Strategy is hard — really hard — to do well. Many leaders will admit this privately: In an anonymous 2019 survey conducted by Strategy, 37% of 6,000 executive respondents said that their company had a well-defined strategy, and 35% believed that their company’s strategy would lead to success.
Great leaders create ways of engaging their teams that can cut through this strategic fog. They may adopt frameworks to guide their analysis, but they expect participants in strategy discussions to contribute coherent reasoning and defensible ideas. Amazon is well known for its requirement that major initiatives be proposed in the form of a six-page memo. The virtue of the memo — versus a slide deck — is that writing in full sentences and paragraphs forces leaders to clarify how their ideas connect to each other. Similarly, Netflix has driven stunning transformations in the media landscape in part through its success at encouraging its leaders to debate ideas frankly and its willingness to empower them to take risks without waiting for an annual strategy planning process. It is no surprise that CEO Reed Hastings views working from home as “a pure negative” for the company, in part because “debating ideas is harder now.”
The emphasis on vigorous debate at Netflix and Amazon clarifies a truth that many approaches to strategy obscure: At their core, all great strategies are arguments. Sure, companies can and do get lucky; sellers of hand sanitizer, for instance, have done very well during the pandemic. But sustainable success happens only for a set of logically interconnected reasons — that is, because there is a coherent logic underlying how a company’s resources and activities consistently enable it to create and capture value. The role of leaders is to formulate, discover, and revise the logic of success, making what we call strategy arguments.
Many leaders would agree with this claim but struggle with how to translate the insight into practice. What does it mean to construct a strategy argument? How does one evaluate such an argument?
In helping executives answer these questions, we have developed a flexible system of three activities: constructive debate, iterative visualization, and logical formalization. This system is facilitated by a set of concrete activities that can be used to develop a great strategy and execute it on a day-to-day basis. These practices demystify strategy and empower leaders throughout the organization to take control of their strategic destiny. They are neither mystical incantations nor rocket science; some of them have been practiced by logicians and philosophers for several millennia. But typically, they are omitted from the process of corporate strategy making.
The process of creating a great strategy is very different from how that strategy is communicated after its discovery. Put another way, executives should learn how to think like Jeff Bezos and Reed Hastings when tackling new problems, and not simply study the decisions they made. There is no need to wait for a visionary savior to create great strategy.
The Ways and Means of Constructive Debate
Many leaders avoid arguing about strategy at all costs. Arguing is equated with fighting and, at best, is considered an unproductive use of people’s time.
This is a mistake. Arguing is the best way to do strategy, especially in groups, provided the arguments follow established rules of engagement that are rooted in the principles of deductive logic. Great strategy demands the exchange and vetting of ideas — both in its development and implementation.
Listen to Patty McCord, former chief talent officer at Netflix, who asserted, “The main reason the company could continually reinvent itself and thrive, despite so many truly daunting challenges coming at us so fast and furiously, was that we taught people to ask, ‘How do you know that’s true?’ Or my favorite variant, ‘Can you help me understand what leads you to believe that’s true?’” Such questions spawned vigorous internal debates at Netflix that, McCord said, “helped cultivate curiosity and respect and led to invaluable learning both within the team and among functions.”
Why is debate so powerful?
One reason lies in the fallibility of human reasoning. People typically argue inconsistently and are prone to confirmation bias — the tendency to interpret evidence in ways that confirm their preexisting beliefs. But while people suffer from confirmation bias when making their own arguments, it makes them better at evaluating the arguments of others: It causes them to cast a skeptical eye on arguments with which they disagree.
Furthermore, arguing constructively generates buy-in from the people involved. Being heard and having your ideas taken seriously leads to higher levels of commitment, both to specific strategic decisions and the organization as a whole.
Finally, reasoned debate is the only way to change how people think. Constructive debate helps participants understand how others in the group see the situation and allows them to arrive at a shared way of thinking. The result: superior strategic execution and learning.
To ensure that debates are constructive and arguing doesn’t devolve into browbeating and power plays, they need to be orchestrated. This requires thinking about strategic conversations before they begin and answering questions such as the following:
What is the purpose of this conversation?
Devote time and attention, perhaps in consultation with others, to specifying the scope and desired outcome of the strategic dialogue in advance. For instance, if leaders are concerned about a new competitor, the team should debate whether the entrant truly poses a threat before considering costly initiatives to counter it. Accordingly, the purpose of the meeting would be to articulate the strategy argument of the new competitor and determine whether it interferes with the company’s own logic of success. Providing participants with clear guidance regarding the conversation (and assigning prework, if needed) helps them prepare for constructive debate and reduces their uncertainty about the parameters of the discussion.
