This is an archived post from January 2024. However, its lessons are still applicable today so we wanted to bring it into our Substack.

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In my book, I state that “Strategists should keep the ‘bad’ decisions from happening,”[1] before exploring the amount of work that goes into doing that. While not everyone will be preventing bad decisions or solving the largest strategic issues at work, a lot of people will solve various issues that will shape the trajectory of their business. While this can dilute classic concepts of corporate and business strategy,[2] it does mean that, on a high level, being a strategist is not as exclusive as originally contemplated by the field.[3]

This lack of exclusivity should feel intuitive. For instance, you can have some knowledge of law without being a lawyer or have some marketing knowledge without actually working in that field. But with strategy, there is much less rigor about qualification, training, and certifications.[4] And that can potentially make it hard to know when it is time to seek assistance. When people start solving business problems, they often find strategy frameworks and apply those frameworks to some end for better or worse. Seeking frameworks is a good step, but I also suggest looking inward as well.

Solving strategic and other business problems is a very human process. All of your confidence, anxieties, biases, intuition, education, and experiences will impact the way you structure and solve problems. Therefore, a deeper understanding of how those aspects of yourself manifest in your role as a strategist will help you improve solutions and stop bad decisions.

Awareness of your strategy type will help strengthen your approach to problem solving and build stronger and more empathetic teams. In many ways, this is like my experience with StrengthsFinders, Myers Briggs, or DiSC personality inventories, where learning more about teammates allowed us to show respect for diverse opinions while becoming more efficient and effective.

Much like those tools, I’m not suggesting everyone fits squarely in one category. In fact, you will probably think of times that you’ve acted consistently with all types from project-to-project or even within the same project. I am simply asserting that if you start a project on your own or think about a project in a vacuum, you are likely to lead with one of these types. That can have a determinative impact on the outcome, results, and personal stakes for all involved.

Let’s begin by diving into different strategy types. Along the way, we will learn what the types are, the strengths and weaknesses of each, and how to mitigate risks with each perspective. We will conclude by looking at how each could lead to different outcomes with help from a hypothetical situation. But with complete transparency before we begin, this strategist segmentation is based on both observation and various sources. It has not been through multiple rounds of academic testing and development . . . yet. Please enjoy their introduction and feel free to provide feedback in the comments below.

The Four Strategist Types:

These strategy types are derived from the schools of thought that shaped the strategy field over the last 50+ years. These schools of thought are expertly laid out in Walter Kiechel’s The Lords of Strategy: The Secret Intellectual History of the New Corporate World[5] and in Lourdesamy Iruthayasamy’s Understanding Business Strategy: Confusion and Consensus.[6] I’ve merely combined the two sources, added some additional structure, and captured it in the visual below:

The four types fit generally into two buckets. These buckets are based on how the strategy types address corporate and business strategy problems. The first bucket includes “Situational” types. They build or rebuild strategies as problems occur and changes are needed. In more stable times, these strategists are good to monitor future issues and support development of functional and departmental strategies (e.g., IT, marketing, etc.). However, Situational types won’t attempt to reset overall direction unless needed. The Situational bucket contains the Positional and Process strategy types.

The second bucket are “Archetypal” types. They are led by a prototype or model for their company. While Situational types develop recommendations that can change a company’s organizational design and culture, Archetypal strategists build prototypes for organizational designs and culture initially based on their vision or philosophical beliefs. From there, Archetypal types create strategic and operating plans to satisfy their vision or belief with the goal of minimizing or fully alleviating the need for case-by-case strategy formation. The Value-Based Management (“VBM”) types build an archetype strictly around maximizing shareholder value, and the People and Organization (“People & Org”) types build around entrepreneurship and innovation. Both types expect their organizations to naturally absorb and capitalize on changes that would usually activate Situational types into a strategy development process without sacrificing shareholder value or strategic agility, respectively.

The Venn Diagram nature of the visual is to only deliver a sense of overlap among all types. It is not used to deliver a sense of proportion or opposing values. Again, the goal is not to place you immovably into one type. The aim here is to discover what type you lead with and how it impacts your solutions and relationship to other types.

Positional

Positional strategists are primarily focused on industry dynamics, competitive positioning, and strategic scenarios. And in full transparency, this is my personal lead type. This type has been around since Bruce Henderson, who founded Boston Consulting Group, built the strategy consulting industry.[7] Positional strategists will often find market, industry, and competitive data to be determinative for strategy choices. The other types will use this data but will be more open to other business considerations (e.g., financial projections, company culture goals, etc.) to impact strategic direction and choices. Positional strategists will tend to reflect Henderson’s legacy for commitment to business ideas, data gathering, and achieving the best insights.

Positional strategists view strategy making and problem solving as deliberate acts.[8] This approach favors having rigorous business hypotheses and testing them thoroughly against data. Brainstorming sessions and other group problem-solving activities are usually geared towards developing and vetting hypotheses.

However, Positional strategists also risk carrying on less positive aspects of Henderson’s legacy. Henderson preferred to be right in front of prospective clients than win business[9] and designed his firm to deliver challenging and thought-provoking reports and then just leave the clients with little follow up.[10] He also got frustrated when company culture hindered getting the best solutions.[11] Therefore, Positional types must be careful to avoid coming off as adversarial, negative, disrespectful to company history or culture, or unsupportive of teammates who are working through their proposed solutions.

Because Positional strategists share an origin with strategy consulting, they can also get tagged easily with common consulting complaints in their problem solving. If you have heard “we’re just proving common sense,” “this is just analysis paralysis,” or “this is too much work,” then welcome, you might be in this Positional camp. To counteract this, Positional strategists must be patient and transparent with others about what steps they are taking to form strategy and why those steps are important. If this resistance is heavy because of time pressures or culture, then Positional strategists will have to think creatively to answer questions without sacrificing relationships.

Process:

Process strategists are focused on building the best business operations, core competencies, and capabilities within the market and believe sustained competitive advantage can be built on those business concepts. Unfortunately for Process strategists, the consulting products built around this type never gained as much traction as the ones created by the other types.[12] Despite that, Process strategist terminology still lives on and makes appearances in other strategy types, specifically the People and Org type, who rose to prominence at the same time as the Process types. This doesn’t mean Process strategists do not exist or that people should disfavor it as a lead type. There are still many successful firms and engagements focused on business process redesign and other related concepts like time-based competition, reengineering, and the resource-based view of the firm.

Process strategists can run into resistance to completing projects in two ways. First, there is the ever-present risk of constant internal focus. Process types could potentially miss key market or competitive information if they do not make a point to seek it out. Second, Process strategists’ primary focus is on changing the organization, as well as the behaviors of all those involved.[13] This level of change can be difficult to achieve, and those bringing the change may not be welcomed by everyone.[14] Process strategists must use patience in explaining why changes are needed and make good use of change management principles. Otherwise, most of the org will just assume they are getting laid off when Process strategists appear.[15]

Value Based Management:

Value-Based Management types focus primarily on maximizing shareholder value and returns.[16] They do this by optimizing the economic value added of each function of the company.[17] This school of thought emerged in popularity with the rise of shareholder primacy and corporate raider activities in the 1970s and 1980s.[18] However, This school hit prominence in 1993 when Fortune Magazine published an article touting Stern Value Managment’s methodologies and metrics.[19] Despite being an overgeneralization, I use this category to cover all strategists that put the pursuit of financial metrics over considerations of positioning, process, or organization, and it’s my initial assumption for CFO and strategic finance people.

As mentioned above, VBM types build a financial archetype of how the company should be generating shareholder value and then adjust strategy and operations. However, they also risk developing myopia as well. This could cause VBM strategists to push building towards a financial archetype at the cost of secure competitive positioning, strong core capabilities, or other business needs. This type can also be heavily influenced by the need to show quarterly growth and thus limit their potential to plan for the long term. If a VBM type wants to operate a company for the long term, which is certainly not always the case, they should look to the other types for support to beat myopia.

