Top-down strategy is dead – Long live the team of teams!

After getting my MBA, I became more interested in business strategy. While strategy was presented in my last MBA class, it was largely a review of everything I’d already learned. There had to be more, I figured. So, after reading Michael Porter’s book Competitive Strategy, I went back for a second master’s in strategic planning. While I never became a real strategy person, I have had a keen interest in how business strategy has evolved, especially with how it intersects with digital.

A couple years ago, for example, Gary Hamel suggested that the practices of management need radical change. He claimed interestingly that business strategies should be generated by teams in coordination with management. In reviewing the latest crop of strategy books, one thing has become clear to me. Gary’s radical rethink of management has become explicitly connected to digital strategy. This includes “Designed for Digital,” which I reviewed earlier this year in “Are you ready to become a digital technology leader?”

Certain business strategists, however, still haven’t gotten this message. “See Sooner Act Faster,” for instance, contrasts Hamel’s approach, the authors of “Designed for Digital,” and even the CIOs of the weekly #CIOChat Twitter chat session. The authors of “See Sooner Act Faster” propose that in the digital age, things are so turbulent it demands different capabilities from those used to manage organizations historically.

What’s now required, they propose, are vigilant firms with greater foresight than their rivals. These firms read market signals, external threats and internal challenges better than the competition. Their leaders have heightened vigilance and build dynamic capabilities (a la David Teece) to adapt to increased turbulence.

That’s all well and good, but the problem I have is with their how. The authors of “See Sooner Act Faster” argue that leaders – not teams – establish design thinking, including fail-fast experiments. For them, vigilance is defined as a superior ability for leaders to anticipate serious threats, recognize major opportunities and then act faster than others despite incomplete knowledge.

So, what’s the problem?

A lot of the above ideas are in fact good for business leaders and CIOs – such as reading market signals, anticipating threats and fail-fast experiments. The problem is that these ideas are not coupled to what The Open Group, for example, calls “the team of teams.”

To be responsive in the Future Shock environment most enterprises find themselves in, strategy needs to be formulated and executed by chartered teams of teams. Through this lens, I reached out to several thought leaders for their perspectives:

Jeanne Ross, MIT CISR, co-author, “Designed for Digital”

“Yes. I agree. I wonder if there is any need for distinguishing strategy teams from innovation teams. Feels like you’d want to combine the accountability. I certainly agree that you’d love to sense signals faster, but I’d think you do that by having accountable innovation teams. Perhaps they have an idea for an alternative approach?”

Martin Mocker ESB Business School, MIT CISR, co-author, “Designed for Digital”

“What any innovation team needs is a mission; a North Star that is linked to the company mission/strategic goals. So, I am wondering whether the idea of strategy groups is to work out these strategic goals and update them based on input from the innovation teams who are closer to the market? Maybe even be on innovation teams (similar to architects) to make sure the team mission fits the overall mission?”

James Staten, VP Disruptive Innovations, Forrester

“Our guidance is that leaders should not just form dedicated innovation teams, but they need to empower cross-company (and cross-ecosystem) innovation ideation so they have a broad set of ideas to choose from. We encourage companies to leverage innovation software platforms for creating, tracking, validating and executing on these ideas. It’s crucial that they build out a portfolio of innovations that don’t limit them to just tactical digital transformation moves (the most common ‘innovations’) nor just respond to digital disruptors who have entered their market; but to have in their portfolio, innovations that position them as the market disruptors. Yes, innovation teams should be separate from the strategy team. They should align with them and insure the innovation program is focused on helping fulfill the company strategy but also be open to moves that align to future customer needs and can expand the company’s market appeal (moves that often go beyond and expand the strategy). This is important because too often company’s strategies are focused on existing services and products only.”

CIO thinking on the opportunity and problem

Most CIOs stress that high-level strategy and strategic thinking remains important…that you innovate, or you die. For this reason, CIOs agree with Dion Hinchcliffe who says, “the future of digital change is more about empowering loosely coordinated points of light (innovation/opportunity) as they bloom in the organization. Strategies that design for loss of control can then harness + collectively guide this programmatically. This means organizations need to move beyond waterfall and beyond agile to small market directed teams.”

Innovation teams should be chartered through a CIO in partnership with C-level peers. As I have been sharing for years, it is time to move beyond mere alignment, digital innovation works best when organizational partners want it, too. Otherwise, CIOs look like a technologist pushing a technology for its own sake.

