Every leader wants to avoid major strategic mistakes, but, in a complex world, it’s hard to anticipate all the forces that might impact your goal. It’s vital to find weaknesses in your strategies before you implement them — and developing a rigorous process to do so.

The ability to poke holes in one’s own strategies is something the U.S. military has practiced and refined over centuries. Rick served in the U.S. Army for 35 years, retiring as a Lieutenant General, and has seen this firsthand. In the heat of battle, strategic planning that’s incomplete or simply wrong causes leaders to revert to on-the-spot decision making. While sometimes necessary, making it up as you go is more often associated with failure — and loss of life — and is often a symptom of ineffective or inaccurate anticipation of competitive moves or environmental shifts.

The same is true in business, and the techniques the military has honed can help executives anticipate problems and change course when necessary.

Build situational awareness

Simply put, situational awareness (SA) is achieved after a soldier has deliberately assessed an environment from various vantage points and has ensured that all potential perspectives have been captured.

In the business world, things are fuzzier — there are no landscapes, buildings, or troop movements to scan. But it’s still crucial to make sense of the environments in which we operate and foresee how different factors will affect our decisions.

One way to build one’s situational awareness is to talk through alternate realities. Although this sounds like science fiction, alternative realities are basically hypotheticals. We think X will happen, but what if Y or Z happens?

At Merck, where Jay served as Chief Strategy and Business Development Officer and President of Emerging Businesses, “alternate realities” were used to prevent “team think,” which frequently occurs when organizations believe the conventional view of a situation is the correct one.

To develop better situational awareness, start by forming  teams and tasking them to develop alternatives based on different views of the same situation. For example, what if a new competitor enters the market earlier than expected? What could they do that would surprise and/or outmaneuver us? What if they are delayed; what types of things might they do to try to recover and penetrate the market more quickly? Could any of their actions be extreme or desperate? What actions could and should our team consider mitigating or blunting the risk in these alternate scenarios?

The next step is to compare these hypotheticals collectively and then determine what counter measures will have the most impact.

 Most importantly, make sure to consider specific “triggers” that would indicate one or more of the alternative scenarios is unfolding. Agreeing on these triggers up front is useful because they prospectively define specific thresholds for change in action or direction. Once identified, you should track these triggers regularly on a dashboard that all senior team members see. This eliminates or greatly reduces debate when course changes become necessary and urgent. Then, make sure that group leaders complete an SA assessment regularly and discuss the alternate scenarios and triggers during each business review.

Small investments of time can result in new insights about your organization’s readiness, and your leaders’ acumen, that would have gone unnoticed until crisis.

Develop an outside-in perspective

This is another technique that’s routine in the military and can highlight unique but under-leveraged capabilities or untapped sources of competitive advantage. Think of aircraft. For a long time, the military used planes primarily to increase visibility of topography and troop movements, but starting in the early 1900s, the military began using planes to delivery ordinance and to conduct warfare. What are your organization’s aircraft?

Frequently, these are ancillary assets or capabilities that are often considered to be a “cost of doing business.” These could include a controlled global supply chain, unique abilities to test compounds, proprietary communication channels with key constituents, unique manufacturing machinery, etc. Think to yourself: In future scenarios, could any of these become new lines of business? If your environment changes unexpectedly could any of them help you to adapt?

In companies, an outside-in perspective can help shape an honest view of your organization’s strengths (and weaknesses). Customers can be a great source for this and forming a strategic advisory council is another option.

Game it out

Another practice is war-gaming, and there is often no substitute for putting real people into the mix to see how they react. Even complex AI simulation, while helpful, can lack the variability and ingenuity of human creativity. The US Military has become an expert in preparing for combat operations using war games.  Most notable is the establishment of the National Training Center in the Mohave Desert in California where the US Army conducts live, force-on-force battles to refine its capabilities.

At Merck, war-gaming exercises around critical decisions were used frequently. The best way to do this is to assign high performing managers to lead “opposing” teams, which should be made up of individuals with expertise across relevant functional areas. Before the exercise, make sure to prepare a background that  outlines the general challenge and provides specific information and data. A best practice is to task the line area most responsible for the situation with organizing and leading the overall exercise — and to make sure that each group presents their findings at the end. Incentivizing “opposing” teams for success will help ensure a robust simulation. For example, consider inviting a senior leader to judge the readout, and offering a cash bonus or team recognition for the winning team, or both.

Form diverse, strategic groups

Finally, form strategic initiatives groups, and populate them with people who can analyze problems from various perspectives.

At Merck, the strategic initiative group often came up with alternate decisions and actions on key business issues.  In one case, the choice to position a new product as second line treatment versus trying to displace a well-accepted initial therapy turned out to be uniquely advantageous, helping achieve a launch that far exceeded expectations.

from HBR.org https://ift.tt/2O9wWmR