People and Organization:

The People and Organization types believe that the archetypal organization will always be ready to develop and execute strategies because of the leadership, employees, and organizational design that is focused on entrepreneurship and innovation. This type has its origins in the 1980s with publication of In Search of Excellence: Lessons from America’s Best-Run Companies by McKinsey partners Tom Peters and Robert H. Waterman, Jr.[20] In Search of Excellence became one of the best-selling business books of all time and the first business book to occupy the New York Times best-seller list (guys let’s challenge that by buying my book: link to buy here).[21] This popularity highlights the shift in strategy consulting’s predominant focus from being Positional to People and Org. Speaking anecdotally only, this feels like the dominant strategic approach among this generation of managers. Another notable People and Org strategist is Jim Collins,[22] whose books are thoroughly popular as well (seriously guys let’s do this: link to buy here).

People and Org types often have a view that strategy solutions emerge from within the organization rather than as a separate deliberate act.[23] A benefit from emergent strategy making is that it is less disruptive to daily focus and has the potential to build more consensus. If done correctly, you can help build strategic muscle throughout the organization. However, this approach can be difficult to coordinate using a common factbase, introducing new insights, and preventing groupthink, which can collectively lead to a myopic process. The risk of myopia increases because of this type’s pre-existing disposition to focusing on internal business factors for strategic solutions. To work against this, People and Org strategists should build psychological safety and reward teammates for dissenting opinions and data. Therefore, the company should make a regular practice of sharing market, industry, and competitive insights to build a common strategic factbase companywide. If those mitigations are included with regular strategy and business case reviews, then these risks can be counteracted.

Build vs. Buy Sample Problem:

Build vs. Buy decisions come up in a wide range of strategy problems. In that situation, leadership and strategists will, for example, weigh buying a company, contracting for services, and adding fixed assets to close capability gaps, operate in a new country, or improve company operations and profitability.

There is a good deal of math, accounting, and data gathering in a Build vs. Buy decision, but it ultimately ends with a “go or no-go” type of decision. This is where your strategy type can push you to different answers per the visual below:

The visual lays out just how different the types can look at this same problem while having opposing priorities and starting points that can influence the final answer and decision. Even between types, you can find some agreement on potential solutions for totally different reasons. Strategists should avoid diluting decision quality by catering answers to a certain type’s favorite problem-solving approach, decision factors/metrics, or initial hypothesis, even if it is the main decision maker’s type. Ideally, strategists will find unique solutions that consistently advantage their companies by utilizing the different strategist types available to gather all relevant information and diverse perspectives.

Conclusion:

While no one is necessarily pigeon-holed into one strategy type completely, strategists can use this segmentation to better understand their own strength and weaknesses and how to best work with teammates to get better strategy output. However, doing this will take practice and can be difficult to apply in the stress of a project. Therefore, I suggest an honest assessment of yourself. While I do not have an online quiz to help you today, you can build this understanding by reflecting on what makes you comfortable and excited to act on a strategy, your approach to past projects, and interactions with teammates. From there, you should be able to take an educated guess. At that point, you can proceed to assign a type to your teammates and map how you can help form better decisions and increase the likelihood of success.

[1] Norton, Patrick W. Revamping the Permanent Growth Environment: How Good Strategy Beats Market Pressures. RQ Enterprises. 2023. Pg. 80.

[2] Remult, Richard P. Good Strategy Bad Strategy: The Difference and Why it Matters. Currency. 2011. Pg. 5.

[3] Kiechel III, Walter. The Lords of Strategy: The Secret Intellectual History of the New Corporate World. Harvard Business Review Press. 2010. Pg. 24-25.

[4] Norton, Revamping the Permanent Growth Environment, pg. 7-8.

[5] See, generally Kiechel III, The Lords of Strategy. generally. In the book, Kiechel lays out three phases of strategy, which are Positional, Process, and People. I have taken the liberty to include Value Based Management given debates on whether the CFO should be the chief strategist of the company as well (See: https://hbr.org/2016/01/whos-better-at-strategy-cfos-or-csos ).

[6] Iruthayasamy, Lourdesamy. Understanding Business Strategy: Consensus and Confusion. Springer. 2021. Pg. 40.

[7] Kiechel III, The Lords of Strategy, Chapters 1 and 2, pg. 5-8.

[8] Iruthayasamy, Understanding Business Strategy, pg. 40.

[9] Kiechel III, The Lords of Strategy, pg. 49.

[10] Kiechel III, The Lords of Strategy, pg. 86.

[11] Kiechel III, The Lords of Strategy, pg. 16.

[12] Kiechel III, The Lords of Strategy, pg. 254.

[13] Kiechel III, The Lords of Strategy, pg. 254.

[14] Kiechel III, The Lords of Strategy, pg. 254.

[15] Kiechel III, The Lords of Strategy, pg. 248.

[16] Kiechel III, The Lords of Strategy, pg. 212-215.

[17] Kiechel III, The Lords of Strategy, pg. 212-215.

[18] Kiechel III, The Lords of Strategy, pg. 212-215.

[19] Kiechel III, The Lords of Strategy, pg. 212-215.

[20] Kiechel III, The Lords of Strategy, pg. 144-147.

[21] Kiechel III, The Lords of Strategy, pg. 146. And https://thinkers50.com/blog/leadership/tom-peters-interview/#:~:text=In%201982%20Tom%20Peters%20and,sold%20over%205%20million%20copies.

[22] Kiechel III, The Lords of Strategy, pg. 144-156.

[23] Iruthayasamy, Understanding Business Strategy, pg. 40.

Picture from Wikimedia Commons

This is an archived post from April 2023. However, its lessons are still applicable today so we wanted to bring it into our Substack.

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I don’t consider myself a cinephile. I also don’t really have the education or experience in filmmaking to criticize movies professionally or philosophically discuss what broadly advances cinema. However, like most people, I know what I love about movies and what will bring me to the theater. For the last 15 years and foreseeable future, the superhero movie genre, specifically the Marvel Cinematic Universe, has been that draw for me. Ever since I was a young boy, I have always loved anything pertaining to superheroes. I’ve read comics off and on, watched tons of animated series, and have shown up for superhero content since Batman (1989). I even watch YouTube videos breaking down the easter eggs, easily missed details, and potential future storylines. In other words, a good superhero film can entertain me for a while and will be fun on repeat viewings.

That’s why I surprised myself when I realized, while suggesting movies to a family member, that Everything Everywhere All at Once was my favorite movie from 2022. . . What? I didn’t say that I only watched superhero movies. I really can’t remember the last time a Marvel movie wasn’t my favorite movie of the year. If you told me that in the same year with a Doctor Strange and a Black Panther movie that a critically acclaimed and Oscar winning indie movie would be my favorite . . . I would seriously wonder if you fell and hit your head or something.

So intuitively, I know Marvel Phase 4 wasn’t as compelling as previous phases. But I still had a good time watching every movie and show, and I’m really pumped for the Multiverse Saga going forward. However, if you google “Marvel Phase 4 Problems” or search “Marvel Phase 4 Sucks” on YouTube, you’d think Marvel had put out a slate of laughably bad movies and shows that have now put itself and the entire superhero movie concept in question or on a path to imminent failure. I won’t waste your time by covering all the critiques I saw, but I recommend a thorough internet search if you want a deeper background on this post.

To that, I just want to tell everyone carrying those hyperbolic takes, even if just for entertainment purposes, to take a deep breath and think of something calming. It’s really not that bad. In this post, I will look at some of the more, in my opinion, objective critiques I found about Phase 4. If you have a problem with story beats, characters, group representation, CGI, or other things that are really a matter of taste, I’m more than happy to let you continue your Marvel bias without interruption. However, some critiques invoke general business concepts, the Marvel business model, or other issues that we can look at with more objectivity. Then, we’ll conclude with the real threats to Marvel and superhero movies that studios should look for when planning the future. With that, let’s assemble and take on Marvel Phase 4.

Box Office Results Don’t Mean What They Say

In your future searches about Marvel Phase 4 problems, you might hear something like “Phase 4 didn’t make as much money as the prior phases, which means people are giving up on Marvel.” This is simply incorrect. Do not turn to these people for business analysis. We all know one reason why Marvel didn’t earn the same money in prior phases, which is the pandemic. Not only is the entire industry down 35%, but there are also a lot of questions about whether consumers have changed their movie viewing habits for good.[1] More and more people are opting to wait until streaming, which is pressuring theaters to add to their in-person experience.[2] I know this will make some of you cringe, but I’ve had a long standing rule about only going to the theater for movies with big special effects or action. There are many great movies with dialogue as their best and climatic moments, but I catch those on streaming now. And it seems like I’m not alone in drawing lines on what is a prerequisite of going to the theater.

