25 years on from when engineers adapted a strategic design tool and applied it to organisation design, it is still the best strategic planning tool in existence.
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Strategic planning is all about creating compelling connections, from clear objectives to the behaviours that will ensure their delivery.
Where those connections are 1:1, strategy is quite simple. But most strategic planning concerns large organisations, with many interrelated goals, across multiple layers and specialisms.
The challenge facing strategic planning
As a result, the strategic planning process became very involved, and quite time consuming. It was not unusual for it to take six months to finalise from top to bottom. And that was when jobs, departments and markets were relatively stable. In addition, each level of the cascade fragmented the goals. As a result, it was not unusual to find departments working against each other and silos forming.Of course, in many situations jobs, departments and markets are no longer stable. And it is not uncommon for things to change quite radically in the six months it takes to cascade.
the rate of change is outstripping the lead time of planning
Furthermore, the top-down nature of the cascade is based upon the notion that the leadership fully understands the organisation. For many industries this is no longer the case.
As a result, some pundits advocate that strategic planning no longer works. They propose a more anarchistic, responsive, short-term approach. This has led in part to the development of Agile methodologies.
However, in complex interrelated organisations, Agile methodologies still benefit from an overall sense of direction and meaning. Furthermore, just because the patterns seem unclear at a detail level does not mean that there are not helpful patterns which can be seen at the next level up – patterns that we ignore at our peril.The design thinking solution
Fortunately, design thinking has an answer to this. In the design of ships, designers often have to adapt what they have drawn on paper. The reality of connecting large pieces of steel often changes people’s thinking. Systems do not connect or fit in as envisaged. Multiple factors affect performance, and each of these compete with each other for resources. Dr Yoji Akao faced this issue back in the late sixties when working with Mitsubishi Heavy Industries on ship design. His solution was a matrix based methodology called Hin-shitsu Ki-no Ten-kai (which translates to Quality Function Deployment or QFD)
a matrix based approach to strategic planning
In the late 1990s a number of organisations adopted and adapted Dr Akao’s approach, and applied it to strategic planning (see the image on the left).The idea is that each row of the matrix represents a primary objective. Each column of the matrix represents a primary business process. Then each cell reflects the key results that the process intends to contribute in ensuring the objective is met. The cells provide the means for engaging ideas and insight from the next level of the organisation.
The tool also provides for weighting, prioritisation, benchmarking, metrics, targets and planning communications. As a result, one diagram can describe the complete top-level strategy for the organisation. This makes it relatively easy to review and adapt in response to changes in the business environment. The basic approach was written up in an e-book: How to Build a Better Business.
Furthermore, you can use the approach at each level of the organisation. Each department or team can use the tool to develop its supporting strategy. In this way, it can deploy the key result commitments it makes to the higher level strategy. And it can engage its people and its sub-processes in creatively exploring how it will do that.
Over the last twenty years, the approach has evolved through experience, ideas and technology advances. As a result, it has enabled us to develop what we now refer to as the Strategic Engagement Matrix.
Benefits of the resulting approach
The design thinking approach provided a means for better engaging their people’s ideas and expertise in the strategy process. And, as a result, it created a strategy document which:
- prioritises the activities required to deliver the goals efficiently
- empowers teams to define and take responsibility for achieving key results
- clarifies interdependencies and builds teamwork across the organisation
- provides opportunities for people to find new and creative ways to deliver value
- enables fast and effective adaptation in response to external disruption
breaks down silo thinking through a clearer, more integrative, context- tracks progress and quickly highlights and addresses emerging issues
- adapts to accommodate fresh perspectives on structure and systems etc.
- ensures all Agile initiatives connect together to create overall success
The Designer Organisation (a paper written for the IJQRM) illustrates the approach as it was back then. Further examples of the use of this design thinking based approach in different environments can be found in the case studies section of Managing by Design (also available in the Case Studies Section below).
Since then, the approach has continued to evolve into what we know today as the Strategic Engagement Matrix.
Other aspects of design thinking in strategic planning
However, it would be wrong to imagine that the Strategic Engagement Matrix is the only contribution that design thinking makes to the strategic planning process. Design tools and tool-based thinking provides many other opportunities to gather the insights that make strategy most effective:
- SWOT analysis and PEST analysis help the organisation to develop greater clarity over what their goals should be.
- Tree Diagrams and Why-How charting enable teams to more clearly understand the interconnectedness between different goals. And how they build together into success.
- Reframing Matrices enable situations to be seen from different perspectives. In this way they help better focus the goals on the opportunities.
- Reversal helps to inspire more creative options for various elements of the strategy.
- Cause and Effect diagrams help analyse the key factors required to ensure success.
- Clotheslines build commitment and consensus for challenging targets. These create the headroom required for innovation.
- Impact Ease grids help to select between competing strategic options to find those that will have quickest impact.
- Force Field Diagrams enable the leadership to plan out the behavioural changes required to ensure their strategy is delivered.
Case Studies of the design thinking approach
- Driving Business Performance: Tells the story of how the approach was used to help an ailing manufacturer. Their strategy enabled them to achieve benchmark performance. And to improve delivery performance by 140%.
- Harnessing Innovation: Illustrates the use of the approach in helping the management of a research facility. The approach provided them with a systematic perspective on performance. As a result, they achieved a 40% productivity improvement.
- Aligning Business Focus: Shows how the approach was used to improve the coherence and performance of a disparate group. In this case a group of largely independent service businesses which became Siemens Shared Services.
- Building Full Commitment: Provides an overview of how the approach was used to design a new, business critical, organisation from scratch. The approach drew out the experience, and built on the commitment, of its newly appointed staff. This is the same case as the IJQRM paper.
- Making Alliances Work: Tells how the approach was used to build a successful virtual organisation between supplier and customer. This resulted in the successful design and implementation of an innovative retail computer system.
- Managing Project Management: Shows how the approach was used at a departmental level in a Project Management Group. It succeeded in providing strategically important performance improvement for the parent company.
- Leveraging Partnerships: Illustrates the use of the approach by a software company. Microsoft used the approach to dramatically improve the performance of strategically important partnerships. As a result they improved sales and customer satisfaction.
A picture of how design thinking comes together into a complete management approach can be found below. Click on it to download it as an A0 PDF.
Useful links:
Track your progress to ensure the efficacy of this strategy.