Strategic IQ

How high is your management teams strategic IQ?  Knowing an approximate answer to this question is valuable. I have argued in the past that strategy is at its core, problem solving and the better your team’s collective comprehension of what they face and options available the less mistakes you make over time.  Strategy is a never ending process that attempts to answer a series of perpetual questions that at its simplest covers – what do we want to achieve, what given my current disposition is stopping us moving forward, how can we overcome this, through what coordinated actions and time frames. It’s the ongoing design of a pathway to a desired future state. My emphasis is on this being a never ending process that is best improved through a conscious changing both of the nature and regularity of conversations your team has. This statement begs four questions:

  1.   How would you define the strategic realm
  2.   What is strategic IQ
  3.   What skills would the team need to collectively develop
  4.   How would you go about upping the aggregate IQ

I define the strategic realm as anything that puts your organisations ability to generate returns that exceed your cost of capital in question or at risk. Why, because irrespective of what your company’s future state goals may be, this is what good strategy achieves.  Anything could include cost diseconomies besetting your business model, need state changes not adequately met with existing products, leadership breakdowns, legislative amendments or new growth platforms underperforming. Fully comprehending challenges and developing a solution pathway that is executable within the resource and risk constraints your face is what your team is paid to do.

I define strategic IQ as the collective understanding and ability your team has within the strategic realm.  I believe there are two elements to this. The first is your team’s innate insight of how your chosen operating model(s) is performing within the context of your chosen market(s). I include intuition, judgement and feel of how internal and external events will impact on your ability to deliver on a future state goal. Some teams are very “context savvy” and are well skilled in defining problem sets and why they pose a risk to the business. The second is an ability to mobilise thought into solution options. How many ways could we solve this problem and which ones offer us the most strategic leverage, make best use of our resource base, minimise risk and most importantly maximise our chance of delivering on the solution requirements.

I break strategic competencies down into what I call meta and action abilities. Meta abilities are those competencies that a team needs to develop and vet the process and outcomes of “doing strategy”. This includes skills like:

  1.    Having a solid understanding of what strategy entails
  2.    Knowing the difference between good or bad strategy
  3.    Understanding whether you have framed a problem correctly
  4.    Whether the process being adopted is appropriately rigorous
  5.    Knowing when to move on or explore a construct in more detail

Action abilities are those competencies that are utilised within the process:

  1.    The questions that get asked
  2.    How problems get framed
  3.    The derivation of solution principles
  4.    How solution options are derived
  5.    The setting of objectives
  6.    Building action plans

Competencies vary significantly across these categories and companies.

Building competencies in this space, like most things, takes time and practice. In my experience the best way to achieve this is through improving your conversational index (CI), the infiltration of strategic conversations into your daily routines. One of the least effective ways is the strategic breakaway. Your CI is a measure of how well and often your team does strategy i.e. practices. Good teams practice all year round and bad ones once a year at the retreat.  High CI teams have better consensus and a more intuitive understanding of some of the basic business building blocks – What’s our core, what competencies most underpin our differentiation, what are our top 3 strategic challenges, what are we trying to grow, what are our most pressing objectives…My preferred route is the introduction of a strategic mind-map that covers must have conversational topics. The map is a dynamic guide that grows around the needs of the team and encourages a more explorative and complete examination of how the business is operating.