Martin, Roger. “Strategy is Iterative Prototyping.” Harvard Business Review,
June 6, 2014. https://hbr.org/2014/06/strategy-is-iterative-prototyping
Managers have no way of predicting with any certainty what will happen with respect to an industry and its likely evolution, customers and their likely preferences, a firm itself and its potential capabilities and cost structure, and competitors and their likely responses/actions. We just can’t do it.
One common response to this reality is to ignore the inherent complexity: simplify, analyze, and then make a plan. That typically doesn’t end well, because complexity and unpredictability undermine the plan almost as soon as it is made. A second response is to throw up one’s hands, declare the situation too complicated to make a decision, and adopt an unhelpful interpretation of “emergent strategy,” the modern strategy scourge.
The third approach is to recognize that while the world is complex and uncertain, abdication of choice is not a productive response. This third way treats strategy as prototyping. Prototyping is a tool for progressively shortening the odds of a course of action and minimizing the costs along the way. An organization produces a succession of prototypes to test an idea, gain insights, improve the prototype, test again, gain insights, improve, and so on until the idea is ready for prime time.
The same can hold for strategy. A strategic possibility — a set of answers to the five key questions of strategy (what is our winning aspiration, where will we play, how will we win, what capabilities must we have, and what management systems are required) — is, in fact, a prototype. At first, it is a conceptual prototype. Strategy can be thought of as moving from the conceptual realm to the concrete realm through the process of iterative prototyping.
The first iteration of prototyping involves asking what would have to be true in order for the initial answers to those five questions to be sound and then testing those answers without actually putting the strategy into action. The answers can then be modified and enhanced.
The refined prototype can be tested again, modified, tested again and so on. And with each iteration the tests move further into the realm of action and the marketplace. Aspects of the strategy can be tested by actually doing things with customers — and gaining more understanding to hone and refine the strategy with each iteration.
In fact, the prototyping should never stop. It is ongoing, as you receive new data from the market, your competitors and within your organization. It is better to think of your strategy as not set in stone but rather as the most recent prototype being tested by the latest marketplace experience. That way strategy will never get out of sync with the competitive environment.