Strategy: Essentials for Management, Consulting and Startup Success | Chris Bolman | Skillshare

Strategy: Essentials for Management, Consulting and Startup Success staff pick badge

Chris Bolman, Founder & CEO, Brightest.io

Play Speed
  • 0.5x
  • 1x (Normal)
  • 1.25x
  • 1.5x
  • 2x
27 Lessons (1h 59m)
    • 1. Introduction

      2:25
    • 2. I. The Definition of Strategy

      2:21
    • 3. I. The First Strategists

      3:50
    • 4. I. The Origin of "Strategy"

      1:29
    • 5. I. The Modern Military Strategy

      2:31
    • 6. I. Strategy is a Narrative

      2:13
    • 7. I. Strategy as an Algorithm

      3:24
    • 8. I. Strategy is Hierarchical

      2:40
    • 9. I. The Essential Levels of Strategy

      3:12
    • 10. II. Scientific Management

      2:57
    • 11. II. HBS and Strategy

      4:27
    • 12. II. BCG and Strategic Consulting

      1:17
    • 13. II. McKinsey's Strategy Frameworks

      11:19
    • 14. II. Advertising Strategic Planning

      2:38
    • 15. II. Game Theory and Strategy

      6:09
    • 16. II. Scenario and Strategic Planning

      2:46
    • 17. II. Porter's Five Forces

      4:20
    • 18. III. The Building Blocks of Strategy

      1:34
    • 19. III. Block #1: Problem

      10:16
    • 20. III. Block #2: Insight

      10:45
    • 21. III. Block #3: Structure

      5:30
    • 22. III. Block #4 Plan

      2:05
    • 23. III. Block #5: Action

      9:45
    • 24. III. Block #6: Results & Learnings

      6:43
    • 25. III. Where to Go Next

      2:37
    • 26. IV. Why Strategies Win

      6:57
    • 27. IV. Develop Your Own Strategies

      2:37
156 students are watching this class

About This Class

Strategy: Essential Foundations for Management, Consulting and Startup Success is a complete, comprehensive introduction and overview of strategy, taught by Chris Bolman, an entrepreneur, startup advisor and former VP of Marketing at Percolate. 

In this class, I do my best to explain and help you understand: 

  1. The history and origins of strategy
  2. The most influential strategy frameworks and mental models
  3. How great strategists think
  4. An actionable framework to help you quickly develop, design and execute your own strategies
  5. My personal lessons learned as a strategist, management consultant and technology leader

Through the lessons in this course, I'll distill the last 10 years of my career into helpful, actionable insights to make you a better strategist. Whether you're a leader, executive, manager, consultant, advertising agency planner, small business owner or anyone else looking to improve their strategic decision-making, this course is for you.

Hope you'll join me.