Another Covid impact is on international distribution, which became more limited everywhere, including China. Marvel, who makes 60% of their box office on average internationally,[3] went without distribution in China for about four years, which is basically all of Phase 4.[4] But it’s not just China. The pandemic clearly forced Marvel to limit its entire international distribution during the pandemic. Some people point to the fact that Spider-Man: No Way Home made $1.9B at the box office as evidence that people would still see the movies if they were good. Once again, this is faulty. Spider-Man: No Way Home, in addition to featuring one of the best-known superheroes ever, was released in 70 countries with a re-release in 16 countries.[5] Doctor Strange in the Multiverse of Madness, which came really close to the billion dollar-mark, was released in 47 countries.[6] Black Panther: Wakanda Forever was released in 45 countries, which included China but only about 3 months after the original release date.[7] For context, Doctor Strange (2016) was released in 78 countries,[8] and Black Panther (2018) was released in 70 counties.

Continuing in the spirit of not comparing apples to oranges, Phase 4 critics must be careful to not be foiled by basic math as well. On its face, Marvel worldwide box office receipts dropped 58% and domestic box office dropped 48% between Phase 3 and Phase 4.[9] This is well ahead of the 35% industry dop and would be proof that Marvel fans have given up on Phase 4. But . . . Marvel Phase 3 had four more movies, including two of the highest grossing films of all time. Of course, Marvel did have 11 Disney+ releases in Phase 4, but those numbers are tucked inside the overall revenue for the platform along with Star Wars projects and everything else. If you look at the domestic box office on a per movie basis, the drop is a much more impressive 18% or only a little over half of the total industry drop. By the box office numbers, Marvel is not in trouble or at least in way less trouble than the whole industry.

Quantity over Quality

I take this criticism more seriously than the faulty business analysis. However, it is a problem that works both ways. Marvel and the other superhero movies are basically the Westerns of our day. Westerns had an incredible run as a dominant genre in Hollywood from the silent film era to the late 1960s.[10] With multiple studios putting out many westerns of inconsistent quality, the genre eventually burned out. Especially with audience and consumer tastes beginning to change.[11] Marvel and the superhero genre is insulated from this a little bit. With two main studios driving superhero content, the opportunity for genre exhaustion seems less likely.

An increase in quantity does allow more opportunities for quality to slip, but it also gives an opportunity for a rebound. In Phase 4, Thor: Love and Thunder and Eternals became two of Marvel’s lowest rated movies on Rotten Tomatoes and Metacritic. As you’ll see in the chart below, this drove the average Phase 4 Rotten Tomatoes and Metacritic score to the lowest of any phase. However, when you factor in the 7 Disney+ shows, then Phase 4’s average scores look more normal.

Ultimately, there is more to love and hate for both critics and fans. This affirms that there is a balance for Marvel to walk in the amount of content. Disney will seemingly take care of this problem by force, or maybe a snap, with its current cost-cutting plan impacting Phase 5 production and releases.[12] Marvel Studio Head Kevin Feige also understands that rationalizing releases will help Marvel recreate the pop cultural impact and moments that it wants.[13] By the numbers, Marvel maintained its standard critical reception. But it did so the hard way with volume, a process they are currently rethinking.

The Marvel Formula and Superhero Fatigue

Marvel criticism for being too formulaic coupled with the argument around superhero fatigue directly related to (and often supported by) matters of taste.[14] For background, the Marvel Formula is a little vague, but it seems to have everything to do with the plot structure, CGI, comedy, and budget size.[15] This mixture has created the consistent Marvel quality we’re used to.[16] Superhero fatigue is the concept that audiences will tire of these movies and move on to something else like the aforementioned Westerns.[17] Phase 4 has certainly been the target of both Marvel Formula criticism and speculation around increasing superhero fatigue.[18]

But whenever I read about these concerns, it sounds more like questions around business maturity.[19] Basically, the quintessential business question: how long will a good thing last? Maybe it’s asked by tired critics who never loved superhero movies and are wondering how many more they have to watch before audiences get to something else. Maybe it’s asked by fans, like me, who want to make sure they always have a slate of superhero movies to watch. Maybe it’s asked by people who are looking at Marvel’s dominance and weighing that against Marvel’s responsibility to push cinema as an art form forward.[20] Either way, when will Marvel fall?

I think we’ve established that Phase 4 is far from proof that Marvel is ready to crumble. It might however be reaching maturity, even though evidence of this is sparse as well. For example, Marvel’s worldwide box office receipts per movie grew from 38% between Phase 1 and Phase 2 and 40% between Phase 2 and Phase 3.[21] Then the pandemic hit, which skewed the data. Were box office receipts going to grow by 40%+ or was growth going to slow? I can’t tell. With movies, even slowing growth doesn’t necessarily mean that the business has hit maturity. Of course, a business entering maturity doesn’t mean that it’s going anywhere. In many ways, wondering about when the MCU will end as a business is like asking when will McDonald’s, General Electric, Coca-Cola, or Google end? No business will necessarily last forever, but if the MCU is still making strong revenue, even decades and decades from now, it will still be making superhero movies.[22] Its role in Hollywood and cinema might change, but it will still be there.

Real Threat and Conclusion:

If it’s a matter of taste that you didn’t like Phase 4, then it would be fun debating the legacy and new characters, the explorations of grief, the story and plot point experiments, etc. However, extrapolating that to a pending Marvel business failure is a big stretch. The real threat to Marvel is exactly what you think it is. If people just randomly lose interest or they fail consistently to make movies that are fun and worth watching, then our superheroes will be under a much greater threat than any villain could muster. But none of that has happened yet, so I will see you at the movies.

Sources:

[1]

(PBS Newshour Report) and https://www.statista.com/statistics/187069/north-american-box-office-gross-revenue-since-1980/

[2] See note i.

[3] Based on analysis of IMDB data

[4] https://www.cnn.com/2023/01/19/media/disney-marvel-film-releases-china-intl-hnk/index.html

[5] https://www.imdb.com/title/tt10872600/releaseinfo/#releases

[6] https://www.imdb.com/title/tt9419884/releaseinfo/

[7] https://www.imdb.com/title/tt9114286/releaseinfo/

[8] https://www.imdb.com/title/tt1211837/releaseinfo/?ref_=tt_dt_rdat

[9] Based on analysis of IMDB data.

[10] https://screenculturejournal.com/2017/04/the-decline-in-popularity-of-the-western-film-genre/

[11] See note ix.

[12] https://www.giantfreakinrobot.com/ent/marvel-shows-risk-disney-cuts.html

[13] https://www.ign.com/articles/marvel-president-kevin-feige-disney-plus

[14] https://www.cbr.com/signs-audiences-critics-have-superhero-fatigue/#some-directors-criticize-the-genre

[15] https://thesciencesurvey.com/arts-entertainment/2022/03/06/the-marvel-formula-is-the-key-to-box-office-success/#:~:text=The%20steadfast%20popularity%20of%20movies,%2Dgenerated%20imagery%20(CGI)

[16] See note xv.

[17] See note ix.

[18] https://www.theguardian.com/film/2022/jul/12/have-we-gone-from-marvel-fatigue-to-marvel-exhaustion ; https://morningconsult.com/2021/12/06/marvel-superhero-film-fatigue/

[19] https://www.themarysue.com/superhero-fatigue-conversation-needs-to-end/

[20] https://www.esquire.com/uk/culture/film/a40653210/martin-scorsese-marvel/

[21] Box office receipt analysis based on IMDB data.

[22] https://variety.com/2023/film/news/marvel-kevin-feige-superhero-fatigue-1235499609/

This is a chapter from my book, Revamping the Permanent Growth Environment: How Good Strategy Beats Market Pressure, and reproduced here in this article. The full book is available for purchase on Amazon and Barnes & Noble.

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Chapter 1

The Permanent Growth Environment

The business environment plays as much of an important role in strategy formation and decision making as any factor we will discuss. Many scholars have shown that social context, societal factors, and environment will influence decision making. For example, people will want to fit with norms, favor the status quo, and select the default option through non-decision. Over time, those decisions stack up and legacies are created. These legacies become the foundations of cultures. This culture provides the menu of acceptable decisions and philosophical positions for people. In politics, this is called the Overton Window. And, in business, this effect is real, and it sets what is acceptable for business decision making.

