In this series of articles on the ten myths of strategy I intend to break the ten strongest myths about strategy that circulate today—and for a long time already. The main reason is that breaking these myths can help the field move forward. After all, as long we we are clung to false beliefs, we can’t expect any significant progress—which is what we are witnessing. In this article I focus on Myth #7: Strategy Can Be Made By Consultants.
Strategy is one of those areas where consultancies flourish. Influential companies such as McKinsey and the Boston Consulting Group thrive to a large extent by helping their clients through analyzing, assessing, designing, formulating, translating, implementing and monitoring their strategy. They are hired because organizations can’t make strategy on their own and benefit from the specialized expertise of consulting firms.
The reason this works, so the idea goes, is that by going from client to client, consulting firms build deep and broad experience with strategy making that no single organization can build alone. Because organizations only engage in strategy making every now and then, they better use the expertise of consulting firms to help them. Furthermore, exactly because the consulting firms are experts in strategy, hiring them makes any new strategy more credible too.
Why It Is Wrong
There is no doubt that it is useful to occasionally invite an external party to have a look at what you and your organization are doing. They can bring in a fresh perspective, point you at your implicit assumptions and even bring in some new ideas. Being a strategy advisor myself, I would be a hypocrite if I argued differently. However, this doesn’t mean strategy can or should be outsourced to consultants at the levels at which it is currently done. There are at least five reasons why this idea is a myth.
- Consulting firms don’t know enough. Strategy requires two types of very specific knowledge: about your organization and about your external environment. This requires deep experience in your particular line of business and knowing all the important details about how your organization works. Consultancies don’t have this. They know something about strategy and about general industry trends, but they don’t know the specifics. Only you and your organization do. This means that consultants could help you asking the relevant questions. But they don’t have the answers.
- Strategy is too important to outsource. As research and conventional wisdom tell us, organizations should only outsource those activities that aren’t core to their business. This is the basic idea of the “resource-based view” and “core competence approach” that have gained traction and we also know this from outsourcing and offshoring. I would say that, if there is any competence that is core to an organization, it is strategy. Especially in today’s VUCA world, specific competencies related to an organization’s products and services erode quickly. This makes the ability to strategize—to redirect, adapt, focus, align, etc.—the single most competence that organizations need. Outsourcing that, or depending significantly on others for it, seems pretty absurd.
- It reduces leaders’ responsibility and accountability. It is very tempting to outsource strategy to consulting firms. Because it means you can hide behind them. Of course they will make sure that at the end it is you who decides (otherwise they could be held accountable for their advice and they certainly don’t want that). But companies like McKinsey are also hired to create credibility and have someone to point at: “McKinsey said it, so it must be true.” While this could help to give a new strategy or decision some extra weight and credibility, it also means leaders are shifting the responsibility to others. But what is the point of leaders if they are not responsible and accountable for an organization’s strategy?
- Strategy is inseparable from the rest of the organization. The idea that strategy can be left largely to people outside an organization rests on the assumption that strategy is something different than what the organization “normally” does and that can be disconnected from the rest. That may have been the case with the traditional waterfall approach to strategic planning and in a situation where strategy is something for top management alone. But it is no longer the case when the separation between strategy generation and execution over time and in the organization dissolves. When strategy is an inherent part of what people in the organization are doing and when generation and execution are inextricably linked, strategy can’t be outsourced.
- Best practices from elsewhere don’t work. As referred to in my recent article on fit vs. best practice, consulting companies’ original reason of existence was that they transferred practices learned in one organization to another organization. Accordingly, by building experience with strategy across organizations and industries they could become strategy specialists and bring best practices to a wide range of companies. Today, however, organizations are so specific, dynamic and different that this idea of shifting best practices doesn’t really work anymore. Every organization requires a tailored strategy that works for them, in their specific context, and at this specific time. Consulting firms can help creating such strategies but the strategies need to come from the organizations themselves.
As already referred to above, there certainly is a role for consultancies in facilitating and helping companies generate and execute strategy. That’s my job and I would like to think that what I do is relevant. But what the above means is that strategy needs to be much more a core competence of organizations themselves than it is today. Rather than putting your strategy making efforts in the hands of external people, the core part of strategizing needs to be done by the organization itself. You should be in the lead, not they.
For many organizations this will imply quite a shift. It means building an organization-level strategy competence that is mastered by the people within your organization. It means creating adaptive organization-wide strategic processes that enable people of various levels and roles to contribute. It means training your people—and perhaps yourself too—to think strategically in everything they do. And above all, it means taking ownership of strategy rather than leaving it to others.
This post was published earlier here on my forbes.com page.
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