Transcripts

1. Introduction: Hi, my name is Chris, and welcome to this course of strategy, essential foundations for management, consulting and startup success. For those of you who don't know me, I actually got my start as a strategy in management consultant about ten years ago. I ended up moving from consulting into founding my own software company. From there I moved on to become a growth and marketing executive at a company called Percolate that you may have heard of, and I'm now back to working, advising companies and working on my own startup. So, I think one of the biggest mistakes or misconceptions, or maybe missed opportunities that a lot of people earlier in their career are face, is they think of strategy as this theoretical thing that only maybe the CEO or the chief strategy officer does. I think the reality is everyone can be strategic, and everyone can apply strategy really throughout their life, right? If you're playing a game of chess, or you're playing a game of monopoly, game theory strategy plays into that. If you're thinking about developing your personal brand, or what you should be doing on social media, there's a strategy element to that. I think strategy is a very universal way to think about problems, think about goals, think about what you want to achieve, and best position yourself to work through approaching and making progress toward those objectives. So, the way I've structured and outline this course is we're going to start by just defining strategy. What is strategy? Where does it come from? What's the history of strategy? Who are some of the most important historical figures and strategists? From there, I wanted to talk through kind of the modern history and development of business strategy. So, starting with Frederick Taylor, Henry Ford, and the principles of scientific management through Harvard Business School, McKinsey consulting, advertising, planning and strategy, where it is today. Then finally, in sort of the back half or the third section of the course, I want to talk about a framework called the building blocks of strategy. The building blocks are a way that you can work as a strategist to come up with your own strategies, identify strategic problems, solve them, execute, iterate, and refine your strategies, and then measure their success. Hopefully, you'll be able to use the building blocks in your work day to day to help you grow as a strategist, but also just generally grow your career. So, in addition to all the videos and classes within this course, I'm also going to provide you with some of my favorite strategy templates. I'm really excited to see this class. I'm really glad. I hope you'll enjoy me. Yeah, follow along, we got a lot of great course material for you. 2. I. The Definition of Strategy: For a term that's so commonly used in business, I think sometimes strategy gets a bad rap, right? Like everybody's always throwing around the term strategy. We need a customer experience strategy, we need an innovation strategy, we need a digital transformation strategy. I think that's all fine and good. But before we start to get into really the nuts and bolts and mechanics of actually making strategy happen and making it possible, let's just talk a little bit about the definition of fundamentally what strategy is. So, one of the most common established definition, broad-based definitions of strategy from the Oxford English Dictionary, define strategy as a plan oriented around achieving a long-term goal or aim. So, I think if you break that down, there's two important parts to kind of recognize there. The first is this idea of a plan, right? Strategies operate as I've already mentioned on different time horizons, but the goal is to think long-term, the goal is to organize and kind of create a list of dependencies things that need to happen, milestones that need to be achieved, and really orient them toward where you're trying to get ultimately, right? But I think, this part of strategy, this idea of a plan is ultimately really your hypothesis as a strategist. I think the whole goal is to be constantly checking this plan against the data, against the news, against the world as you see around it, against the results that are coming in, and sort of adapt course from there. Then the second component is this idea of a long- term goal or aim. As I've mentioned, strategy is really about pointing you toward a north star, pointing a company toward a north star and saying, "Here's where we are now. Here's where we need to go, and strategy is kind of the path that needs to get us there and it's the compass that's going to direct us." So again, strategy is thinking about how do you develop a plan? How do you structure a set of things that need to happen? How can you clearly communicate that to a team, to a company or to the people who need to follow that strategy? Then how can you achieve the long-term objectives? As well as potentially short-term objectives along the way, different flags and milestones to track your progress, so that you can understand, are we getting closer? Are we on course or do we need to adjust and refine our strategy? So, strategy is a plan that plan has a direction, that direction has goals and metrics, and that's really what strategy is all about. 3. I. The First Strategists: As a concept, strategies historical roots run deep. Probably one of the first people you could consider a strategist in human history was actually the ancient Chinese philosopher Confucius. Confucius was very very preoccupied. He thought, he wrote, and he talked a lot about planning, about continuous learning, and continuous improvement and preparation. So, you know one of the famous things Confucius said is, he said "If I go walking with two men, I'll observe one and I'll note what he does well and I'll try to emulate them and I'll observe what the other one does poorly and I'll try to correct them in myself." And he also talked about this across different time frames. So, Confucius said, "If I want a plan in terms of one year, I'll plant a seed if I want to plan in terms of ten years I'll plant a tree. If I want to plan in terms of a century or a hundred years, I'll educate and I'll teach the people. And Confucis, in his writings, in the Analects, was one of the first people again in history to recognize that an effective communication strategy, saying the right things through written text, through public speaking, and through talking with people individually could actually change the direction of someone's life and also change their ability to influence other people and change the directions of their actions and the things that they're going to go do. So, again, a really really important kind of early example in terms of thinking about learning the importance of education and the importance of long term planning within strategy. Another kind of rough contemporary of Confucius was an Indian philosopher named Chanakya. Chanakya was probably the first person to ever talk about propaganda strategy or communication strategy in the context of overall military strategy. And so, Chanakya's ideas were basically saying if you can shape the information, if you can gain a competitive advantage in terms of what you know versus what your enemy knows, you can usually win in battle and one of the best ways to gain advantages is actually to kind of distribute fake news or false information or misinformation, where you can deceive and you can gain an information advantage that gives you the upper hand. So, another example of an early communications and military strategist, who led the way for later on strategic thinking, and then probably the third most well-known ancient strategist is Sun Tzu, whose very iconic and well read The Art of War really is probably the first true strategy document in human history. It's a book that I've read many many years ago. But, incredibly wise great universal teachings. Many of them still apply today. I think probably one of the best known overall is sort of Sun Tzu's comment around knowing yourself and knowing your enemy. He says, "if you know yourself and you know your enemy, you will win or be victorious in every battle. If you know yourself, but you don't know your enemy, for every victory you'll have, you'll suffer defeat. And if you know neither, you'll be defeated every single time. I think this is very very true and I think this is an important, again, lesson or learning about strategy overall is this idea that there is both an internal strategy that's relevant to you, but there's also a macro environment that you have to take into account. If you're thinking about business or even if you're thinking about your career as a musician or a filmmaker or an artist, there's an ecosystem or an industry or an environment around you that your strategy has to account for and there may be other actors in that environment or other players or competitors in your industry or in your ecosystem, who are making different moves. Right. This is one of the important principles or ideas that would later develop into things like game theory. But, you have to understand and kind of think about your own internal strategy, but also how your strategy will adapt to competitors or competitions or changes in your overall environment. 4. I. The Origin of "Strategy": So, now, the actual word "Strategy" itself also carries through to this idea of both continuous learning, but also really the military tradition that helped pave the way for early strategic thinking. So, the word itself "Strategy" is actually derived from the Greek word "Strategos", which really means to be a successful army leader. A Stratego was somebody who could defeat the enemy through the best use of creativity and also the best utilization or optimization of the resources they have, and obviously one of the most classic and well-known strategy examples from the ancient Greek times were this example of the Trojan Horse, where the Greeks were trying to attack the walled city of Troy. They didn't have a military advantage, they couldn't penetrate the walls, they didn't have enough troops. So, they disguised a horse as a gift to the city of Troy, they had some soldiers who hid inside, and then when the Trojans accepted the gifts, they left the horse inside the city. The Greek soldiers were able to sneak out in the middle of the night, opened the gates and that was able to lead the Greeks to victory. But there are lot of great examples of military strategy and effective strategy and a lot of great teachings from the ancient Greek Empire, and that includes the thinking of Socrates and a lot of other philosophers and military commanders from the time. 5. I. The Modern Military Strategy: So following in the tradition of Sun Tzu, one of the great or next great military strategist to emerge in history is a man by the name of Carl von Clausewitz. He was a Prussian or German general who fought against Napoleon, also a great strategist in his own right, but Clausewitz really wrote the initial bible on military strategy or at least modern military strategy in a book appropriately titled On War. Which again, I highly recommend grabbing a copy or taking a skim through or at least finding an online synopsis or summary of it. But Clausewitz does a couple of important things on On War and through his writings. The first is, he got to offer one of the first definitions of modern strategy. He says that the strategist is really defined by his ability to identify the decisive point, which is their competitive advantage or the unique truth that can provide them the opportunity to victory. Once they recognize this decisive point, their number one goal as a strategist is removing distractions and reallocating, in his case, troops or military resources from secondary things to focus on this unique point. So Clausewitz really again, talks about this idea of strategic prioritization and allocation of resources in a really unique way, that was really at the time he wrote it, fairly ahead of its time. The other thing that he really recognizes is that strategy isn't just about resources. It's not just about planning and it's not even just about the strategist's insight. Strategy is really about leadership and it's about getting people to follow your strategy. He describes strategy, he describes war as a moral and a symbolic struggle. He says you can have the best resources, you can have the best ideas, you can have great plans, but if the people following you aren't committed, your strategy is going to fail. I think you see this throughout the business world today. You see this throughout culture. You obviously see this in the military. Strategies are determined by their execution. I think Clausewitz was one of the first people to really talk about it and write about that in a meaningful way. So again, a great example and a great general text and primer on military strategy that would ultimately, I think influence and inspire a lot of the later strategic thinking in the 19th, 20th, and even into the 21st century. 6. I. Strategy is a Narrative: One of the most fun and maybe relatable analogies are ways that I even like to think about strategy, is imagine yourself as a movie director or as a famous author, and treat strategy the same way that you would treat a story, a novel, or a screenplay, right? Every strategy, just like every story it has a narrative arc that you're trying to follow. It has an ultimate conclusion that you're trying to get to. It has character and plot development along the way. It's segmented into different steps like chapters and scenes are. It's really something that you're trying to craft, follow and develop, and then, make relatable to other people. So, again, obviously you can get bogged down in the technical jargon and I think a lot of people throw around strategy without understanding what it means or potentially trivializing the word. But, again, if you just think of strategy as this idea of a narrative arc, I think it can become much more relatable. One of the really nice things that a lot of strategies and strategists have started doing, is this idea of storyboard development. A great classic example is Airbnb, when Airbnb early on in their time, Brian Chesky and the rest of the leadership team, they really sat down early in Airbnb history and said, "Okay, what is the ideal kind of story or narrative that we want a traveler using Airbnb to experience?" So, they brought in a former Pixar storyboard animator, they walked through this whole process. Understanding that narrative or that experience just at that level, that sort of informed their customer experience strategy. Then, in order to deliver on that customer experience strategy that in turn shaped their product strategy, their corporate strategy and what they ultimately ended up doing. So, I'll talk a little bit more about kind of the idea of strategy being relational or hierarchical and the complexities, and interplays among different strategies in different parts of the company. But, again, I think overall it's really, really helpful to think of strategy as a narrative and even plan for it and work with your teams and talk about it in a lot of the same ways, and using some of the same language of narrative arcs. Again, such as movies, films, TV shows, or novels. 7. I. Strategy as an Algorithm: So, if thinking about strategy is a narrative arc, is helpful for some of the more kind of non-technical people or less quantitative people. Another way to think about it, if you're a software engineer, if you're a mathematician, or a statistician or somebody who really does like Qwan, is think about strategy as an operating logic or an algorithm. This is something that Elon Musk kind of talks about and has popularized with his idea of first principles. Just google Elon Musk first principles, there's a lot of great articles. One particular medium that I can't recall exactly the title of, but there's a lot of good material on sort of how he thinks about breaking down problems and then using first principles as building blocks within his strategy. The second person is actually my former boss, the CEO and one of the founders of percolate Noah Brier, who also has a great blog post on strategy as an algorithm. What I mean by that is, strategy is ultimately about defining rules and there are rules and conditional logic and decision making that people should follow. Because, one of the most important things about strategy, is fundamentally that I think is not at all worth glossing over and really deserves to be paid attention to. It's not just enough to come up with a good strategy, you need to actually make the strategy happen. In order to make the strategy happen, a lot of people who probably weren't involved in developing the strategy, need to be able to follow it. So what a strategy really should allow and should transparently communicate to people involved in it is, how do I think about these yes or no decisions or how do I think about these trade-offs? One simple basic example is just setting priorities. For example, with my marketing organization, I always said we have three priorities. Priority one is to grow revenue. Priority two is to build the brand. So grow awareness and understanding of what we do. Priority three is to deliver a better customer experience. So we're obviously going to orient the strategy around these different thematic pillars. So one simple check is, does this aspect of our strategy accomplish one or more of those three goals? If it does, then it probably belongs in a strategy. If it doesn't, it shouldn't be a part of it. That's a simple way that anybody on the team who's working on something could just simply ask myself. Hey, is what I'm doing related to sales growth, brand growth or customer experience? If the answer is no, they shouldn't do it or they should lower it in their priority set and focus on other things that are more impactful along those three themes. So again, thinking about strategy is a way to lay out an operating decision making logic or an algorithm that you can hopefully even eventually encode into systems or into software tools to track your strategy. A very simple example of that would be, tagging. You might use strategic planning or budgeting software where you're going to have specific thematic tags related to your strategic pillars or your strategy goals. Similarly one of the things Percolate did a lot of work on and our software was this idea of sort of encoding your strategy into a calendar, encoding your strategy into strategic briefs and then watching that kind of flow throughout the rest of the system and tracking downstream actions and content that was developed. Again, you want to think about strategy not only as a narrative arc and as a story, but you also want to think about it as an algorithm that can help to guide decision making. 