There is a lot that goes into building the business Overton Window. First, the capitalist system. No matter the point of view, it cannot be understated the basic expectation of private property rights, especially those over profits, and the impact of having free markets. Preserving capitalism is often at the center of policy debates, and it filters into decisions at individual firms. The concept is built into core competitive concepts and key business metrics. As the old business axiom states, “what gets measured, gets done.” That applies no matter what expenditure being considered.

An extension of capitalism is shareholder primacy. Depending on the terminology and business type, shareholders, stockholders, or members (for simplicity, we will refer to them as shareholders going forward) own certain rights to a business’ profits and to vote on key matters, including the election of directors. It is generally accepted that shareholders believe their interest must come before the interests of any other stakeholder in the company, and their main interest is profit maximization. If profits are not maximized, then shareholders have the right and responsibility to smear the company in the media, sue the company, remove corporate officers, attempt a hostile takeover, or all of the above. This belief has only grown stronger as private equity funds, institutional shareholders, and activist shareholders have come armed with business metrics and plans focused on unlocking shareholder value.

Shareholders have reinforced this philosophy by applying the right incentives and pressures on corporate officers. Most directly is through executive compensation. It is commonly known and understood that stock awards, stock options, and other equity-based incentives add great wealth to the officers of the company. From 1978 to 2018, CEO compensation at the 350 largest publicly traded companies increased 940% with stock compensation as a main contributor. Stock compensation makes shareholders out of executives. Thus, in their view, any decision to abandon shareholder primacy is a limiter on maximizing their own wealth. For publicly traded companies, this means maximizing the stock price, which means taking actions that are generally accepted by Wall Street to unlock value (e.g., cost reductions, buybacks, etc.).

Debt can also reinforce the concept of shareholder primacy by establishing another type of primacy. After the Great Depression, people were leery about using debt. This was understandable since deflation makes it harder to pay debts, and deflation was rampant during the Great Depression. Those sentiments faded over time, but even a firm like the Boston Consulting Group had to work hard in the 1960s and 70s to convince businesses to increase financial leverage to gain market share.

Currently, corporate debt is at its highest levels in terms of total dollars and near all-time highs as a percentage of the gross domestic product. There are many reasons for this, but what follows are some of the bigger ones. For private equity, debt is used to purchase companies without committing too much shareholder capital and allows better returns. In certain situations, debt can be a positive market signal that a company is on a good course. Debt is also favored by management because it generally is a cheaper way to raise funds than issuing new shares and carries a lower cost of capital going forward. This lower cost of capital allows executives to approve more projects and investments, which can lead to higher and faster returns.

However, debt covenants can lead to strict financial management to stay ahead of certain bank requirements. For example, a bank can require a company to maintain certain financial ratios (e.g., debt-to-equity, current ratio, etc.) at a set amount and place restrictions on merger and acquisition activity and shareholder payouts. In some cases, debtholders will even have priority over the shareholders in a distribution of corporate profits and assets. This seemingly creates debtholder primacy. This combined shareholder and debtholder primacy provides the motivating basis for many corporate strategies and decision making. But, for the purposes for the rest of this book, we will refer to this collectively as shareholder primacy.

Another key business environmental factor is human nature. Corporate decision makers, whether they are CEOs, board members, or divisional presidents, are people. And people have needs. In this case, these people are securing the resources to feed their families, pay their bills, etc. Additionally, there are ambitions, reputations, commitments to culture, and many other personal considerations that can go into a business decision. The authors of Strategy Beyond the Hockey Stick: People, Probabilities, and Big Moves to Beat the Odds refer to this as the “social side of strategy.” They argue that this “social side of strategy” is a major contributing factor in preventing companies from making large bets that could vastly improve their performance.

The internal and personal stakes for corporate decision makers cannot be understated. Annie Duke explains in her book Thinking in Bets: Making Smarter Decision When You Don’t Have All the Facts that the net effect of the biases, cognitive distortions, and other personal needs is motivated reasoning. In short, you are the protagonist of your own story. Anything that complicates or challenges that position will be rejected. Simply put, you are motivated to reason yourself to a position where your viewpoint is confirmed. Once you attach pecuniary interests to this motivated reasoning, then you can see how correct Upton Sinclair was when he wrote, “it is difficult to get a man to understand something, when his salary depends on his not understanding it.” While capitalism, shareholder primacy, and human nature seem like an exhaustive list in explaining the decision-making context in business, we will see that politics and time pressures play a key role as well.

Politics is a consistent corporate topic. Colloquially speaking, we have all heard “I can’t believe [x] got a promotion, they must be good at politics.” Or “I really want to leave this company because everything is way too political here.” Well, unfortunately, everything is political everywhere, especially in business. For our purposes, we will use the framework laid out in The Dictator’s Handbook: Why Bad Behavior Is Almost Always Good Politics to better understand the role of politics in business decisions, and I will bet that you already understand these factors intuitively. In The Dictator’s Handbook, the authors show how classical political naming conventions like monarchy, democracy, dictatorship, etc. are, in fact, descriptions of the relationship and relative size of three groups key to selecting and retaining a political leader. These groups are called the Interchangeables, Influentials, and Essentials. The Interchangeables can have some surface level say in picking leaders but do not wield any actual power. Interchangeables’ impact on leadership comes from their sheer numbers and ability to produce economic output. Leaders often prevent Interchangeables from coordinating to suppress the impact of their numbers. Influentials have direct impact on who is chosen as leaders by holding key positions and being available alternates for leadership. Essentials are a subset of Influentials who basically have the final say on who the leader will be.

In a corporate setting, CEOs lead companies and are selected by the board of directors. The board itself is elected by the shareholders. In The Dictator’s Handbook framework, Interchangeables are the frontline workers and up to its middle management. These groups can have nominal stakes but have no real ability to pick a slate of directors and get them elected or pick the CEO. The Influentials, on the other hand, can be senior executives, institutional investors, potential acquirers, high-profile analysts, and bankers, all of whom can be board members, alternative CEO candidates, or outside power brokers. Senior executives within a company are extremely key stakeholders in executing a CEO’s agenda and protecting their incumbency. However, those executives are also potential CEO replacements, if they get the opportunity to offer better business plans to the board. But unless they have board positions, they are not Essentials. Corporate boards vote directly on CEOs and their compensation, and, therefore, no one can be CEO without board support. Therefore, they are the Essentials. This is all summarized in Exhibit 1.

Exhibit 1

Here is the most intuitive part as suggested by The Dictator’s Handbook: CEOs must use company resources to enrich Essentials to gain and maintain power. If too much money is invested in long-term strategies or focused on improving the lives of the Interchangeables (i.e., employee compensation, benefits, workplace safety, etc.), then there will not be enough resources to keep the board happy. The board itself will generally have stock awards for themselves, and thus, they become tightly aligned with shareholder primacy. The CEO must also ensure the flow of money to other senior executives. This will ensure loyalty, peak execution, and prevent any executive from trying to take over the CEO role prematurely. Furthermore, the book suggests that because the number of Essentials is small, then, by structure, companies are dictatorships. The larger the number of Essentials the more democratic in structure a governing body will be. As a result, benefits, resources, and accountabilities flow to more people. But, in a small coalition of Essentials, only a few need to be consistently enriched, which incentivizes only giving the minimum number of resources and benefits to Interchangeables to keep them productive, not necessarily happy and stable.

This is clearly a cold analysis of the corporate structure. While the corporate structure matches that of small Essential group governing bodies, like monarchies and dictatorships, not all CEOs are power hungry and evil dictators, and I would not make such a broad personality assertion without better evidence. However, this structure certainly impacts corporate decision making. By structure, there will be few repercussions for CEOs making decisions that only enrich the board. Interchangeables and Influentials can only hold CEOs accountable in ways that do not necessarily impact the CEOs’ incumbency. Interchangeables can and do leave when enough disagreements with leadership mount, but, due to the fungibility of most roles, they are, as the name suggests, replaceable. In addition, the obstacles to unionization greatly diminish the ability for collective action to create more accountability for CEOs. Influentials can only create accountability with great personal or financial risk. Yes, an outside investor can start a proxy fight, but that is expensive and is likely to end with a settlement and board seat, which makes them one of few Essentials and not necessarily guaranteed to change a CEO. And while senior executives can make a play for the CEO position with the board, it is not likely to be successful, and that person’s ethics and loyalty will forever be in question. Such questions will disqualify that leader in other ventures and opportunities. Therefore, they can only do it if they know for a fact that they are going to win. As it was famously said on the show The Wire, “you come at the king, you best not miss.” As a result, an intuitive but understated aspect of strategic decision making is the unchecked and plenary power of the CEO that can successfully enrich the right people but not all people.

