At Ruhl Strategic Partners, we help clients achieve unrealized growth. And the majority of the time: the growth strategies we will develop for our clients will likely turn out to be wrong, probably in multiple ways.’ Because strategy is hypothesis not a defined plan.
It might not be the kind of introduction prospective clients imagine us uttering at the beginning of our first conversation. It might not be the kind of words we actually use. But perhaps we should, every time. Because the prospect of devising a growth strategy requires some strategy of its own, if you want to avoid misunderstandings.
When it comes to achieving business growth for our clients, there are elements that are known and many others that are not. But we can gain insight into the kinds of unknowns the company is dealing with. Even more importantly, we can gain insight into the ways our minds handle the uncertainty that the company is operating under. What assumptions are we making, explicitly and implicitly? And how do we go about once our assumptions turn out untenable? The million dollar question is not so much what steps to take when all goes according to plan. Rather, it is what to do when it does not.
Our million dollar response? Admitting that we have no crystal ball and being upfront with our clients: a growth strategy is not a plan. Strategy is a hypothesis. Understanding this – and learning how to share this understanding with our clients – has proved crucial to both our own and our clients’ success.
However, this insight was a little uncomfortable to gain.
Once upon a time…..
A conference room somewhere in mainland Europe, late afternoon, about 4 years ago. The light streaming in on the eighth floor is soft, September-like, splattering all over the carpet. The air feels a little stuffy. A faint smell of coffee drifts by. Our meeting is about to start. We are in the process of devising a business strategy for one of our first clients, a start-up company in the automotive industry. In a joint effort with chemists from a local university, they have engineered a new type of innovative plastic – scratch-proof, robust yet interestingly pliable – that could well set the standard for next generation dashboard materials and other passenger car applications. It might just take the mobility industry by storm.
That is, if we carefully plan its entrance to the market.
In this meeting, we are about to present a first full draft of the strategy. Though we have done so before with other clients, the moment of presenting a strategy still brings along some nervousness.
And though we do not know it yet, problems may arise at unexpected times and in unexpected ways.
Success Itself is Not Enough – You Need to Understand It
When it comes to getting successful at something, there is no way of pretending first times are not important in life. Yet when it comes to understanding what it is you are doing and why, the heavy lifting is usually done only later on. Only then do you start realizing exactly what is involved in success – and how to adapt your behavior such that it is more likely to befall your endeavors.
That time you managed to ride your first bike right away? Perhaps you had a knack for this kind of bodily comportment, but really, it was also just plain luck. Or that first time you met the partner of your dreams and you hit it off right away, without any stuttering, sweaty palms, awkward silences? Good thing you made it through that horrifying third date – the one where you spilled red wine all over their shirt and they failed to laugh at a single one of your jokes – because your 10-year wedding anniversary next month promises to be a blast.
In professional matters, you only build up expertise by repetition and reflection. Reflecting on both your hits and misses provides insight into the effective ingredients of what you are doing. The first ever meeting at which we presented our strategy to our first ever client went over well. But about 4 years ago, in that slightly stuffy conference room somewhere in mainland Europe, we ran into problems we had not quite foreseen, yet which proved invaluably instructive.
Unexpected Expectations
One of the officers already present pours himself another cup of coffee. Once the CEO arrives, it will be take-off time. As the door to the meeting room slides open and she walks through, I catch the look shooting across my partner’s face. I think I know exactly what has just crossed his mind: in she comes, stern look on her face, folders clutched to her chest, her left arm wrapped tightly around them as if to hold on to them for dear life and squeeze them to death at the same time. Kindly but briskly shaking our hands even before putting her papers down, she takes a seat and starts off right away.
That this document, this strategy, is not quite what they expected us to come up with. That, it’s only a few pages and the work is nonetheless loaded with uncertainties and question marks. That the facts of the matter seem awfully stretched at several points.
The nerves previously coursing through my body are now positively racing. Even some of the co-officers seem a little flustered. She is not sugarcoating anything.
‘How do we know, for instance,’ she continues, flipping through the draft, ‘that we can enter this part of the market? Here, you’re saying that the market for our new plastic in the automotive sector “is attractive for entry.” How do you know that? I attended a mobility congress last year and common wisdom there was divided, really. Yet, you build this whole strategy based on entry attractiveness. Why? I need a plan that can guarantee our investments of the past few years won’t turn out to be wasted. With all the effort that we have put in – ’
Owning the Unknowns
There is no way of denying it: the CEO is right. We do not know for sure whether the market will indeed turn out to be attractive for entry – and this is only one of the valid points she is raising. What is going wrong here? Did we really miss important specifics of the engineered plastics market? Did we accidentally send our client an incomplete draft, rather than the full one? Or are we finally being put to trial like the imposters our nightmares occasionally declare us to be?
