Tuesday, January 11, 2011

Have you tested your strategy lately?

McKinsey offers some useful tests to determine the quality of a corporate strategy. But do you know HOW to create a strategy that passes the tests?

Here are four of the ten tests. They aren't necessarily the most important, but the issues they address crop up in EVERY client I serve. My suspicion, then, is that those same issues crop up in every organization.

Test 5: Does your strategy rest on privileged insights?
Test 6: Does your strategy embrace uncertainty?
Test 7: Does your strategy balance commitment and flexibility?
Test 8: Is your strategy contaminated by bias?

So, I ask...

  • How do you gain insights where others don't?
  • How do you handle uncertainty in the decision making process of strategic planning?
  • Do you quantify the effects of uncertainty? Do you know how to?
  • Do you know how much uncertainty leads to potential risk?
  • How do you make tradeoffs in the decision to gather better information and the cost to do so?
  • How do you make tradeoffs in the decision to gain more control over uncertain events and the cost to do so?
  • Do you attempt to optimize strategies (exposing them to fragility) or make them robust to a wide range of events?
  • How do you control for the effects of bias and avoid committing to favorite strategies versus better ones?

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