8. I. Strategy is Hierarchical: So, hopefully, at this point if you taken one thing away, it's that strategy is really about where do you aspire to go or what do you aspire to be and what's your plan, what's your path to get there. That's really what strategy is designed to do. It's the plan or the path and then how you communicate it to make sure that that plan or path is followed. Obviously, one important thing to recognize which again might be obvious to you if you spent a lot of time within an organization or you've done a lot of work with strategy, is this idea or the fact that strategy is hierarchical. You might have a corporate strategy at the CEO, CSO, or executive level that might flow down for example to having a product strategy on the product side and a growth strategy on the business side. The growth strategy could encompass your sales and marketing strategy and then you could break that down further at a team or department level. So, marketing might have brand strategy, marketing will have a social media strategy, a digital strategy, a content strategy and all of those different strategies need to simultaneously operate at the point of decision and what I mean by that is whenever you get into larger organizations, typically any organization in my experience over 100 or about 150 people, the people that are closest to the problem are usually the most qualified to understand it and solve it. Sometimes they need a little bit of expert guidance or a kind of strategic guidance from management or from more senior executives, but you want to make sure that strategy is being operated at the front lines. You don't want the generals who are way back and actually can't see the battle telling the troops what to do. The troops, the people who are on the ground, the people who are fighting the fight are going to understand the strategy or at least the conditions that the strategy entails better than pretty much anybody else. So, it's really important to have strategy flowing top down from senior management saying, here are the priorities and here's what we need to accomplish, but also having strategy work bottom up. So, again at the point the strategy is happening, maybe that's the point of customer interaction on your website or the point where a customer shows up in your store, it's really important that those people involved at the front-line of your strategy are the people collecting data on how your strategy is performing are feeding it back to the executives, to the strategists, and to other people. So, it's really important to understand that strategy is hierarchical and it flows top down but it's also really important to understand that at least measuring strategy or understanding strategy and a lot of the short term strategic decision making or maybe agile pivots that need to happen with a strategy, they really need to come bottom up. 9. I. The Essential Levels of Strategy: In practical terms, at least from my standpoint, every strategy should have at least five levels. At the top most level, you have really the mission. That's, what's your purpose, if you know Simon Sinek, it's what's your ultimate why. Why do you exist? What are you trying to accomplish? Again, this is one of the most important guiding North Star inputs into your strategy. What are we ultimately trying to accomplish, and who are we ultimately trying to be? So, that's the most strategic top level one. I really really strongly encourage you as a leader, as a manager, as an executive, or anyone involved in strategy, make sure you write this down, document it, film it. Do things that help other people in your organization or other people that need to work with their strategy bond, with it, understand it, and then consistently reinforce that as much as possible. Talk about it, tell stories about it, use case studies, show examples. It's really really important that everybody who's involved in a strategy understands the mission, but not only that, believes in it, and doesn't lose sight of it. The next level down for me is all about the vision. I think vision and mission are very closely related. But for me mission is your ultimate why, and your vision is where and how do you get there. It's where's the industry going, what makes us unique and special. What's maybe our competitive selling point or point of differentiation. If the mission is why do you exist. The vision is why are you going to be successful in what you're doing, and how is your strategy going to ultimately start to take shape and play out. After that, you're really starting to get into the actual third layer which is strategic planning. Once you understand mission and vision, you can actually start to shape a strategy from that. I think once you get into that point, that's when you want to start thinking about an operating plan or a strategic plan, maybe a set of forecasting spreadsheets. Again, maybe you want to start encoding this into software, other tools, but this is the point where you actually want to shape strategy by writing briefs, by creating documents. Again, the more documentation, the more content, the more media, the more you can clearly communicate strategy, the better. Then, for your fourth and fifth levels of strategy. That's when it really starts to get into the execution level. If strategy is level three, your level four is things like your roadmap. That might be a three month or a one quarter roadmap, that might be your annual product roadmap, or maybe a six month roadmap. But the roadmap is where you really start to lay out plans. It's really saying here's our project plan, or here's our timeline, or here are the different milestones that need to happen sequentially for us to realize our strategy. Finally, with the fifth level is really about the execution. This is where you start to get into specific tasks, specific projects, specific initiatives, and things that you're going to keep doing to make sure that you are moving along that timeline, and that you're achieving your strategy. Think about strategy at five different levels. They're mission, vision, strategy, or strategic plan, roadmap, and then the actual execution that's going to make your strategy happen. 10. II. Scientific Management: So obviously, strategic management and strategy have existed throughout time. As I've said, they've existed for thousands, hundreds of years. Obviously, in the business world, successful entrepreneurs, successful business people through the time of mercantilism have always looked to get competitive advantages, to drive profits, to manage their employees and resources more effectively. So fundamentally, that's not new. But in the 20th century, what you start to see is the actual emergence of strategy as a proper discipline. I think the first person to know if you're not familiar with his work is a gentleman by the name of Frederick Taylor. So, Frederick Taylor read it kind of the turn of the century worked in a steel mill in Philadelphia, and I guess you could effectively describe Frederick Taylor as a perfectionist if there ever was one, right? He was really really occupied, almost preoccupied with this idea of quantitatively breaking down work, right? Before then, there had been sweatshops, there had been assembly lines and things like that, but nobody had ever really gone through the precise process of counting and saying, "Okay, how many minutes or how many hours does it take to do this step? What if we did this thing differently? How much time with that save us?" So, Frederick Taylor started going through this process of really benchmarking each specific step of manufacturing, and introduce this concept of strategic management, which is really this idea of using again quantitative principles and measurements to improve the results of things. So, what Frederick Taylor did, and one of the people that he actually started working with very early on in his career was a gentleman by the name of Henry Ford, who you probably recognize from the Ford Motor Company. So, Taylor and Ford started working together. I think Taylor was very influential on Ford. In 1903, when they kind of first started working together, and Ford was just getting going with the Ford Motor Company, it took 12 hours for Ford to make a single car. Roughly, 10 years later by 1914, he had gone from making a car in 12 hours to making a car in about an hour and a half, using a lot of the optimizations and assembly line innovations that he developed and that were inspired by working with Taylor. So, Taylor went on to write his own seminal text, the foundations of strategic management that ended up inspiring a lot of business school practices particularly, early on at Harvard, and then later, you pen Wharton. But I think it's important to remember and just really understand that Frederick Taylor's idea of strategic management, and this idea of quantifying and benchmarking your management, your manufacturing process, and the other aspects of your business was really something that had never been done as rigorously or as scientifically, and that would ultimately become kind of the foundation of modern business strategy. 11. II. HBS and Strategy: So as I mentioned previously, in the 1960s, the practice of strategy and strategic management really takes off in the business world. I don't know exactly why, it could have something to do with the post-economic growth period following World War II. It could be the fact that roughly a generation of business people had been able to go through the strategic management process at this point, which was introduced roughly 50 years earlier. But in the 1960s, strategy really takes off. A couple important things happened. So, Alfred Chandler, who was a professor at Harvard Business School, he published a pretty seminal work, Strategy and Structure, which basically says, "Strategy has to follow structure, and however your business is shaped and organized, that's going to inform your strategy." Chandler's work was really, really influential for another Harvard professor who'd come along later, Michael D Watkins, who framed what I would consider the modern Harvard Business School definition of strategy. And Watkins says, "Your mission is what you're doing. Your vision is why you're doing it." And I think it's interesting because I would actually flip the two and say, your mission is more your why. But I think that's fine. Your strategy is like the resources, it's how you're actually going to do it. Then finally, the value propositions is like the what or the whom, like how are you actually accomplishing things. I think it's worth noting at this point we're talking a little bit about value propositions because whether you're using the Watkins strategic framework, or you're using something like the business model canvas, you're going to walk through the same process of thinking about the value levers for a business. The nice thing about this is, there's only about roughly five or so, if I'm using, and above, modernized version of the McKinsey definition. And it's really really important to think about these, to write them out, to answer them for yourselves, and think about strategy's role in enabling them. So, essentially, what I mean by a value lever is that, whether you're talking about your own business, or your own company, or your own efforts and projects, or you're talking about your product or services' ability to do something for another company, say for a customer or a client. There's really only a few value levers and ways you can create growth or create economic value. Essentially, you can do volume up. So, you can sell more of an existing product or service. Right? So, if I'm Apple, and I'm selling iPhones, or MacBooks, or whatever, if I sell more units, I'm going to increase growth and I'm going to make more money. So, that's lever one. Lever two is price up. So, you can price at a premium. If you're able to increase your prices, you should thereby increase your profit margins, if all of their things, ceteris paribus, remain equal. So, that's a second pricing power value lever. If you are like a luxury brand or a premium product, or you're defining and creating a new market, you have pricing power, and you have the ability to charge a higher price thereby creating more value and thereby creating more growth. The third lever would be the opposite. It would be cost down. So, say your costs are flat, or you have a certain cost trajectory, or rather sorry, say your pricing is flat and you have a certain pricing trajectory, but if you're able to keep prices steady and you're able to reduce costs faster more significantly, you can similarly capture more efficiencies, reduce inputs and materials, and thereby create more value that way. I think the fourth value lever is really this idea of risk. So, it's actually the reduction of risk. This is the creation of long term competitive advantages, the investments, and things like strategic partnerships. But it's doing things that don't necessarily pay value dividends immediately, but de-risk your future value trajectory. Then, I think finally, sort of the fifth value lever, is really this idea of the why and the purpose. It's really all about motivation. If you are able to inspire your employees, build them more, I guess you could say, forward thinking, ambitious, aspirational, and your entrepreneurial culture, you'll typically see better business performance. This is actually a benchmarked fact, that companies that can really establish this type of purpose really become mission driven, often tend to see outsized business performance, and increase shareholder value creation. 12. II. BCG and Strategic Consulting: A second important strategy development in the 1960s, was Bruce Henderson, who spun off from another organization to start a consultancy called Boston Consulting Group or BCG. At the time, consulting existed, and there were management consultants, but a lot of consultancies focused on practices like financial accounting and there really was no established practice for strategy. So, Henderson really created at BCG and McKinsey would soon follow suit, the first practice in management consulting. Henderson's real contributions to the field, is he was one of the first people who thought about strategy in almost Darwinian or evolutionary terms. So, similar to some later thinkers, like Michael Porter, he thought about strategy is this competition between different lifeforms. He thought of it as an evolving process and he was also one of the first strategists to talk about strategy as a mix of imagination and logic. Strategy has a creative side, but as I mentioned previously, it also has rules driven, its algorithmic, its logical. Henderson was very interested in the interplay between the two. So, his work at BCG and McKinsey's later work, really established a lot of the modern management strategy frameworks that exist in business today. 