Chris Bradley - Strategy Beyond the Hockey Stick: People, Probabilities, and Big Moves to Beat the Odds

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Cartoons: Mike Shapiro created signed cartoons and Jeremy Banks (Banx) created all others

Copyright 2018 by McKinsey & Company. All rights reserved.

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ISBN 978-1-119-48763-0 (ePDF)

ISBN 978-1-119-48760-9 (ePub)

To

Bini, Walter, and Hildegund Hirt

Bibi, Jan-Ferdel, and Ute Smit

Mel, Olivia, Alice, and Harriet Bradley

And to our

Partners and Colleagues at McKinsey & Company

for giving us the opportunity to beat the odds.

In the strategy room, human bias and social dynamics can prevent the necessary big moves from getting on the table, let alone getting executed. In this book we arm ourselves with hard data from thousands of companies to take the social side of strategy head on.

Isnt there another way?

We hear that all the time, and you must have asked yourself that question, tooprobably more than once. Perhaps after an exhausting marathon of strategy sessions that are supposed to be discussions but really are just presentations. Perhaps after feeling compelled to say yes to another investment proposal with uncertain prospects. Perhaps after one of the usual discussions to re-allocate resources to growth opportunities that go nowhere.

Over decades of working with hundreds of the most senior business leaders around the world, we agreed:

There has to be another way...

As interesting as these books are to read, as inspiring as their case examples are, it seems we are still short a breakthrough. Todays strategic challenges are, in fact, very similar to what theyve been over the ages, despite the serious efforts of a lot of smart people.

This book belongs on a different shelf. Rather than relying on the traditional approach of best practices and inspiring anecdotes, we use broad and deep empirical research. We have identified a small number of performance levers that, according to the factual evidence we compiledand our experience in implementing themcan be used to greatly increase your odds of success. We believe weve also found the oneoften overlookedfactor responsible for many of the conundrums facing us in the strategy room, the one factor that has perplexed generations of business leaders, the factor that causes so many strategies to not work out as planned. That factor is what we call the social side of strategy.

In this book, we use empirical insights to finally help you and other business leaders chart a course to address the social side of strategy and, as a result, develop better, bigger, bolder strategies.

There is another way!

As we begin our journey together through the empirics and the social side of strategy, lets peer into the strategy room and look at some of the scenes playing out there. These scenes probably feel familiar to you because they are surprisingly common despite all those books and articles about how to get to better strategy, better decisions, and better business performance.

As the strategy process starts, the team agrees that this year you will avoid huge documents with 150 slides and endless appendices. You commit to having real conversations about the future of the business and the tough choices youll have to make. Then, two days before the first meeting, three of those 150-page documents land in the CEOs in-box with a thud. So much for real conversations. You are back wading through details in carefully scripted presentations that numb the senses before anybody has a chance to fully grasp the content.

Or, you decide that you need to have a deep strategic rethink after a stretch of indifferent results. The top team agrees on a change in direction. The board approves. Then the CFO takes over and turns that vision into a first-year budget. The boldness oozes away as those who stand to lose resources mount rear-guard actions and as other immune responses to real changes kick in. Somehow, that bold rethink produces a new budget that looks a lot like last years budget. Its back to business as usual.

How about a third scenario? The strategy is agreed on. It all looks good on paper, and there is loads of compelling backup. But, somehow, deep down, everybody senses that the strategy is nothing more than hopeful thinking. It is a little too kind to the egos of the people who made it and a little too unwilling to embrace the harsh reality of competition. People two or three levels down in the organizationthe ones who engage with actual customers, the ones who often werent really part of the strategy processconclude that management is stuck in a bubble, roll their eyes, and just get on with what they were doing. All that new strategy ends up being good for is justifying some uneconomic projectsthe ones labeled strategic because they lose money; everybody knows that no real change in trajectory will happen because of them.

Even if you are the CEO, it can feel at times as if the inertia caused by individual behaviors and social dynamics is rather hard to deal withand getting in the way of doing the right thing for your business. One of our client CEOs in Australia recently reflected: I am well aware of the fact that we should be moving faster in that direction, but I have to bring the team along.