If transformation, however, is a shared strategy, it works far better. For this reason, digital innovation succeeds when there’s a lot of trust with partner organizations and they are okay with IT organization saying hey, you have a problem, and we can help if you’re willing, but it’s primarily a process issue.

While smaller, nimble strategies are the survivors today, these can evolve into big strategies given enough time. Meanwhile, when big strategy is something an IT leader waits to receive from on high, there’s a lot broken in the firm and perhaps with themselves.

For this reason, it’s critical that CIOs be part of strategic planning team. With the plan themes in hand, it is important to charter innovation teams. These teams should be doing what Zack Hicks, CEO of Toyota Connected Enterprise, suggests: “Our job isn’t to tell them what to do. Our job is to remove the obstacles that are in the way. The PMs can hire and do as much as they want if they are profitable. This of course requires a rethink of governance.”

Hicks’ position fits well with the research of James Staten, who has found that innovation works especially with CIOs who are forward-looking and want their department to not be seen as just the managers of tactical software but as the digital transformation leaders that help their companies take advantage of new and emerging technologies. Staten says that he would love to say that most CIOs are pushing for this mantel but no, there are many who aren’t pushing for it or aren’t enabled to do so because they report to the CFO or COO. A focus on cost reduction and back office operations is dangerous in the digital era where companies win my innovating their companies business models and value propositions.

IT’s role is NOT to just enable the business

At the same time, CIO Jay Ferro, says, “CIOs that sit around waiting for a grand strategy from on high are doomed. Most companies don’t have a magical document for them. Instead, CIOs should become the business leader they’re supposed to be and identify the pieces, build, sell, and execute.” Clearly, CIOs that believe IT’s role is just about enabling the business will not survive in the long term. And unfortunately, CIOs who are not there are bad for the businesses they serve. CIOs have a responsibility to learn, influence, and sometimes lead business change.

At the same time, the reaction to change across the organization isn’t always strategic. IT leaders need to have the vision. This includes the ability to foresee/predict change and look at the macro levels. Otherwise, a tactical context will kill the company. And worse yet, the innovation teams will not prosper.

The timeline for strategies can no longer be 5 years

Top-down strategies no longer work because the timeline for strategies is no longer five years. Today, they need to plan for a 1-2-year horizon. At the same time there cannot be a monolithic roadmap, but instead a roadmap that flexes. Some CIOs I’ve spoken to suggest their organizations should have a rolling 18-month roadmap. After that, it’s somewhat directional. For this reason, it’s a living roadmap, but it always makes sense to have a North Star (even if it moves or gets further away from time to time).

At the same time, it’s possible that the CEO has the bulk of customer technology and innovation reporting to a CDO or elsewhere. In these cases, it is short sighted for the CIO to not be in the middle of things especially for business to consumer companies that compete on CX in highly competitive industry.

One CIO in our weekly chat said for this reason, they balanced this recently, as they knew their new strategic plan was coming. Rather than get in front of it, they held back a bit which let them learn their organization better and build critical relationships. Now they have a strategic plan and an IT strategy that fits together with it.

The problem with traditional thinking here is there is a difference between long term, inflexible strategy vs real business agility. For this reason, it’s important to establish a flexible long-term direction, somewhat more fixed for mid-term plans, and short-term deliverables. In this world, a CIO worth their compensation package and the trust put in them, should lead from the front with business strategy + digital art-of-the-possible. Otherwise, they become just an order taker.

The CIO is either in front of or behind a plan built by others in the business. Being integrally involved in crafting a cohesive strategy that melds aspiration and business capabilities is the ideal place to be in the digital era. Smart CIOs involve as much of the organization as possible in building strategy. More eyes, more ideas, more visibility into what could be and should be done, and more shared ownership and thus commitment.

Clear vision statements from this process then help guide innovation team chartering. There may be differing opinions regarding the chartering of innovation teams. But smart CIOs kick things off simply by grabbing coffee with a division president, buying lunch for the product folks and going on sales calls with sales representatives.

Small teams win out

It seems clear above that CIOs should be involved in strategy. It is equally clear that the innovation today gets done in small digital innovation teams and not by vigilant leaders on their own. And it also seems clear that the function of chartering innovation teams should be facilitated by CIOs in conjunction and with the support of other business leaders. CIOs have a unique opportunity to achieve business relevance, but they must seize the mantel now.