13. II. McKinsey's Strategy Frameworks: McKinsey's strategy practice gets a little bit of a later start than BCG and they don't really ramp things up until the 1970's. But when they do, they start to contribute some of the most important influential and you could even say iconic strategy frameworks that have again been very useful and influential both for management consultants, as well as executives, leaders and strategists overall. So, the first important McKinsey strategy is the 9 Box model, which is one that they actually invented alongside GE. What the 9 Box model does is it takes industry attractiveness and plots it on the Y or the vertical axis, and it takes internal capabilities or competitiveness and graphs it on the X-axis. You then create nine boxes going from low competitiveness and low attractiveness all the way up to high competitiveness or high value rather and high competitive ability or ability to win in that segment. What the 9 Box model is really all about is it's a portfolio strategy model and a way to benchmark your own competencies. So, if you operate a portfolio, if you operate a business that operates across multiple industries or multiple product lines or has multiple revenue streams, it's a way to benchmark, self-assess yourself and say, "Okay, here are the spaces and here the opportunities where there's a lot of business value that we should really prioritize, and here's where we're best equipped to win." Once you understand those things about yourself, then you can really start to dictate things like investment prioritization, product prioritization, and how you want to focus on these different competency areas or sections of your business. The second area or the second important McKinsey framework is the 7S model. The S's are all S words. So, there is style, skill, staff, strategy, structure, and systems. They are all united by this idea of shared values. I think the important thing to understand about this second McKinsey framework is the fact that on one level it's still fairly comprehensive. If you look at a business, if you really look at any business company or even your own personal project, you can break it down in those different ways. Your structure might be your organizational structure, your systems might be the technology, and software, and tools that you use. Your staff is obviously the people involved in their capabilities. Of course, you're going to have a strategy. But I think the most important thing is again, beyond using it as a self-assessment tool, what McKinsey really tries to point out is by putting shared values in the center, what they're really saying is it's not so much any of the individual components, it's really about the cohesiveness between all of them. So, having specific strengths in one areas or advantages actually isn't as good as just making sure that all the different pieces are working together or that if you're in a large organization, different parts of the organization are collaborating, they're cooperating and they're achieving success together. So, again, I think this is a really important principle. I've definitely seen and lived this where you might be in a company where the sales organization is really great at selling something but the product isn't particularly good, or maybe you have an excellent product but marketing isn't able to devise the right channel strategy to get it out there. So, it's really important that, A, you have a balanced strategy portfolio that all the different seven S's you've thought through them and they really are balanced and working together. But more importantly, they're all operating off a shared set of values and your strategy might be one of those. So, again, a really important second way to think about prioritization but also organizational cohesiveness. McKinsey's third really important or influential strategy framework, is this idea of the three horizons of growth. Again, this is also probably something that you've seen visually in your work before. But what McKinsey does is they chart three different sequential curves. You've got curve one, which is the first horizon, and then at the end of that horizon, a second one branches off, and then a third one branches off the end of the second. So, these horizons are meant to represent a company's growth. So, horizon one is the core business, it's what you're doing today, it's how you're making money, it's the products that you're producing today. That's where you want a certain amount of your focus, you'd arguably say most of your focus. Horizon two is adjacent business models or opportunities. Then horizon three is long term R&D, maybe investments or strategic investments, partnerships and things that you want to work on long term that are really important for future growth, but may not be as important now and may only deserve a small percentage of prioritization. It's also important to think about this from a company life-cycle standpoint in terms of like stacked revenue streams, right? A lot of companies don't always or can't always grow by just selling more and more of the same single things because you reach a certain point where your market is saturated or your markets mature, there's only so much demand for something. So, most companies if you think about it, they grow by adding additional revenue streams. They either sell more or add on new and different products, or they figure out new markets or ways to resell or redevelop what they're already selling. So, if we use maybe the example of Google, for example, Google's core business is obviously search and advertising, that the lion's share of their revenue. The most staff at Google is working on those types of things. That's obviously a place where they want to continue to invest and grow because that's the core business, that's where the majority of their revenue is coming from. Now, horizon two might be new products. That could be for example, Google Cloud which is something they've obviously introduced. They've commercialized, they have lots of users on it but it's not necessarily the core business, just purely from a revenue standpoint. Then horizon three would be something like artificial intelligence. It's something that Google has spent a lot of R&D investment in, is investing a lot from a talent perspective. They've developed TensorFlow which is an open source library for Artificial Intelligence and Machine Learning that they've made available. But they're actually giving away TensorFlow for free right now, it's an open source project. So, you can use it if you're a software developer or an engineer without actually paying for it. But obviously, I would imagine that long term Google sees themselves as an AI or an Artificial Intelligence company. AI is definitely something that's at the core of even how for example, their page rank search algorithms work now. That's something that they're going to imagine or I can imagine they're going to develop additional revenue streams off of in the future. Then finally, the fourth really important influential McKinsey framework is the cost curve. So, the cost curve is another really great one. I've actually worked with cost curves myself in the past. One of the most important, actually long term strategic tools that I feel like you can use is the cost curve. So, for example one famous entrepreneur who has done a lot of great work with cost curves is Elon Musk. So, the entire principle for some of his businesses, both Solar City for example, which was actually a solar business that he helped get going and invested in, as well as his electric car vehicle company Tesla, were really based around cost curve. So, for example with Tesla, Elon Musk looked at the long term cost curve trajectory of lithium ion batteries. What he saw was that, over time lithium ion is going to get cheap enough that you can affordably develop it and the technology will get good and reliable enough that you can affordably develop it and put it in cars. So, by taking this long view and saying, "If I start the business today, in 5-10 years, lithium ion batteries will be at the point where I can cost effectively commercialize them." That allowed him to get a head start against other entrepreneurs who are actually waiting for the cost curve to come down before they dove into the business. So, that's just one example. I think another great example of cost curve thinking really actually comes from Amazon particularly, with Amazon Web Services. So, similarly, Amazon was using a lot of this computing power. They were running a lot of servers and virtual machines and things to obviously operate their core business. But what the Amazon Web Services team did was they looked at the long term cost curve for hardware and for server hosting, and they said, "This is going to continue to get cheaper and cheaper. There's going to continue to be more and more demand for it, so a larger volume need for it. So, we're going to enter into this business now and we're going to be able to build a very large attractive business for us based on this cost curve trajectory." So, again, what the cost curve really does is similarly to an X and Y axes graph, is it charts two things. So, it charts the cost of being able to produce something and really looks across all of the different suppliers in a market to say, "Okay, who's the cheapest supplier of a specific good and how does their cost structure compare to different other suppliers in the market?" Then it looks at the total overall amount of supply. The reason why that's important is because if you look at and you assume that markets are competitive so that the lowest cost supply or the lowest cost products are going to clear or be purchased first. If you look at cost versus volume and then you understand overall demand, you can understand who's well-positioned in the market versus who potentially isn't well-positioned and might not sell all of their products. So, actually to go back to the Amazon example if you think about Amazon's core business of e-commerce and selling products on amazon.com, Amazon along with probably Walmart would be the two cheapest or furthest to the left companies on a lot of the retail cost curves, whereas higher cost suppliers might be further to the right and because Amazon and Walmart can satisfy so much demand at such low costs, those higher cost suppliers or providers might not be able to clear all their products unless they have a specific competitive advantage or product advantage or channel advantage that allows them to get around and sell a higher cost product maybe because it's more interesting or it's higher quality or they have a specific captive market for it. So, again, cost curves are a really great tool to, A, understand the existing state of an industry and how competitive it is and how competitive one company is against another. But it's also a great long term strategic forecasting tool because you can develop cost curves over time and then you can look out at future cost curves and say, "Okay, well, if this trend continues, the industry will look very different or potentially this industry or market will become much more attractive than it is today." So, those are really four very influential, very helpful strategy frameworks that the McKinsey Consulting Group started to develop and commercialize in the 1970's. I think if you're a strategist, familiarizing yourself with all four of them and thinking about how you can apply them in your own work is tremendously valuable and helpful. I rely on a lot of McKinsey strategy framework still today and I think they're very evergreen in terms of helping you think about and structure business problems. 14. II. Advertising Strategic Planning: Around that same time that BCG and then subsequently McKenzie were introducing strategy consulting, a group of forward thinking advertising industry strategists notably at J Walter Thompson in London, we're also thinking about how they could structure things like brand strategy, advertising strategy, and commercial strategy for customers. The team at JWT really came out with the initial, what was titled kind of a planning bible. Planning and advertising means strategy or they're kind of synonymous, if you're not in the industry. What they really looked at with strategy was saying, "Okay, there's really four elements of successful advertising on brand strategy." It has to be data driven, so it has to be inspired by research. It has to be cross-functional, it has to involve everyone on the team. It has to be systematic, so it has to take into account a lot of different factors, a lot of different inputs. Then finally, it has to be continuous. So JWT is actually the first organization that really starts to talk about strategy as a continuous process, as a process informed by data and really think about closed loop strategy, right? I've already talked a little bit about closed loop and what I really mean by close loop, is the idea of, as you operate a process and this cycle happen, the process improves and you learn over time. Each step through the cycle or each revolution, adds more to the process. So a very straightforward example and a lot of you would probably be familiar with, is this idea of a network effect in a company like Uber or Lyft. The ride sharing apps are a great example of a network effect. So the more rides that happen with Uber, the more data Uber captures, the more it gathers, the more it can understand about the taxi or the ride sharing market, and the more it can inform that into its pricing algorithms, the more it can dynamically improve the product, and iterate on the platform offering. Tesla does similar things, a lot of autonomous vehicles and ride sharing companies are doing this now with actual driving data to drive sort of autonomous vehicles. But this idea that as things happen, as more cycles happen within a system or a network, you learn, you capture data as each process cycle goes through. Then you build on those learnings, that was really something that I think JWT really established for the first time in business strategy. Again, building on some of the earlier military strategy work from Carl von Clausewitz. 15. II. Game Theory and Strategy: Another very influential field on the development of strategy is actually kind of the adjacent field of game theory, which is really a way of thinking through and designing strategies for winning games. A really great classic example of this is the Ultimatum Game, which is really a negotiation scenario. So, the Ultimatum Game works like this. It says there are two players and they're separated. Let's say Player 1, which is you is in Room 1 and Player 2, which is me is in Room 2. So, Player 1 is given a choice and they're allowed to divide a certain prize. Maybe it's a certain amount of money between themselves and Player Two, and then player Two has the option to either accept or refuse that offer. So let's say, you as Player 1 are given $100, and you have the choice of splitting that $100 with me. If I accept it, we both get the split amount of money. If I refuse it, nobody gets anything. The interesting thing about the Ultimatum Game is when it's actually done in practice in real life. The most common move for Player 1 is to just split the money 50/50. I get $50. You get $50, and we both walk away with $50, which is actually not a bad outcome for either player. But the interesting thing is, oftentimes if Player 1 splits it 60/40, keeps $60 and offers $40 to the other player, the other player will usually take it, because having $40 is better than having $0. So that scenario often works too, but then the interesting thing is, again, when this experiment is actually performed by researchers in real life, if Player 1 offers Player 2 $30 or less or 30 percent or less, that's usually the point when Player 2 starts to reject the offer, because Player 2 doesn't see it as fair that Player 1 is getting so much more as them. So, it's an interesting psychological tool for example, because ostensibly on one level, getting $30 or getting $20 is still a better outcome for Player Two, but then the psychology of fairness starts to play into it and other kind of behavioral factors start to motivate economic decisions beyond just sort of pure rational logic. So, I think the interesting thing and the important thing to understand about game theory and why I think it's helpful to research and learn and understand as a strategist, is game theory is really about thinking about empathy, putting yourself in another player or actor shoes, and trying to anticipate their decision making as far ahead as you can. Again, negotiations is a great example of game theory. If you're a hostage negotiator or you're negotiating in business, what you're really trying to do is understand what the other player or actor wants, what their best outcome is, and how you can best balance kind of what your desired action or outcome is versus theirs. I think this is a great example. I'm actually really grateful to my parents. Growing up, my dad played a lot of chess with me and a lot of other sort of board and card games. I think this was a really helpful thing for me early on to think about how can I understand what other players might be doing, how can I think about what other scenarios might be, and how can I understand the way the games being played or the game might turn out, so that I can best position myself as I'm developing my own strategy. So when you're thinking about game theory as an analogy for strategy, there's a few different rules or principles that you want to think about. And again, this is similar in some ways to the McKinsey 7 S model, but it's really just a check list or maybe again you could think about it as a set of building blocks, for thinking about a strategy or thinking about the strategic conditions. So, the first thing you want to identify and understand is just the rules of the game. How is the game played? What are the things you can and can't do? Very similarly with strategies, just as in life there are things you can and can't do and those are going to be dictated by kind of the rules of engagement or the rules of the game that you're playing, or the rules of the business you're in or the strategy or the country you live in and things like that. So, that's kind of rule one. I think rule two or building block two of game theory strategy is really think about what the players value. So what do I want to get out of it? What's my ideal goal? What does the other player want to get out of it? What does winning look like for them? Kind of understand those things, and if you understand what motivates or what the values of another player is, you're better positioned to try to anticipate what their moves might or might not be. The next thing is resources. So, what resources are available to you in a game versus what resources are available to your opponent. If we use the chess analogy again, what pieces do you have on the board versus what pieces do they have. If you use the company analogy, what competencies do you have, what competencies do they have. What are your competitive advantages? What are theirs? How much money do you have? How much money do they have? What distributions and customer bases do they have? Think through those types of things. It's really, really helpful to do so. Then you want to think about the individual tactics. Tactics are often related to the rules. If we use the chess example, there are certain moves my pieces are able to make and certain moves that my pieces can't make. But you want to understand like what are the options available and what's the likely first move, and then if a second move is made in response, what would the third move be in response to that, and sort of think through those things. So again, thinking about strategy like a game, thinking about strategy through the lens of game theory, I found really, really helpful. I think hopefully it's helpful to you too. The interesting thing to leave you with or an idea is you can't analyze uncertainty. So, it's impossible to say for certain what the 7th or 8th or 10th move in a game is going to be. But what you can respond to uncertainty if you anticipate potentially different scenarios. So again, this is why strategic forecasting game theory and scenario modeling is so helpful in strategy because you know the future is going to be one way you can anticipate how change might happen or what might occur, but you can plan for how you're going to respond to it and what levers you're going to pull when a certain thing or when a certain outcome happens. 