quickly and iteratively, so that people can effectively triage issues and allocate resources in changing environments; they are optimized to identify the best ideas and to ensure that individuals throughout the organization have access to the latest version so that everyday actions can be aligned with the most important strategic insights. Since people throughout the organization play roles in the company’s strategic success, strategy development needs to tap into ideas from everywhere. This requires opening up the process to people throughout the organization, permitting extensive face-to-face collaboration, and arranging for individuals other than senior executives to facilitate important strategic discussions.

Drawing extensive comparisons with software development and using examples from companies including Metrowerks and Shamrock Foods Co., the author focuses on three major themes: having an iterative, or “spiral,” approach versus a linear approach; organizing the strategy-making process around people rather than processes; and the recognition that in strategy there is no such thing as a “silver bullet.” Most managers operate in settings that are too dynamic and complex for simple success recipes. Instead of seeking long-term sustainable advantage, good managers need to create sustaining advantages on an ongoing basis.

Keith R. McFarland, a former technology CEO, is founder of McFarland Strategy Partners in Sandy, Utah, and author of The Breakthrough Company: How Everyday Companies Become Extraordinary Performers (Crown Business, 2008). Comment on this article or contact the author at smrfeedback@mit.edu.

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