Lastly, we will discuss time pressures. This is the most straightforward of them all, and it works in two aspects. We all know that many businesses operate quarter to quarter. It is such a ubiquitous concept that it seems to have been around forever. In the United States, securities laws require that public companies report results on a quarterly basis, and analysts build expectations on those quarterly reports. If you beat the quarterly expectations, stock price and equity-based compensation increases. If you do not, then you need a really good excuse or be prepared to face calls for change from Wall Street and the board. There are also pressures from the passage of time. Every business model matures and that means every business model slows and produces growth at a slower rate. Bain partner Chris Zook describes this in his Focus-Expand-Redefine framework. McKinsey implores leaders to start preparing for that day in their Three Horizons framework. It is mathematically shown in Prof. Ghemawat’s Strategy and the Business Landscape by highlighting how performance and superior competitive position inevitably reverts over time. But leadership tends to only feel existential dread at business model maturity as it can be a limiter on growth and stock price (i.e., personal wealth). Therefore, depending on where your business is in the life cycle, corporate leaders could face delivering stronger than ever quarterly growth even though time and, in some ways, math works against them. This can lead to even more desperate decision making and more danger to Interchangeables.

In sum, capitalism provides a baseline philosophical and economic view to create what is acceptable options in a certain range of business activity in the United States. Shareholder primacy bolts on the idea that the enrichment of the shareholders is the top corporate priority to that economic thinking. The prevalence of share-based compensation reinforces shareholder primacy into the corporate political structures, where CEOs rule at the mercy of boards of directors and at some expense to everyone else. On top of this, human nature will further limit the number of overall options and favor picking options that are comfortable in some way rather than new alternatives regardless of merit. All of this plays out in a quarter-to-quarter accountability system that demands growth in stock price and wealth no matter where the company is in its strategic life cycle. This is the context for corporate decisions on everything in a company from strategy to worker treatment to selecting a janitorial service vendor, et. al. We will now refer to this as the Permanent Growth Environment.

The Effects of the Permanent Growth Environment

The Permanent Growth Environment requires solutions or growth plans to be identified, solved, and returning maximized profits within three months. Any option that does not fit that criterion will not be seriously considered or implemented. It will be considered next quarter’s, next year’s, and maybe the next owners’ problem. If companies complete a strategic process that presents a robust and well-founded strategy, the temptation for short-term maximization can lead to gutting those plans or reshaping them in some way to meet the earlier criterion. For a lot of companies, they will skip or never consider studying their competitive positions, value proposition, key trends, or other factors at all. The process would be too slow to get maximized profits next quarter. “We must act now” or “move fast and break things” is what they preach to convince themselves they are on the right track. Consulting firms can offer quick study and robust solutions, but that is expensive and requires people to focus on something other than everyday work. Thus, consultants will get ruled out, brought in on limited scope, not listened to, or brought in only when the situation is extremely bad.

The Permanent Growth environment not only provides criterion for strategic options during decision making but also limits possible solutions. In my experience, “field of dreams” strategies are generally left to venture capital and entrepreneurship even though more mature companies will wish they had the entrepreneurial spirit themselves. The Permanent Growth Environment will limit the questions you can ask about your company and the market overall. Concepts will not be explored because from the outset only one answer will meet the criterion. Automatically, the strategic solution set available will be limited to buying growth through mergers and acquisitions, selling more of what you already sell, or creating cost efficiencies, often by cutting people and benefits.

Companies will continue to select from limited strategic solutions over and over again. If decisions do not work, the solution set itself will narrow over time. This means the ability to fix problems gets narrower and narrower until the fundamentals of the company are completely broken. Upper leadership will get fired, and new leadership, often with consulting help, will go for a complete revamp by re-opening the strategic set and, unfortunately, likely to start this process all over again but from a different basis. Along the way, companies will cause unemployment, ignore or exacerbate social ills, and, in some cases, put people at risk with their products.

Therefore, the Permanent Growth Environment is overall just a limitation on what we can accomplish in companies, and the impacts are felt in both the company and society. It is a rare day, usually after a change in leadership or in a pure venture setting, that the full strategic solution set is truly considered, weighed, and acted upon no matter where the truth takes leadership. Understanding this environment is the first step in building better corporate decisions and pushing decisions that benefit more people. In the next two chapters, we will look in depth at the decision categories to avoid while operating in the Permanent Growth Environment and the legacy of those decisions.

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My business partner and I realized we had a major misunderstanding the other day.

We’ve been working together for about five years on all things strategy and organizational alignment, so we *seemingly* should understand each other’s perspective, pretty well.

But when we came upon a - quite sizable - misalignment in our understanding of each other’s perspective (and, therefore, our contributions to our company)…it was pretty eye-opening.

I was under the impression that business strategy inherently understood the crucial connection to organizational alignment and, therefore, would dedicate resources to implementing/executing/managing it.

Coming from my career of working with alignment issues, I thought, “Surely, aligning the strategy is a major consideration for organizations. Surely, an organization would understand the glaring pain points they’re experiencing are very often due to a rift between the designed strategy, the organizational reality, and the post-strategy alignment. Surely, this is an understood reality, right???!”

His response, “Nope - strategy alignment is a common problem in the strategy world.”

He even went on further to describe how some strategy approaches prefer to remain “elitist” - centered in the C-Suite and Corporate Strategy teams, but never moving much beyond those groups (nor seeking feedback from those outside the group).

I mean, I knew this - we’ve talked about strategy + organizational alignment ad nauseam before. But, I don’t think I understood the magnitude of the issue across the larger strategy culture.

Basically, what I’ve been experiencing from an organizational perspective is a larger strategy culture issue.

My business partner then sent me an article from MIT Sloan titled, “Turning Strategy into Results.” Though the strategy + organizational alignment topic is bigger than one article (and a continual, evolving discussion), I wanted to use this article now to highlight some of the strategy + organizational alignment dance - first, for me, and second, for you…if you so choose to accept this adventure. 🧝‍♀️

But if you go no further on this journey, please take away this one point: the process for the strategy/alignment dyad should be customized and go both ways, meaning, strategy creation should utilize both top-down and bottom-up feedback.

Overall, the best strategies I’ve seen shared a common trait: humility, especially the willingness to listen to multiple stakeholder groups. By contrast, some of the weakest strategies came from top-down C-suite leaders who seemed to make decisions in a bubble, often justifying their own authority (*cough* huge salary) while wasting significant company resources.

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What is Strategy?

I love to start with a working definition so we have a foundational, collective understanding to build on. For the MIT Sloan article, the authors defined strategy as:

“Strategy, at its heart, is about choice…Most winning strategies are based on a bundle of choices about, among other things, the customers to serve, the scope of the business, product offerings, and capabilities that interact with one another to help a company make money.”

The article goes on to say that strategy is inherently complex, often being delivered in thick reports and complex frameworks. ← I’ve picked this up from clients who’ve worked with larger firms and often receive a large PDF with no implementation or follow-up alignment.

But - and get out your drool rags for good ole’ Megan over here - they wrote this beautiful gem-of-a-gem to sum up what I see and experience with strategy:

“Describing a strategy favors complexity, but executing it requires simplicity.”

Simplicity is key! I have seen, again and again, complexity take over EVERYTHING - operations, product, services, user-experience, sales, customer success, marketing, leadership.

Often, this complexity starts at the top and spreads throughout the organization like a virulent glitter.

Effective strategy creation + organizational alignment helps keep your organization moving together in a winning direction.

Simplicity helps so much with this goal.

🛑 Organizational alignment pit stop 🛑

So, how can we stop complexity from infecting the organization (like virulent glitter)?

We make a clear path from the company strategy to the remainder of the organization; if something is confusing or unclear, stop there and see what’s going on.

Confusion, friction, or lack of clarity is NOT always something to be pathologized - it can simply be a signal of misalignment or misunderstanding. Before taking it personally, try to identify what organizational elements are contributing to the situation.