Who should participate?
Assemble people with relevant information and expertise, those responsible for executing the resulting decisions, and those with the power to make the decisions. Balance the need to represent different views and interests with the practicalities of conducting a productive discussion. We recommend including no more than 10 people, preferably fewer.
What are the participants’ roles?
Most participants will arrive with ideas and proposals of their own, and the meeting should be structured to encourage everyone to share their views. We advise assigning just two roles in a strategic conversation: the facilitator and the devil’s advocate. The facilitator’s job is to get everyone involved by making the participants feel comfortable expressing their views. The devil’s advocate’s job is to challenge claims put forth and ask uncomfortable questions. Ask the remaining participants to leave their job titles and ranks outside the room before the start of the meeting. This is often a challenging ask for participants with the most formal power. Try reminding them that although the ultimate decision still rests with them, their authority should not be used to squelch debate. Instead, they should play subdued roles, not shoot down ideas, and allow their own arguments to be challenged by those with less power.
Where should the session take place?
Choose a setting that offers the participant's freedom of movement to encourage new ways of thinking. There should be enough space to rearrange the seating and multiple whiteboards for sharing ideas. If the meeting must be held online, keep the group small so that everyone remains engaged, and make use of online whiteboarding and collaboration tools.
How should the conversation be opened?
Ask whoever decided to convene the discussion and the facilitator to choose a starter question to kick it off. Choosing a good starter question requires trying to imagine the different ways a conversation could go and how a question might be interpreted by the different participants. For instance, in a meeting regarding stagnant sales, a good starter question might involve asking each participant to arrive prepared to state what they believe the cause to be and why. Avoid yes or no questions, because they tend to polarize discussions and shut down a full consideration of the issues and processes at hand. Avoid specialized jargon as well, especially if it may not be understood by everyone in the room.
Strategy Maps Enable Iterative Visualization
Constructively debating a proposed strategy requires a shared understanding of the strategy. This means not only understanding the connections and causal flow between its elements, but also working creatively and collaboratively to harness different points of view.
During a July 2016 earnings call with Wall Street analysts, Southwest Airlines CEO Gary Kelly found himself battered by hostile questions. Analysts wanted to know why Southwest, which was experiencing revenue and profit declines, was sticking to its long-standing policy of first-come, first-served seating instead of following the lead of other airlines and charging passengers a fee for seat assignments. The analysts argued that Southwest was leaving money on the table.
One might imagine that a similar debate had already taken place within Southwest’s headquarters as the executive team sought to reverse the airline’s declining results. In such a situation, the ability to argue constructively is critical to reaching the right decision. The intuition that seating fees would not help Southwest might be correct, but it should not be accepted simply because it feels right or because that’s what the boss believes.
Unfortunately, such debates devolve into shouting matches in many companies. Opponents hurl opposing justifications at each other, with no clear means of resolution. Meetings drag on interminably as the opposing sides dig in. Finally, a decision is reached, but perhaps only because the most powerful person chooses the option he or she wants.
Instead, leaders can use strategy maps to surface and examine the underlying logic of their alternatives.4 A strategy map is a visual depiction of a strategy argument, using boxes and arrows to represent the structure of connections between ideas. It allows leaders to see how proposed investments and actions are linked to desired outcomes, how parts of a business model fit together, and how causes will supposedly lead to effects.
How might Kelly and his team at Southwest have used a strategy map to guide a discussion of seating fees? To start, put yourself in the team’s shoes. You know that Southwest’s ability to perform quick turnarounds of its planes is critical to its cost advantage. When a plane arrives at a departure gate, passengers are lined up and ready to go, and every employee at the gate and on the plane — flight attendants, pilots, baggage handlers, gate agents — helps them board and get ready for departure. This teamwork fosters flexibility and better labor utilization. Indeed, Southwest flies more available seat miles per worker than other major carriers, despite its shorter flight lengths.
With this in mind, any consideration of fee-based seat assignments requires you to speculate about what will happen if Southwest abandons open seating: Will profits go, or will the impact be different? Such speculation involves visualizing scenarios — in this case, the current reality of open seating and a counterfactual one with assigned seating — to see how a change might reverberate through the system.
The boxes and arrows connected by solid lines in the figure “Mapping Out Strategy Arguments” depict how teamwork at Southwest’s gates improves capacity utilization and lowers staffing requirements. The boxes reflect ideas, concepts, resources, or actions, while the arrows represent causal claims. An arrow from A to B asserts that A causes B — that you believe the teamwork at the gate lowers costs through two distinct channels, one leading to greater capacity utilization and one leading to lower staffing levels.
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