Then, with the adrenaline kicking in, comes clarity of mind. The CEO is right – and yet her concerns are beside the point.
‘This is exactly the kind of critical thinking we will need, now and along the way, if we are serious about successfully launching our product – ’
Did the air in the conference room just get a little less stuffy? Our clients seem to breathe a little more easily. So do I.
‘ – because we don’t know for sure whether the market is effectively attractive for entry. We can’t be sure that the companies we will target will indeed favor our plastic over the plastics they use now; despite signs they have been on the lookout for new, innovative plastic, they may have their reasons not to switch suppliers.’
Assumptions, Assumptions, Assumptions
It is then and there, at that meeting table in that slightly less stuffy conference room, that the significance of a basic feature of human cognition kicks in with us: the list of things we do not know for sure, can have a much greater impact on the outcome than the list of things we do know.
As strategic consultants, we cannot change this basic feature of human cognition for our clients, but in our view, we must at all times be straight about it. Uncertainty presents a challenge, possibly even a threat, to the existence and persistence of companies. However, it also opens up room for growth. As consultants, entering this space of possibilities is our expertise. Though our own cognition is just as limited as any other human being’s, we are trained to navigate uncharted ground and then keep track of how we are doing.
Right at the point where we run out of facts, we get to formulate assumptions. Though assumptions are highly provisional, they are also invaluable when proceeding under circumstances of uncertainty – and this description covers most, if not all, business situations. Metaphorically speaking, assumptions are the stilts that can carry us across shallow waters or muddy territory – that is, if we are careful to pick ones that seem fit for the road ahead, and if we keep testing along the way whether these stilts are the right match for these particular waters or muddy grounds.
Strategy is a Hypothesis
At that meeting table 4 years ago, we learned that it is all too easy to confuse a business strategy with a plan. A plan tells you exactly what to do, when and how. However, a growth strategy is not a plan. Strategy is a hypothesis: if we are right to believe that x, y and z, then our best course of action is a, b and c.
A strategy provides opportunities for navigation much like a compass, map and observation skills do, rather than instructions on a treasure map. Treasure map instructions do not take into account what you do know about your environment nor does it systematically deal with the gaps in your knowledge. Rather, when lost you first need to find out where you are in relation to your destination.
Our research and background knowledge of the markets our clients want to enter helps us to oversee and map these markets as well as their dynamics, just as if they were landscapes. The strategy we write for our clients then amounts to a glowing red, first and tentative ‘You are here’-dot onto the maps of these markets. Furthermore, given what we know about the company, we can suggest the best route toward success – one that will most likely play on the company’s strengths and spare its weaknesses.
Learning to be Strategic About Strategy
Back to the stuffy conference room. Our clients have no problem understanding the conceptual difference between a plan and a hypothesis once we elucidate it. The CEO who has been challenging the draft, however, has her own kinds of pressure to deal with. For instance, at investor meetings, her annual or quarterly reports somehow need to show progress. ‘Hypotheses’ are surely very interesting from a science perspective, and market dynamics may always prove to be more complicated than expected, yet she knows her own performance as a CEO will be judged based on criteria less fluid than that.
As strategic partners, we cannot control the kinds of company-internal pressure our clients are under. But we can make every effort to understand those pressures, communicate clearly to avoid simple but significant misunderstandings about the consulting process, and help our clients explain the newly developed growth strategy to the stakeholders they are accountable to.
Embracing the Unknown
With clients that have followed within the mobility, renewable energy and the aerospace sectors, this clarity about expectations has proved highly beneficial to the consulting process and to achieving the desired growth. Because when venturing into the uncharted territory of a new market or developing a new product, clarity about assumptions and expectations – those concerning the market and the company as well as those concerning the consulting process itself – is the most valuable asset around. It is how we get to know each other and build up trust. Without trust and solid knowledge of all partners, navigating the business landscape becomes much harder, if not perilous.
No prospective client is fond of hearing about uncertainties and question marks – We are Ruhl Strategic Partners, helping you achieve unrealized growth. And you have our word: the growth strategy we will develop will likely turn out to be wrong, probably in multiple ways.’ But it is our point of pride to be forthright and tell our clients upfront, Strategy is Hypothesis not a plan. It’s the shortest route to success.
Interested to learn more about our work, Click here to review some of our case studies on the “Our Works” page.
