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September 29, 2006

The difference between Value and Valuable

In our management comfort zones, if we're not in the skeptic's cart, we'll usually associate "strategic" with "valuable" in an almost automatic reaction, with the additional thought of "higher" value coming along for the ride. It just feels like the enormous discipline required by strategy makes the higher value of strategy harder to come by than non-strategic value...

But the big news is that value doesn't come from strategy. Instead, value comes from execution. The essence of value is that it is a difference with a significance -- and that difference doesn't just pop up on its own.

Strategy might define what will be considered "significant" about a difference, and of course that's the real job of strategy: to identify and promote pursuit of what is most important. But literally making that difference occur is what execution is all about.

Thus, while the priorities and positions set by strategy are what we'd consider to be "valuable", that simply means that with them we have a reasonable hypothesis of the potential for value to be gained. The value is not actually there, however, until execution draws it out from real circumstances.

So what are we saying that is not already obvious? Strategy is not action. Strategy, as a plan or an idea, is the money hidden under the mattress while the markets swirl around. Everyone can guess at how valuable a strategy might be, but since real value comes from execution, the irony is that the promised value of strategy generally competes with the real value of execution.

Judging from recent popular management literature, it would seem that strategy loses this competition more often than not. But this is because we tend to discredit the importance of a strategy that must keep changing in order to stay competitive with the outcomes of execution. If the strategy "had it figured out" but then had to change, then wasn't the strategy wrong? And won't it be wrong again if it has to change again?

Think through this, however, and what surfaces is that strategy is not a static reference but instead a dynamic mentality. Like a blueprint, it is essentially a set of design principles iterated for a target moment and location of delivery. The moment and location can change, resulting in a new blueprint while the principles remain the same.

We accept that these days we usually must work against moving targets, but that simply means that we have to have means of deciding in advance what our positions and operations should probably be in the foreseable future. Charting these P's and O's, and then navigating according to the chart, covers a lot of the discipline and commitment in strategy, leaving execution with the job of producing the current movement while also protecting the opportunity for the subsequent ones.

So, while we should measure execution according to that "productivity", we should remember to measure strategy by the strength of the logic with which it identifies leverage in pursuit.

Posted by Malcolm Ryder at September 29, 2006 7:31 PM

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Comments

Really enjoyed reading your articles which add a completely different dimension to the business process model that we use for "defining" business need. To use the term "administration" in a very generic way your Topical Framework "administers" everything in our process models. However our model uses strategic, tactical, operational and control in a top to bottom fashion (as opposed to your maintain, implement, commit and propose). I would like to use your Topical Framework as a different dimension to our model but would have to modify it to avoid confusion. In our credits do we say "based on" Archestra or reference the work of Malcolm Ryder? Our normative model for process definition has a lot more in common with your framework than is published on our web site and have used it for 25 years. We base our definitions on the deliverable of each of the lines of business in an enterprise as "skill, space, event or thing" and modify all of the resultant processes based on the response. Again - very good articles.

Posted by: David Edwards at October 5, 2006 7:04 AM

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