As we near the end of the 2nd quarter many boards and executive leadership teams will begin the strategic planning process, and many will fail to move the needle. One major reason is because ‘strategy’ is too often confused with ‘planning’.
A Plan is Not a Strategy
The great strategy pioneer and professor Roger Martin, former Dean of the Rotman School of Business at the University of Toronto (and as my colleague Madeline Fredin calls him, our Patron Saint of Strategy) said:
“In short, strategy is the act of making an integrated set of choices, which positions the organization to win; while planning is the act of laying out projects with timelines, deliverables, budgets, and responsibilities.” - Roger Martin
Banks are generally good at the planning part, because it’s about controlling the controllable— budgets, timelines, policies and procedures. Strategy is about choosing how to react to the things we can’t control— market conditions, competitor actions, customer preferences, technological breakthroughs.
In this rapidly changing environment, here are six principles to apply to put the strategy back into strategic planning
Six Uncommon Principles of Digital Leaders
1) Technology is just a Tool
Strategy first, technology second.
Your biggest problem is probably not that there are so many vendors, and you don’t know who all is out there and who’s the best. For whatever it is you’re trying to accomplish, you could probably win with any of a dozen choices. And you could probably lose with any of them.
Your biggest problem is much more likely that none of the things on your list will help you create and sustain competitive advantage in the market.
Once you nail that, it becomes much easier to understand what technology will help you get there.
2) Continuous Improvement
There is no finish line.
You can’t cross digital payments off your list because you implemented Zelle, or think you’re on the other side of the digital banking divide because you finally have digital account opening. The world keeps moving and the bar keeps getting higher.
That doesn’t mean you need to mindlessly try to keep up in the digital arms race, where 98% of banks are hopelessly outgunned. It means understanding where you choose not to play, where you need to play defense to stay in the game, and picking those few spots where you can win.
Read more: Prioritizing Your Innovation Portfolio
3) Data > Opinions
Strong opinions loosely held.
Gathering your best and brightest around a big brown conference table or off to a nice resort somewhere to ruminate about the future isn’t the answer.
If we don’t have data to help us understand what’s going on, our default decision making mode is going to be the HIPPO – the highest paid person’s opinion.
When Jim Barksdale was CEO of Netscape he used to say, “if we’re going to go with data, let’s go with data; if we’re just going to go with opinions, then let’s just go with mine”.
Making decisions without data is like going all-in at the poker table before you’ve even seen any cards. Data is almost always incomplete, often conflicting, and sometimes inaccurate, but we make better decisions when replace our opinions, with facts.
4) Exploration Before Execution
Nail it, then scale it.
Use Fast, Iterative, Responsive Experiments to de-risk new ideas and as an empirical approach to value creation. Start from the customer and work backwards. Understand the jobs they need to get done, the gains they’re trying to achieve, and maybe most importantly the pains they’re trying to relieve.
Vendor diligence, technical testing, compliance reviews, ROI calculations, and the like are important steps, but none of them matter if you’re not solving a problem your customers care about, in a way they care to use.
5) Agility > Plans
Progress will not be linear.
A good strategic plan is not a static written document or checklist to be followed and updated months or years from now. Strategic planning is a hands-on dynamic process that should be adapted and iterated upon as you begin to gather market data to turn your ideas, past experiences, opinions, and hypotheses into actionable insights. There may likely be a need for more structured project management documentation and controls as activities progress.
6) Action > Talk
The answers aren’t in the conference room.
As Steve Blank famously said, the answers are outside the building. While externalities such as macroeconomic trends, interest rate forecasts, emerging regulatory issues, etc., are critical aspects in determining ultimate success, these are systemic industry factors which generally offer little opportunity to create unique value for individual institutions.
Scope down new ideas to a level where the cost of failure is palatable, and test early and often. Just don’t confuse motion with progress.
Analysis Paralysis can be fatal.
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JP Nicols is cofounder and Managing Director of the Alloy Labs Institute where he helps leaders create competitive advantage to drive new growth through industry-leading best practices, tools, and frameworks.
He is a top-rated speaker and instructor on innovation, strategy, and leadership at leading graduate schools of banking, and cohost of the Breaking Banks Fintech Podcast , the #1 global fintech radio show and podcast.
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