16. II. Scenario and Strategic Planning: I happen to really enjoy history. I hope I'm not boring you, but I just want to make sure that you understand the context of strategy as well as name drop a few great strategic thinkers so that if you want to follow up on their work or read any of their books or thinkings, you know who blazed the trail for later strategies. So, one other important development in strategy that's well worth mentioning, is the advent of scenario planning which really came about in the 1970s, also out of London. One of the pioneers of scenario planning was the team at Royal Dutch Shell, the energy company. One of the things that they were trying to really deal with was all of the volatility in the energy markets, and basically saying, ''Okay, the price of oil could bounce around and it could be this much a barrel, or it could be this little a barrel, and that has dramatic impacts on the economy, it has dramatic impacts on our business, and our strategy.'' What that team started doing is it effectively introduced scenario planning which is really just saying, ''Okay, multiple different outcomes might happen, and we don't know which one's going to happen, so we're going to plan for different outcomes, or we're going to be able to change assumptions. As the assumptions change, as conditions change, as facts change on the ground, it will change our model and we'll be able to adjust course with our strategy.'' Literally by doing this, the team at Royal Dutch Shell was actually able to anticipate and successfully react to two different Middle Eastern oil crises in the same period. So, a really great example, and a really good lesson as a strategist is, as you're building strategy models, try to isolate out as many important variables and assumptions as possible. If you're doing this in Excel or if you're programming it into software, again don't hard code all your assumptions in. For example, if you were trying to assume the size of a market and you're saying, ''Okay, X many units are going to be sold.'' You might not want a hard code that into your model, you might want to code in different ranges. So, if for example, growth in the space happens at a higher rate, you could quickly change your assumption and it would run through and change your calculations and vice versa. Again, investment bankers, management, consultants, strategists, this is pretty common practice. But again, think about scenario modeling, think about strategic forecasting as a dynamic process where you have a hypothesis but the world might change, things may not go the way you want to do. So, you want a plan for different outcomes, or if an outcome happens that you didn't plan for, you want to be able to say, ''Okay, I understand that that happened, I'm going to change this, or if this happens, then I will do these things, or my organization will do these things.'' And you can respond accordingly. 17. II. Porter's Five Forces: Okay. And then the last strategy framework that I'll share, the last historical bit before we dive into the building blocks in the next module is Porter's Five Forces. This is again a very common strategy framework that you probably heard of, fairly influential. So, Porter really talks about five different competitive forces as inputs that should shape your strategy. So, for Porter, there is the threat of new entrants or there's the reality of new entrants. So, when you're in a business, or you're in an industry, if the industry is good, if it's profitable, if there's money to be made, more people are going to enter it. Because they're going to be attracted by those profits or those margins, and you're going to have to account for that, and those new entrants may drive down your pricing power, they may drive down margins, they may add more inventory or more supply relative to demand, and you just want to account for that. So, that's kind of the factor 1. The next factor is the threat of substitute. So again, if we go back to the Uber and Lyft example, if all of a sudden a bunch of people started riding bicycles, that could be a substitute to using Uber, using Lyft, or Uber and Lyft could be substitutes for public transportation or owning your own car. So for example, you want to think about not just who you compete with directly, but also who you compete with indirectly. I think in particular, a great example of this is actually the media industry overall. You might think for example, if you're publishing content on a specific subject, that you're competing with the other people producing content on that subject. And to an extent you are and you might be from a search engine optimization standpoint, or maybe from a buyer attention valuation standpoint, but the reality is you're actually competing with everyone else who's competing with people's time and attention. So, BuzzFeed is competing for the same time and attention in the day that you might devote to Netflix. Or Spotify is competing for the same time and attention that you might devote to a different podcast not on their platform. So, you really want to think about this idea of what is the fixed demand or attention within a given space, relative to the supply. So, that's another and that's the second factor in Porter's model. The third is the pricing or bargaining power of customers. So, if you're in an industry where your customers have a lot of bargaining power, they can again put pressure on you, they might be able to substitute you with another supplier, that's another competitive factor you have to account for. The fourth factor that you have to think about, is this idea of strategic partnerships. This was actually something that was introduced a little bit later in Porter's framework, this wasn't actually part of the initial forces. But you want to be able to think about both partners overall wholistically, so people that you can ally with as well as just specific suppliers. Which is what Porter really focused on. So, an example of this recently in the news is Apple's dispute with one of their chip suppliers Qualcomm, this is an ongoing dispute over the pricing of the inputs that are going to go into the iPhone and other Apple devices. It really depends if the market for iPhones is very, very hot and there's a wide supply of chips, then obviously, Apple has a lot of pricing power. If the supply of chips or a supply of certain types of chip for very advanced uses is pretty limited, then actually Qualcomm or a company like Intel has a lot of pricing power. And then Porter's fifth force which is a little bit his catch-all is this idea of industry rivalry. Here's where Porter lumps things like RND industry competitiveness, innovation, technological, things that you as a company can do to create a competitive advantage. Or things potentially are competitors to do to have a competitive advantage over you. So, overall, those are the five forces that Porter really lays out in his thesis. So, it's the bargaining power of customers, the bargaining power of suppliers, the competitiveness of the industry, overall, or the innovation or pace of innovation within the industry, there's the substitute of fact, and then there's the new entrant effect. These are all of the different sort of strategy, I guess you could say factors or contacts, or input that you want to take into account as you're developing a business strategy, or you're developing your business scenarios. 18. III. The Building Blocks of Strategy: So, now that you know the historical context background and some of the important strategists and strategic frameworks that really contributed to modern strategy, let's talk about how to actually work with strategy, how to design develop and ultimately implement your own successful strategies. To do that, we're going to work with what I'm going to call the building blocks of strategy. So, if we think back to the original definition of strategy that we already covered. A strategy is a plan, it's a road map, or it's a path to achieve a desired outcome or goal, right? If you think about breaking down those different components for example, the plan versus the objectives, we can start to understand and think about strategy as modular components or as building blocks. The exact same way that a child or maybe you growing up worked with Lego building blocks, right? Legos have individual pieces and then you work with the instruction manual to assemble those pieces into different things. Maybe you want to build a Lego car, or a lego castle, or a Lego spaceship and you can do that. I think strategy works the exact same way. I'm going to talk about six specific building blocks of strategy that you can think about, you can work through individually, or work with your team, and that's not only going to help you design and develop your own strategies, but it's also really going to help you when you want to sell, or present them, or communicate them to people that you work with. So, we're going to walk through each of the six specific building blocks. I'm going to explain them, I'll give you some examples, and then I'll give you some of my recommendations and some tips on how best to work with them within the context of your overall strategic development process. 19. III. Block #1: Problem: Okay. So, let's talk about the building blocks of strategy. Although there's no universal consensus among strategists or among strategic practitioners what these are, I've designed them and really kind of put together my building blocks in a way that I think is within the spirit of how McKinsey talks about strategy, how Wieden and Kennedy talks about strategy and how a lot of other strategists think about the structure of a strategy. So, the first strategic building block we're going to talk about is problem. And when I mean problem, what I really ultimately mean is problem clarity. I think one of the most important aspects of strategy again, if we think about it as the focus or the process of developing a plan to achieve certain goals or objectives, is getting from point A, the starting point to the goal itself is ultimately about overcoming challenges or solving problems In terms of figuring out how you can unlock the success at the finish line. I want to tell a little bit a story about this. Because I think ultimately, knowing the right problem to solve is one of the most important things that a strategist needs to learn how to recognize and understand. Obviously, you will develop as a strategist and be able to filter better and use better strategic judgment with experience. But it's really really important to kind of go through the process of this understanding to make sure that you're solving the right problem in the first place. Because a lot of times when strategies fail, it's because their north-star or the initial direction they're pointing is off the mark to begin with. So, an interesting story. If you go back to the 1860s in Finland, there's this little tiny Finnish paper company that sets up a mill on a river. And they're making paper and they're doing fine. When they're asked, when the two founders of the company are asked what company are you in? They don't say they're a paper company. Even back in the 1860s, they say they're a communication company, right? They want to make the paper and the raw materials that people are going to write letters with that newspapers are going to print their papers on, right? They fundamentally talk about themselves as a communications company and they have a strategy that they've designed or rather really a vision to build the raw materials for modern communications even back then. So, as they start to consume more and more energy, as the mill expands, they start getting into electricity. They dam the river and they start harnessing hydro power to fuel their operations. They get involved in other things peripherally involved in communications. As the decades go on, they start to invest very early on in Nordic Telecom. So, when the very first telephone poles and telephone networks are being built out in Finland and in Norway and in Sweden, this little paper company which again sees itself fundamentally as a communications company is one of the first to recognize and invest in this opportunity and builds out this network of telecom lines. They become very instrumental in developing devices for defense and in early robotics. This small paper company, ultimately, transforms itself into the company known as Nokia. Which you've likely heard of which you know grew to 50 something thousand employees. Still one of the largest employers in Finland and a multi-multi-billion dollar revenue company. All because fundamentally, the founders and the leaders of Nokia through the decades and generations, focused on the right problem, right? They weren't focused on how do we become a successful paper company. They were focused on how do we build the raw materials to supply what modern communicators needs. As time changed as technology and social needs changed, they were one of the first people to continue to fulfill that vision, ask the right questions, identify the right problems and challenges. That led to decades and decades and nearly over a century of immense success by Nokia. Now interestingly, if you then fast forward into the 2000s when Apple, BlackBerry, when Google starts developing Android, the iPhone is being commercialized, Nokia kind of loses this focus or really loses this emphasis around being a communications company. They're doing telecom, but they're also investing in networking. They're investing in a lot of other satellite businesses. In some regards, I think they almost lost the plot around understanding where the market was going from a communications standpoint how modern operating systems for mobile devices were evolving. They really lost a tremendous amount of ground to companies like Apple and Google with their Android devices. Nokia is still a successful very large company, but when they really got away from the core problem that they were trying to solve after years and years of success, they really did end up getting out competed by companies that saw the device market and saw mobile communications and had a vision for it in the way that they didn't. So, again, just a really important reminder of this critical importance of understanding the right problems. So, when I'm approaching this as a leader or as a strategist or a problem solver in my own right, I think one of the things that I like to try to do to get to problem clarity is go through an exercise that really just becomes kind of a game of asking why. You can do this by yourself as a solo practitioner or you can also do this with a team. It's actually very fun