Great strategists are like scientists — they test a theory of success and use the evidence to develop better strategy: Jesper B. Sorensen

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Great strategists are like scientists — they test a theory of success and use the evidence to develop better strategy: Jesper B. Sorensen

Synopsis

Jesper B. Sorensen, Stanford University’s Graduate School of Business (GSB), he outlines what makes great business vision — and how to build the best strategy to accomplish this.

Jesper B. Sorensen, Professor, Stanford Graduate School of Business (GSB)

Jesper B. Sorensen teaches at Stanford University’s Graduate School of Business (GSB). Speaking to Srijana Mitra Das, he outlines what makes great business vision — and how to build the best strategy to accomplish this:

What is the core of your research?

My recent research is on the strategy process in organisations and how leaders can align their strategy with execution by having greater clarity about how their strategy will drive their success.

How do you define a company’s strategic vision?

This is what its leaders see as the future state of the world which their organisation could help accomplish. Great organisations help create social change. More environmental sustainability, reduced emissions and less inequality can be parts of a vision of the world a company would like to see. A compelling vision is very inspiring. A lot of the excitement around Tesla stems from the story Tesla tells about itself and what it is trying to accomplish. A strong vision is highly motivating and gives people a sense of direction.

However, a successful organisation needs more than just a compelling vision — it needs clarity on the way it’s going to get there and the distinctive choices, from investments to activities, it will make. The strategy is the roadmap for a company to reach its destination.

What are your insights on building sustainably successful strategy?

My colleague Glenn Carroll and I have co-authored a book titled ‘Making Great Strategy’. We make the case that all sustainably successful strategies have a logically coherent strategy argument at their core. We see strategy as an argument or a way of connecting causes to effects and inputs to outputs. If you think of strategy in that way — as an interconnected set of actions, investments and enabling conditions — then you can see how every company’s strategy is unique. By studying their strategy, you can learn why, for instance, Walmart has been so successful. In our book, we outline how you as a business leader can build the ability to formulate, revise and implement your own strategy argument. This involves developing a set of tools which we call ‘strategy mapping’ or visua lising all the connections between the different things your organisation does and how they can lead to desired outcomes. This can be very collaborative and it helps leaders to think about their logic of success.

Are there case studies of such effective strategy-building?

Apple is a strategically very disciplined and capable organisation. We often think the companies we celebrate today started with a strong idea of how they would succeed and that’s why they succeeded. But, in fact, great companies start with an initial plan, put that into action, evaluate how it unfolds, go over the outcome and update their understanding. Great strategic leaders are like scientists — they have a theory of how they are going to win. When they go to market, they test that theory and use the evidence to revise and develop an even better strategy. In the late 1990s, Steve Jobs didn’t have a clear vision of the iPhone revolution. It came about with a series of experiments — some worked, some didn’t — meeting a commitment to learning from these experiences and incorporating the lessons into Apple’s logic of success.

How important is innovation here?


It is critical — innovation is how you respond to competitor threats and identify new opportunities. But innovation is also how you respond to and drive change. Often, organisations can get frustrated if they feel they’re not generating enough new ideas. One aspect we emphasise in our work is how to manage the innovation process — a good innovation process must have a divergence phase and a convergence phase. The initial divergence phase is about expanding your horizons and generating as many wild and crazy ideas inside your organisation. At the next stage though, as a leader, you find you can’t implement all these ideas. You have to start choosing and filtering for more detailed consideration and investment — that is a critical but under-appreciated stage in the innovation process.

This is typically done by a manager thinking about market demand for a product, how it’ll be produced, the rate of return on the investment, etc. If you implement those criteria too early, you could end up crushing innovation. People who came up with these ideas feel that the next time, they should just come up with something the boss likes — this turns into the opposite of being innovative. So, at that stage, people need to be more careful and find ways to have those offering new ideas validate these themselves.

Views expressed are personal

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