Creating an Effective Strategy

What can help prevent some of the aforementioned alignment issues? Keeping the strategy as simple (and real) as possible. I say “as possible” because simple strategies do not work for all companies.

The article saw success with simple strategies if they “…focused on a single business, offered a standard value proposition to a clearly identified customer segment, and their strategy was stable over time.”

But, wait, didn’t you just say strategies are complex? You even had a meme about it…

I did! Because not all businesses are simple. You should always strive for as simple of a strategy as you can get, but business complexity makes strategy creation and execution more difficult. Therefore, aligning it broadly with the organization also becomes more difficult.

Additionally, there can be a real problem with creating effective strategies and strategic priorities. What do I mean by that?

Well, is your strategy fluffy or is it executable? Can it be broken into concrete steps and directives? Or is it a bunch of vague, feel good, no accountability, loose directives? See the chart below from the MIT Sloan article for an example of this:

From an organizational alignment standpoint, it is a HECK of a lot easier to create alignment activity from a strategic priority like “Integration of Southwest’s and AirTran’s network and operations” versus “Focus on customers’ needs and wants.”

It’s not only easier to align, but it also helps with accountability. Not ‘heads will roll’ accountability, but a strategic goal that allows room for reflection and measurement, both along-the-way and when the strategic priority is achieved/not achieved.

We can say, “We were able to integrate Southwest and AirTran’s operations because of xyz. We were only able to integrate 60% of the networks because of xyz, and are still working on the last 40% of the integration after we address these [insert block(s) here].”

Unless we put clear performance indicators around “Focus on customers’ needs and wants,” it is less likely to be able to measure success, or failure.

Or, maybe we make a vague priority like this to avoid conflict.

Sadly, I see strategies like this all too often, which can result in - what I describe as - just moving food around the plate: never really making any decision, unless you absolutely have to, but looking busy enough that people think you’re being effective.

Heck, you probably are super busy. But, I’d wager that most of the work being done while “moving food around the plate” could easily be avoided or fixed with clear strategic initiatives that would give way to clear strategic organizational activity.

Simply put: clarity at the top of the org trickles down to the remainder of the org.

Writing Clear and Effective Priorities

For writing clear and effective priorities, the article shared the advice below (and goes into more detail for each bullet point in the article):

In addition to the above, I also love to see organizations upskill, train, and educate employees on strategy creation and organizational alignment.

Very often, strategy and alignment knowledge stays in board rooms and senior leadership meetings, creating a very top-down funnel that can miss crucial organizational information. Intentionally or unintentionally, hoarding this information inhibits the full potential for strategic success.

I’ve seen a mix of scenarios at different companies:

1. An individual who is not the best option for a strategy/leadership/decision-making role, but who got there simply by having access to C-Suite information and discussions (or maybe due to relationships).

2. Fantastic leadership candidates who need training, upskilling, and access to C-Suite information to help foster their innate leadership talents. Additionally, middle managers ARE YOUR ALIGNED STRATEGY FRODOS (yes, Frodo from The Lord of the Rings - which I’m currently reading, but am only 20% of the way through, so this analogy may be wrong. Cool, but wrong). If you properly train and upskill them, and allow them an opportunity to learn about the larger strategy creation, they will help keep your strategy moving in the same direction. They will also be key informers on wtf is going on with your customers, teams, organization, and markets.

3. Some crazy Game of Thrones-like activity where leaders intentionally hoard information and push their own agendas because they’re playing a weird game where everything’s made up and the points don’t matter (well, the points are usually money and status). Typically, these folks have self-serving goals and (logically) though I understand why they’re acting this way I (existentially) think it’s silly. My feelings aside, research has shown that self-serving leadership actions are bad for the organization (though, culturally praised and enabled…at least in the US).

To this last point, the article sums up effective strategy creation by saying:

“Strategic priorities should lay out what matters for the company as a whole to win and should reflect the interdependencies among the choices. If senior executives pursue goals that aren’t aligned with one another, the disagreements will filter down the silos, and the various teams will work at cross-purposes.”

Which is why strategy cannot exist in a silo, it cannot stay in the board room, it cannot stay with executives - it must be aligned, implemented, and managed throughout the organization.

Conclusion, for now…

So, although this one MIT Sloan article and my humble Lord of the Rings-tinged thoughts argue that organizational alignment is necessary for effective strategies, our work is not finished.

You will not stop hearing about this from me. You will not stop hearing about this from the strategy research world. You will not stop hearing about this from the organizational alignment and Industrial Organizational Psychology world.

And, yes, we can AI the strategy + organizational alignment dyad to our heart’s content, but unless someone in the organization is managing the day-to-day strategy boat, there’s a huge chance of going off course.

It is critical for organizations to understand that assigning dedicated resources to this dynamic helps with their strategic end goals, whatever those may be.

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🤖 diD I uSE AI tO WriTE tHiS?!?! 🤖

No, and then yes, and then no again. The idea to write this article truly came from the story about me and my business partner. When he sent me the MIT Sloan article, I plugged it into an AI platform to see what it said.

But, just as I always experience when using AI, when I read over the results I remembered nothing. Therefore, I could write about nothing.

So, I did the best thing I know how, and went back to my grad school days of printing off a paper copy so I could highlight and hand-write notes.

About three-quarters of the way through reading the article, my 3-year-old asked me to watch over his sick dinosaurs. I’m happy to report, they all made a speedy recovery, and I was able to finish reading the article.

Who says women can’t have it all. 🙄

This is a throwback article from October 18, 2024. Since then, my family’s second kiddo came into the world and I have much more to say about trying to do this whole things called life with two young kids.

The title says what I learned, but it should also say what am I still learning.

But here are some lessons that stood out:

• Time management. Gone are the days where I could spend hours, uninterrupted, on work. I used to get into a work “flow” and found such satisfaction with how much I could accomplish. That immediately went out the window. I’ve learned how to shift my productivity into smaller sprints and set very clear boundaries around my work time.

• Parenting styles are personal and unique to your family. There is an abundance of noise and pressure around parenting styles: which ones are correct - or wrong, backed by research - or not, exceptionally marketed - or not, part of the status quo or culture - or not; it’s enough to drive a modern parent or primary caregiver mad. Every family needs to find what works for them and keep in mind the aggressive and lucrative businesses behind some of these pressures - the “new parent” market estimated at $46 billion in 2019 and the global baby products market estimated at $320.65 billion in 2023.

• “Having it all” is an illusion. To piggyback off the parenting point, the “You can have it all!” idea feels like an illusion. One, what is having it all? And two, what is your success metric for hitting that point? I see this more as an ongoing series of trade-offs because you can’t be everywhere all at once. You can’t be 100% mom/parent/caregiver, or 100% worker, or 100% spouse, or 100% perfect home manager (a point that our culture has seemed to forget, that someone needs to take care of the home and it’s just as valuable and important as the other items listed above). You have to make trade-offs, find balance (through trial and error, sometimes), and call in support when needed. I have a new level of respect for companies who accommodate employees’ unique needs. Because parenting, caregiving, and life don’t always fit on a schedule - being flexible and accommodating is a huge benefit.

• Find the right business, career, team, or business partner for you. This one isn’t easy because we all need to make decisions to survive in an increasingly expensive, modern world. Sometimes taking any job is better than no job. But there is hope that, in time, life can present an opportunity that maximally aligns with who you are and how you can best contribute to our world. I’m super stoked to have found a business partner who aligns so much with my values and how I want to grow professionally. We’ve treated our partnership like a professional “marriage,” of sorts, from the get-go - which means a deep level of honesty, transparency, and communication…even if it’s uncomfortable. But this is who we are and what we bring into our work, so it’s only natural and fair to be that way with each other. I’m sure we’ll have much more to learn as the company grows, and it’s not always going to be sunshine and roses. But proper alignment between the work you want to do with the people you want to work with seemingly makes the struggle worth it.