often to make this a group exercise. So, what I'll typically do is I'll think about what the ultimate goal is that I want to accomplish. Maybe it's I want to develop a certain product and I want to take it to market. Or I want to launch a new business or I want to finalize a certain project and I have a measurable goal and objective for it. Whatever that is, I'm going to frame that and just articulate it in a few sentences, maybe a paragraph again to myself or to my team as best as I can and say, "Okay, here's my best understanding of what we're trying to accomplish and any of the problems or pitfalls or challenges that are going to need to be solved along the way." Maybe we don't have the resources, maybe we don't have enough money to do it. Maybe there's a competitor that we have to figure out how to kind of outmaneuver, right? But just a fundamental statement of like here's the goal, here's the problem that we're trying to solve. I think one of the really nice things to then do is just start this process, almost this chain of asking why, right? So, just to give you like an actionable practical example. Let's say you've got a product and you've launched the product. So, your team's designed it, you've developed it, you've marketed it, you've gone out and sold it, and you're noticing that customers aren't using it as well as you were hoping, right? You're churning out customers or the adoption rates are lower or people aren't getting as much usage and value out of it as possible, and your goal is to figure out why, right? What do we need to do next as a strategist or how do we make sure that this product's successful? Maybe we need to invest more in the product features itself. Maybe we need to make the product easier to understand. Maybe there's design changes or maybe from a services or a customer service standpoint, we need to be better at customer education. Maybe we need to change packaging or the label, right? There's a lot of different potential directions you can go. As a strategist, one of the most important things is really saying, "A, I know the direction we need to know and also I have a sense of the prioritization or the steps or the plan needed to make it happen." So, what I'd like to do in this process is again go through this process of asking why and doing it in chains. So, let's take our example again. So, we have a product, customers aren't using it enough and we want to just understand why. So, ask why? Right? Maybe there are three specific factors. Go out and interview customers. Listen to social media or social listening, online review sites, Twitter, Facebook, LinkedIn, these places can be great sources of data that you can aggregate and understand both at a micro level, but also at a macro listening standpoint. So, there's all these different places where you might try to go out and understand what the core problems or issues are and then go through this process of asking why. So, if the product's hard to understand why is that? Maybe you'll find maybe three specific reasons where people are having difficulties. Or maybe your analytics will tell you there's a certain sticking point in the tool or maybe you thought something was self-evident or designed well and it's not. Or maybe there's a competing product that does something better or people have difficulty getting over the status quo. Again, there's lots of different reasons, but the more you start to ask why and then the second order process of once you start to get maybe that initial answer as to why, ask why that second thing is. Then once you get to that answer, ask why again. You can build out these why chains. I know Simon Sinek and a lot of these people are asking, what's the ultimate why? Like why do you do what you do? I think that's a really great framework or way that you should operate as a strategist. Is once you understand the problem or your best understanding of the problem that you can get to, get together with a group or get together with advisers or an executive team, other people you trust, other people you think have really good vision and try to get to problem clarity by seeking your ultimate why. Along the way, you may understand that you actually do need to redefine your problem. Maybe your weren't potentially trying to solve the wrong problem or going in the wrong direction. But I think you can do a ton and I think you can really illuminate and get a lot of strategic clarity by going through this why process. So, one of the very first recommendations and I think to me really the first building block of strategy is stating the problems, stating the objectives and goals, and then testing that by going through this why process. Interviewing yourself, interviewing others, synthesizing data, and trying to just make sure that you're solving the right problem. You have the right north-star and the rest of your strategic development and execution problem is oriented toward a path that will make you successful. 20. III. Block #2: Insight: The second building block of strategy is insights, and I think it goes without saying or really couldn't be more of an understatement that the best strategies are built on great insights. In some ways, you can think of an insight as the bridge between the problem that you're trying to solve or the objective that you're trying to get to, and the potential solution that you're going to implement to achieve your goals, or the plan that you're going to design. The insight is really the inspiration for the work that you're about to go do further down the road as a strategist. So, I think insights are really important to think about for a couple reasons. One, I think in some regards, finding insights is a lot like finding clues, finding patterns or synthesizing important truths from different elements. In a lot of ways, an insight itself is really kind of finding the true nature or understanding the true nature of something, and that might be a forecast, an aspect of consumer behavior, an unmet need in the market or maybe just really like a brilliant artistic opportunity that you can exploit and really leverage. So, I think that's kind of the way that I commonly think about insights. Again, the other thing that's important to understand usually about most insights, particularly strategic insights is, if you are potentially operating in a vacuum where you just had to come up with your strategy and your strategy was a plan and then you had to make it happen, insights might be less temporal in a sense, but because you have to come up with a strategy, in many cases you're executing a strategy that has a competitive element to it, there might be other players or other strategists out in the market or even other potential game players if you were playing chess, for example, who are playing against you, you have to come up with a strategy that isn't just going to work now but will work in the future and is optimized for a future state of affairs, because often it also takes time to execute a strategy. So, a lot of the best strategies have a forecasting or a strategic planning element to it as I've mentioned before. I mentioned the example of Amazon Web Services, where Amazon looked at the cost curve for Cloud computing or Elon Musk at Tesla looking at the long term trajectory or trend for Lithium-ion batteries. Another example would be Netflix. So, Reed Hastings and the Netflix leadership team, in the earlier days of the Internet, they had a very successful DVD rental business, and they were one of Blockbuster's main competitors. Now, the DVD rental business was actually a great business for Netflix at the time, it was their biggest revenue source, it was a profitable business, they were very happy with it. But the Netflix team looked at the long term trajectory for broadband adoption in the United States and not only penetration rates in terms of adoption, but also the ultimate costs. They said, in the future, a lot more people will have faster internet. It'll be a lot cheaper and they'll be able to consume a lot more bandwidth, and they saw a market opportunity to introduce video streaming and streaming entertainment or digital television well before Amazon or even Hulu and obviously before Blockbuster saw that opportunity. So, very early on in their history, at the point when they had a very attractive DVD business, they invested away from the DVD business where their core business was and really went into that second and third frontier of investing into streaming entertainment services, which again gave them the first mover advantage that allowed them to kind of leave Blockbuster and get ahead of even other great competitors like Amazon or Disney or HBO Go. So, again it was kind of the strategic insight of saying, "Here's where the world is today. Here's where the world is going, adn that's going to create an opportunity or a moment in time where other competitors, other strategists are going to try to be catching up to us. We're going to get that first mover advantage and we're going to be able to execute ahead of it." Now obviously, first mover advantage alone doesn't work as an insight. There's many great examples of the first move that comes along, and then actually the fast follower wins. So, Blackberry with a smartphone or even Palm with the Treo were soundly beaten by Apple and the iPhone and the devices that came along later. MySpace and Friendster were soundly beaten by Facebook which came along a little bit later. So, it's not just about getting the insight and getting going first right. You obviously have to execute faster and better. But I do think having an insight and having the right read on the direction of the market is a really valuable and important thing. Another aspect of insights that they think is really important is broader situational awareness. So, again, a lot of the most creative people a lot of the best strategists that I've ever worked with or I've ever observed are very good at synthesis. They're very good at taking a very holistic macroview of the world. They consume information from a lot of different sources, from social media, from culture, they read a lot of books. It's very important to surround yourself with a healthy flow of information to really help generate insights. I think, as broadly as possible as you can frame your understanding of the world and some early potential trends or directions that it might be going, the better and more successful your strategy will be and the sharper insights you'll be able to get to. One good example that I think is very obvious in retrospect but only a few people really picked up on it at the time, was actually the development of Bitcoin and early Cryptocurrency. So, if you think about it, one of the really core genesis or inflection points for Bitcoin and for decentralized networks and trying to develop a decentralized financial system, was two corresponding things that happened in the world. You had the global financial crisis of 2007/2008, where there's a lot of issues and lack of trusts in the conventional banking system, there's a lot of sense of unfairness and income inequality and Wall Street profiting at the expense of consumers. So, you have large public backlash against that. You have the emergence of the Occupy Wall Street movement which was one of the first decentralized, I guess you could say, social and political protests focused on this, and at the same time, you have this cipher or a cyberpunk community where you have a lot of cryptographers who are starting to gather momentum on the Internet. You have a couple other projects leading up to it such as Zibo proposing bit gold and a few other early cryptographers thinking about this intersection of assets, cryptography, and decentralized networks. All of these different factors coming together ultimately led to the formation of Bitcoin, and then the network building out from there is an ecosystem of exchanges, and providers, and entrepreneurs, and investors start to get into this space. So, if you look at a lot of trends, the distrust for centralized financial providers, issues with the system, decade long trends in terms of income inequality and also the rise of the cryptography movement and a lot of other trends happening on the Internet, you start to see why the intersection of those trends might lead to the formation of this movement and ultimately the formation of bitcoin and these other crypto-protocols. But obviously in retrospect, it may be easier to say that, but people who are very forward thinking, people who are very strategic, were the first ones to pick up on these opportunities and start to tap into that ecosystem and obviously in many cases, did very well for themselves. So, I think that's your role in a lot of ways as a strategist, is looking at these intersections of different things happening in technology, in culture, in consumer behavior and out in the world, and trying to say, "Okay, I'm going to make a couple hypotheses on how these might play out on a five year time frame or on a 10 year time frame, and I'm going to develop and invest and refine my strategies and really try to come up with insights that I don't think most other people recognize or appreciate." So again, that's really my goal and I think one of the most important strategic processes is, once you understand the problem that you're trying to solve or the goal that you're potentially trying to work toward, try to get to this insight, this root truth or understanding that you can develop to put into your campaign or your strategy pitch or your product launch or your company or your project or whatever else it is you might be working on, and really try to synthesize information from as many different places as possible. Again, social media is an incredible source of data and information, reading books obviously. I follow a lot of people on Twitter and whenever I try to learn a new topic, I always try to find typically the smartest people on Twitter who are talking about it. I'll follow them, I'll build lists and I'll try to understand what are they thinking about, what are they reading, what are they talking about, and go through a synthesis process that way. I actually really love what Chris Dixon, who's a venture capitalist you may have heard of. One of his great quotes is "Find the smartest people and figure out what they're doing on their nights and weekends. What they're usually doing on nights and weekends now is probably what the world will be more invested in and what a lot of people will be doing five to 10 years from now." So, again that's another way to potentially spot or identify early trends, is through this synthesis process but really trying to find the smartest minds or the most forward thinking people and leverage their own expertise and understanding and their worldview, and then shape yours around those things. So, again, the second step of strategy is, after you've understood your problem, really work on trying to get to some core insights that you think will differentiate you and your strategy from the competition and will kind of distinguish it and allow you to pursue unique approaches, or successfully outmaneuver other potential competitors in your ecosystem. I think that's usually the two kind of core raw materials that will then allow you to start to structure your solution which I'll talk about in Step 3 or Building Block 3. 