Why Inside-Out Planning is an illusion



Many traditional strategic planning approaches start with the premise that you can design your future and follow a straight line to this future.

We call this Inside-Out Thinking, which is problematic as the underlying assumptions are:

  1. The future can be predicted

  2. The external world is static

Neither of these assumptions is correct. Waterfield’s approach works on the opposite basis ie. Outside-in which has as its assumptions:

  1. The future can not be predicted

  2. The world is complex and dynamic

If the COVID pandemic has taught us anything, it should be that this is correct.


Below is a more detailed look at the Outside-in approach to strategy development and strategy execution.


1. Outside-in logic

The Outside-in logic recognises that the external world is by far the biggest predictor of an organisation's success and there is a long list of very large organisations and sectors that planned their own demise by ignoring this principle:

  • Worldcom

  • Nokia

  • Kodak

  • Taxi industry

  • Music industry

Today the pandemic has probably brought this home very clearly to most people. The starting point of the StrategyConnect process is therefore scanning and interpreting the external environment and how to position your organisation to be a viable and valued player. We have found that the collective knowledge of the whole group is the richest source of information for the future scanning process.


The following diagram shows the logical flow back from the external environment analysis.

2. Progress over precision

Given the speed of change, by the time an organisation has perfected its plan, the external world has changed. We have taken a leaf out of the software industry’s playbook and advocate a rough consensus approach and learning by doing. Interestingly, the World Wide Web developers pioneered this philosophy to build and continue to evolve one of the most significant technological advancements of the 21st Century - the internet. See Wired Magazine article below - “How anarchy works”.


In practice, I am sure this is exactly how your frontline staff operate every day to deal with the multitude of challenges they face. This agile thinking and approach are equally relevant to planning and executing strategy and means the organisation spends less time planning and more time acting and learning. The Strategy Map then evolves in line with the external environment changes and the organisation's capabilities.


As below, the Strategy Map sits at the nexus of the two cycles and matures over time as the organisation gets better and better at simultaneously scanning the external environment and testing its assumptions rapidly.

Conclusion

If your organisation is setting its strategy to win, or its BHAGS (Big Hairy Audacious Goals) or any number of Inside-out planning models whilst paying scant regard to the external environment, then our suggestion is that your organisation will struggle to assert its will on the external world, and more likely to fail.


Our strongest recommendation is to recognise that the external world you operate in is many times more powerful and more complex than you can hope to predict or influence. This is not in the least a defeatist attitude, but dealing with reality.


To succeed is accepting the unpredictability of the future, building your best hypothesis, then acting and adapting quickly.


Kevin Nuttall

Director, Waterfield


For more information on Waterfield's strategy development and execution process, visit strategyconnect.com.au

StrategyConnect provides an outcomes driven approach for developing, managing and executing strategy in a fast changing environment.


Reference:

Wired Mag article 'How anarchy works' at https://www.wired.com/1995/10/ietf/

MIT professor Dave Clark, one of the grand old men of the Internet, "We reject: kings, presidents, and voting. We believe in: rough consensus and running code." Which might translate to, "In the Internet Engineering Task Force, we don't allow caucusing, lobbying, and charismatic leaders to chart our path, but when something out on the Net really seems to work and makes sense to most of us, that's the path we'll adopt."


#strategy #futureplanning #strategicplanning #outsideinstrategy