• It’s difficult. I mean, life can be difficult. Starting a business can be difficult. Being a parent or caregiver can be difficult. For me, it’s been the physical demands of being pregnant and the physical demands of being a toddler mom that have really gotten to me. My first trimester was feeling like garbage (obviously) while I sifted through hours of IO Psych research papers for our Introductory Course (currently under a 2026 revamp), with the added difficulty of needing to wean my 16-month-old because I just couldn’t physically continue. Even just now, in my third trimester, I had to pause writing this paragraph to go throw up. Gross, I know, but also very real. (If the other articles you’re reading aren’t talking about vomiting while writing them, then are they even worth it?!??) The physical demands of pregnancy are no joke. I’m so grateful to have experienced this now – twice – so I can bring this perspective into my work. Not everyone’s pregnancies are the same (I’ll take mine any day over other stories I’ve heard) but the challenges of life, especially health, vary and look different from person-to-person. I have a lot more compassion and understanding for an individual’s journey now, and a lot more gratitude for the resources and support I do have.

These are just a few lessons I’ve learned, but all of this has been 100%, absolutely worth it. I’m so excited to see where our company goes, where my family goes, and where life will take us. I’m also excited to eat garlic and onions again, or eat after 6 pm, once our second child is born because pregnancy reflux is a fiery dragon of a beast.

What else have you learned in your career journey?

This is the next article in The Psychology of a Business Decision series. For additional context, you can view the introduction here.

At StratThink, our foundational perspective on business environments originates from our co-founder, , who highlights a common scenario he calls the Permanent Growth Environment. It consists of five elements:

1. Capitalism- our collective belief in private property and the expectations of returns from ownership

2. Shareholder Primacy- the prioritization of shareholder return over other stakeholder and business strategy considerations

3. Human Nature- the pressure to secure our own positions and stability

4. Corporate Political Structure- the natural impact of having a small number of people selecting and retaining the highest levels of company leadership

5. Time Pressure- the quarterly demand for maximum growth

So, when thinking of the Psychology of a Business Decision, this environment sets the stage for the trickle-down process that occurs with business decisions.

Per Patrick, “This collection of elements sits in the background while we mull over strategic options for our company, and pushes us to suboptimal decisions and results.”

Business decisions are a marriage of external and internal dynamics. The external environment primes and conditions the internal process.

Usually, the internal process is uncoupled from the external dynamics when someone has objectivity - like they’re new to the company or a consultant/vendor. This allows them to, potentially, be more perceptive to true company dynamics (before they get inundated with the respective business goals and organizational culture).

In general, urgency, pressure, and avoidance is just, sigh, so terrible for effective decision making. If you could feel, what my husband calls, the defeatstration (which is simultaneously feeling both defeated and frustrated) in the previous sentence, then that is correct.

It’s remarkable to me that so much of the business world seemingly runs on urgency, pressure, and avoidance. Urgency to do…anything and everything! And then pressure to be urgent about what you’re doing! But MOST IMPORTANTLY avoiding anything that might get in the way of urgently, almost frantically, pursuing profit.

Operational issues? AVOID THEM. Even though we’re frantically sending Slacks at 2AM to fix the operational issues that could have been avoided by…addressing the operational issues.

Board meeting? URGENTLY GIVE ME EVERYTHING! Everything that we’re working on, that’s new and shiny, snippets from what clients said, I will slather this pig in lipstick so the board doesn’t know any better.

Competitor released a new service/product? WE MUST RELEASE SOMETHING NEW, NOW! Doesn’t matter if we haven’t done the proper research, doesn’t matter if it doesn’t fit in with our current strategy (which, by the way, do we even have a true strategy??), doesn’t matter if it’s going to cost the company loads of money and labor to frantically Frankenstein an offering together. We. Must. Do. It. Now.

But the thing that’s crazy about this mindset is it creates so many more issues than it solves. But, I don’t think some organizations care.

There’s this weird influence hanging out in the shadows of business culture where organizations, seemingly, no longer want to provide a quality product or service. They want to provide a good-enough product or service that will continue to feed the company revenue. This lack of caring is a direct outcome of the Permanent Growth Environment and a lovely concept known as “enshittification.”

So, what can we do to hedge against this?

Here’s what we think:

• Maintain awareness of these influences

• Create a true growth strategy

• Strengthen decision-making skills (via self-awareness and self-growth)

• Train, educate, and upskill employees

In general, we think making a good decision looks like this:

The reality is, we live with the Permanent Growth Environment - it’s probably not going anywhere for a long time. So, it’s up to us as leaders, managers, employees, and people to educate ourselves as to what it is and how it impacts our day-to-day experiences, specifically how it impacts our decision-making.

For the next article in this series, we’ll dive into culture and group dynamics, which is more my topic and specialty (since it’s Organizational Psychology), and I will have a lot more to say about that. Subscribe so you don’t miss out!

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This is an archived post from December 2022. However, its lessons are still applicable today so we wanted to bring it into our Substack.

This post took me in a direction that I didn’t expect to go. I planned to highlight a strategic error, explain the importance of knowing your core business, and make recommendations about business decision making. But in retrospect, while researching Capital One Cafés, I learned about an obvious and long-term banking trend that is having negative impacts. As it turned out, Capital One Cafés are an interesting attempt to address those trends. But Capital One’s approach also raises real concerns about communities getting left behind economically.

Bank Branches Disappearing

Most of us intuitively understand why bank branches are declining. Personally, I don’t go to the bank unless I have a question too hard for the banking app to answer. That usually means opening an account, getting a cashier’s check, or helping my dad’s business by depositing some checks. Since all of this can be accomplished online these trips to the bank are rare.

This is a common approach to banking. “Roughly three in four Americans (76%) have used their primary bank’s mobile app within the last year for everyday banking tasks like depositing checks or viewing statements and account balances, according to the Ipsos-Forbes Advisor U.S. Weekly Consumer Confidence Survey.”[1] However, when things get complicated, people rely on branches to get in-person expert advice on home-buying, small business loans, retirement planning, etc. As U.S. Bancorp CEO Andy Cecere said in 2020:

This is further supported by data showing “nearly one-third of U.S. consumers either switched banks or started using a different financial institution after their main branch closed.”[3]

Despite this continued love for branches, banks are shutting them down at a good pace. At its peak, in 2008 the United States had 102,630 bank branches.[4] Beginning with the 2008 Financial Crisis, banks began closing branches and, with few exceptions, branch closures have only accelerated. The ongoing pandemic further fueled this trend by pulling even more foot traffic out of banks, which led to 3,492 branch closings in the last two years. This is the highest number of branch closures in any two-year period since 2001. Since 2008, the U.S. has lost roughly 13% of its bank branches with no real end in sight. One group even speculated that bank branches will go extinct by the year 2034.[5]

While total extinction is a strong prediction, you cannot deny that the economics for it are there. In 2017, it was estimated that new branches require $2-4 million in setup costs and between $200-400k in annual operating costs thereafter.[6] And pushing app activity is extremely more profitable. “Bain estimates that every interaction a consumer has with a teller or agent at a call center costs the organization $4; by contrast, mobile interactions cost only 10¢ each.”[7] In other words, banks will happily close branches and smile all the way to the bank (themselves?) after doing so. Therefore, banks will seek the highest profitable mix of purposeful branch footprint and branch closures. And, so far, they’re still figuring out what that mix is.

Capital One Cafés- A Potential Step Forward, A Potential Major Step Back

The Strategy

Capital One is known for building analytics-based strategies. In their words, via some sponsored Harvard Business Review content:

In other words, Capital One looks at the data.

The data on Capital One shows it has become the foremost example of closing branches. Capital One closed 321 branches from 2017-2021.[9] JPMorgan Chase closed 311 branches, and Bank of America closed 379 branches in the same period. [10] These are very similar closure numbers, despite the two banks operating 8x and 7x the branch locations than Capital One in 2017, respectively. All in all, Capital One closed 50.1% of its branches between 2017 and 2021; no other bank would close more than 26.8% of their branches during the same period.