21. III. Block #3: Structure: The next building block is structure. Structure is what really starts to bind together your strategy into an operating system or something that can be implemented. So, the structure step which is again Stage 3 is really, really critically important from my standpoint, because it's what really starts to tie together your strategy and takes it from concept to an insight and problem statement and starts to form it into an actual plan that people can understand and follow. One analogy that I like to use here is actually just thinking about any game or sport. Games and sports have rules. If the players don't know the rules, they can't really play the game. Strategy is exactly the same way. A good strategy has rules and everyone playing or implementing or operating under those rules should know what they are. If they don't, they can't follow the strategy. So, what you're really trying to do in the structure stage is answer and really frame three strategic questions: Where are we now, where are we going, and how do we get there? I think the best way to do that is to start with again just a small strategy statement. So you can take your initial few sentences maybe that you wrote when you were talking about your problem statement or when you were developing like a Y or a strategy tree, and just really start to flush that out. What I recommend doing at this stage is either writing a strategic brief, and if you actually want an example of that, I have one on my web site, chrisbolman.com. It's free, you can just go there, download my growth strategy template and there is a link to a google doc of strategy brief template that you can start to work with or and or build out a Business Model Canvas. Again, this is probably something you've also already seen. If not, just Google Business Model Canvas, there's various kinds of free opensource ones that you can find. Once you started to formulate and develop your strategy, once you feel good about the problem and the goal, once you start to feel good about your insight, start to structure strategy into a brief Business Model Canvas or a strategy statement, and then use that as a tool to start to communicate to your teams or potentially your customers or whomever else you're working with, you need to understand the strategy, what is it? Once you've done your initial strategy structuring, I then recommend taking it one or two levels deeper. You might have heard of two frameworks, one being OKR which stands for objectives and key results, and the second being V2MOM which is Vision, Mission, Methods, Obstacles, and Metrics. But these are two strategy frameworks, they can really help structure your strategy even more so and serve as good communication tools or documents to help share out your strategy to a broader team or audience. Personally, I actually prefer of the two, V2MOM. If you're not familiar with it, it's actually a strategy framework that Marc Benioff who founded Salesforce designed and implemented. It was introduced to me by one of my old bosses, Dave King, who now is the CMO of Asana, a project management tool you probably also heard of. So, what it really does is it says, "Okay, we're going to look at kind of the overall strategy." Again, let's look at our vision, let's look at our mission and what we stand for or what we're trying to accomplish, and then let's structure that into methods. Methods are strategy themes that have steps and they have owners. So one method might be, we're going to generate more demand for this product and that's going to have an owner, and it's going to have specific things tied to it. Then each method also has obstacles and has metrics. So, obstacles are, what are the challenges that might prevent us from accomplishing this method? What are the things that we have to understand and solve? Then metrics is how are we going to measure the success of this, and what are we going to tie things toward? So, this process of tying strategy to methods, which again are more implementable themes that have specific owners who might be managers or individual team members, and then having obstacles which again are challenges known frictions and then measurable metrics, it really starts to help structure strategy into action plan that people can follow and carry out. Another thing that's again genuinely really helpful with strategy is thinking about encoding it into systems. This is actually something that percolate that we really designed our software to do. So we wanted to make sure that any marketing organization could encode its marketing strategy, its brand strategy and its brand elements into a system, and then see that visualized in different ways, track or it's brief, visualize its marketing plan over time and various things. Having a system to really map your strategy into whether that's a dedicated tool like percolate or even a more basic project management system like JIRA or Asana or Trello, can be really, really important, because the more system structure you can put around it and the more you can make a strategy easier to follow and track, the more likely people will be to follow it. So, I recommend thinking about strategy in terms of communication structure, which is how we phrase the strategy and how we communicate it so that everybody understands it and knows the rules, and then also system structure which is, what's the software, what are the tools, what are the operational processes that are going to help people follow the strategy, understand and execute it better with less friction. 22. III. Block #4 Plan: So, now that you've started to shape and structure your strategy, the next building block is really about developing the plan or going through the planning process. A plan is really about connecting the structure and the goals of your strategy to actually start to sequence out the individual action steps that are going to be performed to make it happen. So, the common strategy plan might take the shape of spreadsheets, Gantt charts. It might again as I mentioned be encoded into software. In fact, I highly recommend coding into the software. But it's really about sequencing it out over time and taking the strategic themes, the strategic methods, or the Strategic priorities, and actually sequencing actions against them. Then, starting to again structure that in a way that people can understand, and can start to follow such as a project plan or a calendar. The other thing that I think is really good to think about in terms of the planning process, is also breaking down individual plans, and making plans based on disciplines. So, if you're a strategy consultant, or say you're an advertising agency and you're coming up with a campaign strategy, you would go in and you'd say, "Okay, we're going to have a brand strategy, and here's our brand strategy." And we're going to lay that out. We're going to have a communication strategy and we're going to lay that out, that's what we're going to talk about. We're going to have a media strategy. That's the advertising we're going to run in the different media appearances and placements we're going to get, we're going to lay that out. Then, we might have an experience plan or a customer journey map or strategy. Here is our experience architecture or strategy there. Then you're going to talk about and present how all these different aspects fit together. So, the important part of planning is going from, how do we get there or which direction we're going to to the actual actions or steps or milestones that are going to make that happen? And it's translating the structure of a strategy into followable plans, and sequences that individual team members, customers, or other strategy participants can start to execute and follow. 23. III. Block #5: Action: At the end of the day your strategy is going to be manifested through the actual actions that happen to bring it to life, right? You might have excellent ideas, excellent insights and inspiration, but it ultimately is going to come down to the implementation of that, and I think this is one of the most challenging parts of strategy, precisely for a single reason. This is one strategy really leaves the hands of you the strategist, and is passed on for the other implementers and execution participants to really again bring to life. Now, obviously again if you're a freelancer or a small solo entrepreneur, you might be implementing or executing your own strategy, but in most cases particularly in large organizations there's many, many people in fact potentially entire teams departments and business units, responsible for executing different actions or different steps of a strategy. So, what I think is the most important at the actions stage and really working with this building block, is making sure that each action or each step in the strategy or strategic plan has a couple of specific properties or attributes, and again if you can encode these attributes into software and a task management or project management systems, I think that's going to be even more helpful and more likely to kind of keep everyone on strategy. So, obviously the first point is the one I just made, that the actions need to match the strategy. If the action doesn't relate to the strategy, it shouldn't be happening. The next thing, second, is that every action in a strategy needs to have a clear owner. If there's not somebody directly responsible for it, and responsible for the ultimate goals, and outcomes, and execution of the strategy, it's much more likely to fail. So, make sure every action has a clear accountable owner. Next, make sure every action is visible to all of the other participants or orchestrators or executors of a strategy. I think one of the biggest problems large organizations happen is because strategic execution is fragmented across many different people, teams, offices and even geographies and countries. There's not enough visibility, so that some people might be executing on one point of the strategy or one area, they don't know what the other executions are happening in parallel. So, the more you can enable strategic visibility again through software and through systems, and help all of the different strategy participants understand their role and the other actions that are happening around them, the more likely and the more successful they'll be. Again, if you're thinking about orchestrating a complex customer experience or making sure that potentially one channel team like maybe the social media team is coordinating well with the e-mail team, which is coordinating well with the retail team, like that coordination really happens through joint visibility. So, make sure that every action and every participant in a strategy has visibility into the other actions being taken. Next, make sure that every action has a clear deadline and work back plan. Again, this is a place where a system like percolate or a project management tool can be really really helpful and valuable, because again strategies have actions and actions have dependencies, right? You may have to take or achieve one step or launch a product before you can go onto the next steps of the go to market motion, and so being able to say and understand and really track against deadlines and have accountability with the owners, is really, really, really important. You obviously want to try to tag different elements and different actions as much as possible, I think making sure that you understand what elements of the strategy it ties back to, again that's another place that's really, really helpful and important. Every action similarly should have a measurable outcome or you should be able to look at it and know when it's been completed and what the results were. So, going through this process and saying okay every action has an owner, I know when it's on strategy, I know the attributes and properties related to it, the other actors also executing other actions have visibility into each other's work, and then there's clear accountability and deadlines like those are some of the core prerequisites that you want to make sure any strategic plans have laid out with their actions. This is one of the best ways that you can again track how your strategy is actually being executed to iterate, to course correct, to optimize, improve and add other elements to it. So, at this point I've probably kind of thrown a lot at you and I want to kind of break away from a second from the building blocks before we get to the sixth and final building block and talk a little bit about personal experience up to this point, around how to put this together. So, obviously the process of developing a strategy and going from kind of problem and insight to structure framing and then communication and execution is pretty tricky. So, what I've found works best and obviously again it will be situationally dependent is, initially go through a process of trying to develop like a very, very long term strategy, go off, take a week or take a day, do an off site, go on a trip, go on a long walk and think about kind of what your long term strategy and view is going to be. Again, this is your Jeff Bezos, Elon Musk, Reed Hastings, five to 10 year view of the world and how you kind of see that strategy coming together. If you're working for a large corporation or if you're a management consultant, you probably want to do this with your teammates, potentially even more experienced strategists as a collaborative exercise, but you can also do this yourself and I think this is the first kind of element is get together your long term point of view or thesis on the world. Now, the long term point of your thesis on the world, is it going to be very actionable or implementable? Right it's more of a Sci-fi potentially vision or a futurist vision than something that's really tangible today, right? Like, I can't tell somebody to work toward a decade long goal or a goal that's a decade away, and so I think the best way to kind of work in a more manageable time frame, is then take that kind of 10 year or five year goal or vision and try to break that down into the next year. So, what does your one look like? What is an operating plan or a playbook or a strategy for the year and what are the different goals and milestones that you want to accomplish along the way? So, that you could say I started the year here and I'm going to end it here. Then break your year down into quarters. I think three months is a very useful, very realistic strategy, decision making window and strategic planning window, because you might have a year long forecast but a lot can change in a year, right? Your strategy might go through two or three iterations, but if you're thinking about strategy in a three month context, right? The world can obviously change and things can happen in three months, but typically not a lot, and because strategy takes time to implement, right. Like a marketing campaign or a marketing strategy or product strategy it may take weeks and months to even get going, usually you can kind of course correct and operate within three months cycles. So, I like to start with a one year kind of strategic plan that might be a forecast, in a spreadsheet or in a financial model, I'll start with a year long kind of strategy playbook or operating book or strategy statement, and then I'll break that into a three month or one quarter maybe v2 model or framework or document that'll outline, I'll share that with my team, I'll probably do an offsite or maybe a workshop to make sure everybody understands it, get people's feedback, work through it, take points, refine it, ask and answer questions and then that becomes kind of the operating framework that you can then start to get teams working toward and then you want your managers or your direct reports, you want to talk to them in weekly stand ups, weekly status meetings, weekly one on one, how are things going? How are we progressing against your goals or against the method that you own? Or how are we tracking against the metrics? That to me is what I've typically found to be one of the most actionable ways to oriented top down is starting with a 10 year view, compressing that to one year, compressing that into quarters and then breaking that down into weeks and working with that plan. Then I think from a bottom up standpoint, you also want to constantly be soliciting feedback and listening to signals on how your strategy is performing. Now, you don't want to do the equivalent of being a dieter or say and stepping on the scale every day, right and I think we live in a world of abundant data and abundant analytics, and I think it's very easy to kind of mistake noise or look at daily metrics or results and kind of potentially get distracted by that. So, I typically like to look at things on a monthly time frame or on a quarterly time frame and obviously daily and weekly is important. But I think it's not the type of record keeping and it's not the type of measurement that you really want to work toward, but I do think it's important to have it and I think if you are in a very kind of dynamic fast paced business, you probably do want to pay attention to those things or have an analytics professional or someone on the team who is doing that. Similarly, I think if you're a consultant and you're presenting strategy to a client or if you're an advertising agency, you similarly want to think about reasonable, compressible and manageable time-frames, right. So, that might be a single campaign, that might be a single scope of work or project, again think about kind of actionable time-frames and then how you can kind of break that out, and then start to track and manage the strategy along the way. 24. III. Block #6: Results & Learnings: Fewer strategies survived the battlefield of life intact, which is obviously why iteration, results, measurement, and continuous improvement is really, really important. So, the final building block, building block six of strategy, is really about research, results, and learnings. Strategy should be a closed loop process. You should really think of strategy as not so much a timeline or something that's linear, but really something that's cyclical. You might start with a specific outlook or goal, you're going to go through strategic execution, implementation process and then you're going to measure your results, and hopefully, you're going to take learnings away from those, that will then allow you to refine, and improve, and iterate on your strategy. So, I really recommend thinking about strategy as test driven development and again, thinking about it as closed loop. What I mean by closed loop, I really mean like data stays within the system and more and more cycles of data enrich the network. If you think about a publisher like BuzzFeed, for example, they do a tremendous amount of work around data science to really close the loop and understand what articles their audience is reading, what articles and content people are sharing and engaging, and they have whole systems and are starting to even use artificial intelligence and machine learning to parse and really understand their content better, so that they can develop better and better editorial and shareable viral content. I mean, similarly, if you look at a ride sharing app like Lyft or Uber, or you look at a marketplace like Airbnb, it's similarly a system where the more users in the network there are, the more data is captured about the day-to-day operations and activities of the network, and the more that data can then be leveraged or harnessed in order to improve the operations of the network. Now, obviously, there are privacy considerations and there are, obviously, a lot of ethical concerns with the usage of data, I won't get into that here, but I think you should think about strategy as a closed loop process that should capture data as it's being executed, and then you can start to use that data to refine and improve it as you go. One great example of this is actually from General Stanley McChrystal, who is actually one of the military commanders for the US in the Middle East, he took over at some point. Now, McChrystal is a little bit of a controversial character in his personal life, I won't go into that at all here. But I think the point that is very relevant is he was a very successful and very effective organizational and military strategist, and actually he wrote a great book that I recommend a lot of strategists to read, called Team of Teams. What McChrystal really realized was that the US military went into the Middle East with a specific strategy and it wasn't working. Particularly, the strategy of working from large centralized commands, very hierarchical, very top down, very slow moving, McChrystal just saw that the US military couldn't operate at the speed of the enemy, like dealing with decentralized fast moving terrorist organizations and enemy combatants, they couldn't move quickly enough, and so McChrystal established this decentralized operating model in this Team of Teams that he then successfully implemented and executed, that was then able to function in battle a lot more effectively. So, it's the same type of process where almost never are you going to kind of nail a strategy on the first go around. Strategy product market fit success, it's often very iterative, and you might stumble into it and sort of happen there by luck, but the sequences and steps are very predictable and there are patterns. So, you might end up with an unexpected outcome but you can follow this expected consistent path in these building blocks in order to get there. So, I really urge you to think about strategy really as a series of tests, or rather that you're always testing your strategy, or you're always testing your V2MOM, or are you always testing your operating plan, and you're gathering the metrics and key results as you execute on this weekly, monthly and quarterly time frame, and then you're going to feed that back into your process. So, again, if you're having a monthly kick off process to communicate your strategy, make sure you're also having monthly and quarterly review events or analytics meetings to actually review your results and make sure that your course correcting and gathering data and then integrating that back into your process. Another thing that I think is really, really important for a strategist is to think about this idea of the one key metric. So, if you're a tech startup for example, you might measure a lot of different things. You might measure awareness, you might measure acquisition, you might measure revenue, and then potentially things like retention or advocacy. A lot of other businesses will measure along similar time frames. They'll use a customer journey framework like moving someone from unaware to aware, from aware to understanding, from understanding to believing, believing to action and then the action is maybe the purchase, and there's a lot of different consumer journey frameworks. When you want to think about matching your measurement framework to the operating context of your business, if you're in marketing, you should make sure you have these types of funnel metrics. If you're in sales, you should make sure your sales strategy is measuring things like revenue pipeline, rep productivity and things like that. There's lots of different ways to orient the analytics and measurement for the type of strategy and the strategic environment that you're operating in. The more important thing is that you are going through the process of benchmarking and measuring all of those different steps and then feeding them back into the process. So, again, I highly, highly recommend taking some basic data science courses even if you don't consider yourself an analyst or an analytics professional by background, spend some time on the Internet, take a couple of analytics and data science classes and tutorials and really make sure you understand, not just how to look at data and how to measure things and check dashboards, but really understand what to measure in the context of your strategy. Again, that's why I think using a process like V2MOM or using actual software systems for strategic measurement, can really make it a lot easier to make sure that your strategic themes and strategic priorities are clearly mapped to metrics, that you are then measuring different business units, departments, direct reports or teams against. 25. III. Where to Go Next: So, now that you know the six building blocks of strategy, you should be much better positioned as a consultant, or as an advertising agency planner, or as an entrepreneur, or even just as a manager to go out, develop your own strategies and start to iterate and improve on them. Then work with teams or communicate them effectively and make them happen. I think the core point of the building blocks is to think about it again, as I mentioned, as an iterative closed-loop process that works in cycles. Every time you go through a strategic development cycle, let's say on a quarterly basis or on an annual basis, you should be looking to exit that cycle with more data, a better understanding of the core value pillars of your markets, things like your market dynamics, your competitive standing, your products, your customers and their needs, and kind of how those dynamics are working together. Then lastly, you should exit with kind of a clear set of takeaways, and a vision and purpose for how you're going to improve the strategy, and make it better for the next cycle. Now, the building blocks is not an original concept. I didn't invent it. I happen to like and I did actually design these six specific building blocks. There are a few other examples of strategy building blocks out there. McKinsey actually has their own strategy building blocks framework themselves, which you can see right here. I think how you sort of frame and define the building blocks, which specific steps you want to use, what you call it, I think is a lot less important than the overall philosophy of how you approach strategy. I happen to like my building blocks and my sort of sequence and approach a little bit better, but if you prefer McKinsey's, or you want to go and develop your own, I think that's the great thing about building blocks is you can actually design and develop your own process and your own modular components. Then test them in different ways in your work and with your teams to see what works best for you. Again, strategy is very dynamic, it's very iterative. What I appreciate and how I work as a strategist is going to be very different than how you end up working for a variety of reasons, and that's totally okay. I think one of the things that hopefully, you've learned from this module is how to think as a strategist and the different sort of levers that you can work with. I'm not necessarily saying that you always have to follow the buildings blocks plan as a doctrine or really follow it step-by-step, or go into as much detail on each step as I do. Feel free to obviously modify it for how you learn and work best. 26. IV. Why Strategies Win: So, in closing to really kind of tie things all together, one of the things I want to talk a little bit about and really leave you with, is this idea of Why Strategies Win. Because again as I've mentioned there are common design patterns and strategies. Ultimately everyone's context, everyone's environment and reality is going to be a little bit different. But there are some very common universal themes that you can identify both across culture and across business, but even across history, for why specific strategies have won or really emerged as successful during the period that they were designed and executed. So, here's a couple common design patterns for Why Strategies Win. The first is finding strategies to connect supply and demand better for anything, right. This could be supply and demand for music, or a specific media product, or art, or content, or it can be the supply and demand of goods and services. A great example is Craigslist. There were obviously people who wanted to exchange local goods and services before Craigslist, but Craigslist was one of the first services that really took example or rather took advantage of this principle and was able to better connect supply and demand, and became an incredibly successful platform with a very, very small team. The founder was largely operating the platform with a handful of people even though it's scaled up to millions and millions of users. The next is to create unmet or undiscovered demand. So, again, a common example that's highlighted in recent tech history is the iPhone. So, people were buying smartphones to a certain extent, Palm Trios and Blackberries before the iPhone came around. But it was really kind of Steve Jobs and that Apple team. They're kind of core insight that the smartphone could be so much more, it had so much more potential, it could be an operating system with different apps delivering an entirely new customer experience. So, they kind of created this demand or rather unlocked all of this existing demand that nobody really knew they had when they introduced that product, very similar in a way to sort of how they created a lot of demand are unlocked a lot of unknown or unmet demand for the iPod when Apple first introduced that. That's kind of a second principle, is discovering demand that might or might not exist, maybe the demand doesn't even know it exists itself. But creating a product or a solution or a service that unlocks or creates new demand. The next would be unlocking or better utilizing existing supply. So, again AirBnB would be a really good example of this type of principle, which is we already had our homes, or we had our apartments, or we had places that we controlled as property or maybe rented, but we weren't doing as much with it as we potentially could. So there's a whole host of I guess you could say gig economy or sharing economy companies that have emerged recently, that have taken better example or taken better advantage of underutilized assets, and sort of, this is again a common strategy pattern throughout history, which is taking assets or identifying assets that are underused and figuring out new ways to use them and monetize them. So, that's another kind of common strategy pattern. The fourth, is better utilizing or rather reducing the cost of supplying goods and services and things to a market. So, again for example, Spotify, Soundcloud, iTunes, reduce the cost structure of supplying music to people. For goods and services, Amazon and Wal-Mart reduce to the cost structure of supplying a lot of different products to consumers and were able to become very very successful because they were the lowest cost supplier on their supply curve for a variety of different products. So, again if you can supply things two people at the same quality or better quality and do it cheaper, you are typically going to be very successful in whatever strategy you're executing if there's demand for what you're supplying. A next principle, is just leveraging network effects in general. So, if you look at a lot of great network based companies, whether that's Facebook, or Google. If you can create economies of scale, if you can create network effects where the more people using a network the better it gets or the more valuable it is, you'll typically build a great company and you'll also be able to leverage and do what you're doing, leverage economies of scale to kind of get a lot of value at relatively low operating costs. Now, Facebook's actually really interesting if you think about it, because now they've almost reached the point where they have both positive network effects and negative network effects. Because, the more people are the more content creators on the platform filling up the news feed with potentially irrelevant or bad content is actually a bad network effect for Facebook that they have to kind of counteract. So, in a weird way they want more and more people using Facebook, but they actually want less advertisers and less people creating irrelevant content for it. And they have to manage the balance between those two in some ways algorithmically via the news feed algorithm, so that the content being created on Facebook doesn't detract from the user experience. So, an interesting balance to strike there. But again, building and developing and exploiting and discovering network effects is a huge strategic advantage. Then finally figuring out ways to just improve experiences. So, if you can take an existing product, an existing service, or existing experience, and just find ways to do it a lot better, take out frictions, make it more delightful or enjoyable. Again, that's usually a recipe to strategy success. There's a host of different companies again whether it's Spotify, or Instagram, or AirBnB or even a lot of the great kind of retail successes or location based successes. Successful hotel chains, Starbucks in terms of how they designed their venues and their stores to be kind of comforting and make people want to come and visit stay there, access free Wi-Fi. There's a lot of great examples where if you can make the experience for something consistently better, and there's demand for it again to begin with, again you're going to have likely a successful strategy. So, again, those are just a couple common design patterns or maybe checklist that you can run your strategy against. If you're in business, or if you're trying to grow your own personal brand, or your own personal profession, is your strategy achieving some of these things? If it is, then it's probably a good strategy. If it can't or it doesn't, you might want to rethink your strategy, refine your work, and make sure that it does. 27. IV. Develop Your Own Strategies: So, now that you know the six building blocks of strategy, you should be much better positioned as a consultant or as an advertising agency planner or as an entrepreneur or even just as a manager, to go out, develop your own strategies, and start to iterate, and improve on them, and then work with teams or communicate them effectively, and make them happen. I think the core point of the building blocks is to think about it again, as I mentioned, as an iterative closed-loop process that works in cycles. Every time you go through a strategic development cycle, let's say on a quarterly basis or on an annual basis, you should be looking to exit that cycle with more data, a better understanding of the core value pillars of your markets. Things like your market dynamics, your competitive standing, your products, your customers and their needs, and how those dynamics are working together. Then, lastly, you should exit with a clear set of takeaways, and a vision, and purpose for how you're going to improve the strategy, and make it better for the next cycle. Now, the building blocks is not an original concept. I didn't invent it. I happen to like, and I did actually design these six specific building blocks. There are a few other examples of strategy building blocks out there. McKinsey actually has their own strategy building blocks framework themselves, which you can see right here. I think how you frame, and define the building blocks, which specific steps you want to use, what you call it, I think is a lot less important than the overall philosophy of how you approach strategy. I happen to like my building blocks, and my sequence, and approach a little bit better. But if you prefer McKinsey's or you want to go and develop your own, I think that's the great thing about building blocks, is you can actually design, and develop your own process, and your own modular components, and then test them in different ways in your work, and with your teams to see what works best for you. Again strategy is very dynamic. It's very iterative. What I appreciate, and how I work as a strategist, is going to be very different than how you end up working for a variety of reasons, and that's totally okay. I think one of the things that hopefully you've learned from this module is how to think as a strategist, and the different levers that you can work with. I'm not necessarily saying that you always have to follow the buildings blocks plan as a doctrine or really follow it step by step or go into as much detail on each step as I do. Feel free to obviously modify it, for how you learn and work best.