At around the same time, Capital One Cafés began popping up on the map. In 2015, Capital One opened its first café in Boston.[11] Since then, it has grown to “almost 50 Capital One Cafés around the country, and that number is set to grow in 2022.”[12] In crafting the Capital One Café experience, Capital One looked at the data once again:

The café provides human resources to facilitate more complex financial conversations and customer service. Furthermore, by creating a consistent touch point at the café, Capital One positions itself to be there as latent consumer needs become urgent. For context: That business plan you’ve been working on at the café for the past 6 months? Simply get up from the high-top table and talk to a loan officer on the couch. Additionally, cafés are brand marketing that grant interactive access to consumers at the bank. Somewhat surprisingly, this is actually an excellent plan to take advantage of the overall branch decline. Especially, assuming they spent $2M per cafe, their costs were approximately $100M,[14] over the last 7 years for rollout. Meaning it was around .3% of last year’s net revenue.[15]

The Problem

Capital One Cafés’ approach is fascinating, but it could harm “low-to-moderate income and minority neighborhoods.”[16] Per the National Community Reinvestment Coalition (“NCRC”), “[o]ne-third of the branches closed from 2017 to 2021 were in a low-to-moderate-income and/or a majority-minority neighborhood where access to branches is crucial to ending inequities in access to financial services.”[17] When branches close down, small business lending declines, and people turn to more predatory financial services like payday lending.[18] These banking deserts[19] deprive communities of economic opportunity and sound financial advice from bankers who are connected to those communities.

Your immediate thought might be that one-third of branches closed is not too bad given the general trend. However, as NCRC points out, looking at this problem on a percent change or absolute number basis is misleading. These neighborhoods were operating on a smaller branch base to begin with.[20] Even the smallest change can cut sharply into the economic opportunity available and add to the challenges that these communities face. You might also wonder why these conversations just can’t happen online. But you must remember: 1) the human connection is highly desired to navigate complexities and 2) these communities often have unequal access to broadband or adequate technologies.[21]

If Capital One is a leading indicator, then there is real cause for concern. Capital One Cafés haven’t opened in communities of need. Of the 49 café locations I could identify, 57% are in zip codes where the annual median income is over $80,000.[22] 37% are in zip codes with annual median income over $100,000. The other locations are generally in malls, parks, or downtown districts where higher income people are likely to gather and spend time.

If this becomes the dominant branch banking strategy, then we’ll see closures in disadvantaged neighborhoods while the branch model is specifically relegated to locations in upper-middle to high-income areas. In other words, the profitable mix between branches and online activity will remain askew from those in the most need of solid banking.

In fairness, we are still in the early years of this branch banking evolution. It is entirely possible that Capital One and other banks are following the common rollout approach for almost all new concepts, which is to target higher income consumers before mass distribution. Capital One might ultimately put cafés in every type of zip code and/or find interesting partnerships to provide services in communities of need. However, given the financial industry’s history of limiting opportunity via geography (read: redlining), in conjunction with the profit motive I wouldn’t assume that this is the plan.

At that point, Congress and regulatory agencies must be ready to step in and assist these neighborhoods. Programs to pilot basic banking at postal services are underway.[23] This will solve some problems by providing a safe alternative to predatory financial services. However, it is facing Republican opposition, leaving the future of this program unclear.[24] Rep. Maxine Waters has introduced legislation that would allow credit unions to serve banking deserts.[25] However, this is opposed by the American Bankers Association.[26] But as B. Dan Berger, the president and CEO of the National Association of Federally-Insured Credit Unions, points out:

Banking institutions have a long-standing concern about credit unions because, in opposition, credit unions can offer better savings and interest rates.[28] However, credit unions are limited in terms of scale and reach, and the banks reflexively oppose any credit union scope expansion. In this case the banking industry is literally ceding the ground in banking deserts while fighting against efforts to fill the void they created. All considered, legislation will likely be the only way to fulfill the needs in banking deserts.

Conclusion

Capital One Cafés are a surprisingly good and data-supported corporate play. But their deployment highlights a concerning trend around banking desert growth. If all banks follow their lead, the low-to-moderate income and majority-minority neighborhoods will be left behind. This is an outcome supported by banking history and profit motives.

I can’t fault the banks for pursuing ideas to find the right mix of in-person and digital banking. But I don’t think they should create banking deserts and actively oppose attempts to fill them. If banks are incentivized to pull branches out of these neighborhoods then as citizens we have the right to legislative solutions that will further promote economic equality and fair banking practices for all who get left behind.

Sources:

[1] https://www.forbes.com/advisor/banking/digital-banking-survey-mobile-app-valuable-features/

[2] https://seekingalpha.com/article/4393879-u-s-bancorp-usb-ceo-andy-cecere-presents-goldman-sachs-u-s-financial-services-virtual

[3] https://cxfinance.wbresearch.com/blog/capital-one-cafe-a-blueprint-for-the-modern-branch-strategy

[4] https://www.federalreserve.gov/econres/notes/feds-notes/bank-branches-and-covid-19-where-are-banks-closing-branches-during-the-pandemic-accessible-20211217.htm#fig1 (full article: https://www.federalreserve.gov/econres/notes/feds-notes/bank-branches-and-covid-19-where-are-banks-closing-branches-during-the-pandemic-20211217.htm#:~:text=From%202019%20to%202020%2C%20there,although%20by%20a%20smaller%20amount.) (Author Note: I noticed that 5,973 bank branches closed in 2001, which is the biggest single year ever. It is out of scope to research this dip, but I may return to it in a “Quick Thought” later on. All calculations on branches are based on this data.)

[5] https://www.foxbusiness.com/markets/bank-branches-to-disappear-2034-research

[6] https://futurebranches.wbresearch.com/blog/capital-one-combines-coffee-with-banking-to-cater-to-millennials

[7] See note 3.

[8] https://hbr.org/sponsored/2021/02/how-capital-one-moved-its-data-analytics-to-the-cloud#:~:text=Analytics%20is%20at%20the%20heart,its%20customers%20manage%20their%20finances.

[9] https://ncrc.org/the-great-consolidation-of-banks-and-acceleration-of-branch-closures-across-america/

[10] See note 9.

[11] https://www.wsj.com/articles/is-this-a-coffee-shop-or-a-bank-1436225586

[12] https://www.fastcompany.com/90710664/how-a-coffee-shop-concept-helped-a-credit-card-company-transform-into-a-consumer-friendly-financial-institution (Author Note: I counted 49 on a Google search and from what I could find on the Capital One location finder.)

[13] See note 12.

[14] I’m going off the $2-$4M range for starting branches quotes earlier, and I’m using this headline from the Atlanta Business Journal about the Lenox Mall location costing over $2M (https://www.bizjournals.com/atlanta/news/2019/05/14/capital-one-cafe-coming-to-lenox-square-mall-will.html). If you are thinking that the $100M estimate is low, just keep in mind that you can double it, and it still won’t likely be material spend for Capital One. And ongoing operating costs will be lower going forward annually than the set-up. There is a lot of runway with this approach.

[15] Calculated from Capital One’s 2021 Annual Report on Form-10-K

[16] See note 9.

[17] See note 9.

[18] See note 9.

[19] See note 4 (to read an in-depth breakdown of banking deserts).

[20] See note 9.

[21] https://www.pewresearch.org/fact-tank/2021/07/16/home-broadband-adoption-computer-ownership-vary-by-race-ethnicity-in-the-u-s/

[22] For this, I used census data at: https://www.census.gov/programs-surveys/geography/guidance/geo-areas/zctas.html

[23] https://www.aarp.org/money/investing/info-2022/restarting-postal-banking-services.html

[24] https://www.oleantimesherald.com/news/gop-senators-oppose-idea-of-post-office-banking-services/article_c508cba8-3297-5195-8325-57da550a665a.html

[25] https://www.nafcu.org/newsroom/nafcu-supported-bill-allowing-cus-add-underserved-areas-fom-introduced-house

[26] https://www.aba.com/advocacy/policy-analysis/joint-sba-letter-to-hfsc-opposition-to-hr-7003#_ga=2.36230176.1691677642.1650389819-2064918875.1649862546

[27] https://www.americanbanker.com/opinion/waters-proposed-legislation-would-benefit-under-banked-communities

[28] https://www.experian.com/blogs/ask-experian/what-are-the-benefits-of-a-credit-union/

Ever been in a job where you were annoyed - or even angry - at someone because they kept asking for work to be done that was clearly THEIR job?

Or were you annoyed that they didn’t have a cleaner process to help get the work you collaborate on done more efficiently?

Have you ever been close to quitting because the chaos of your everyday job is just too much to handle?

I’ve been there - in all three examples, and way more. After experiencing this so much, especially with companies that had rapid growth, I started to see a trend.

The friction, anger, resistance to helping, and grievances that bubble up in day-to-day work all came from something that is both common and pretty easy to fix.

I call this “Interpersonal Beef” and it looks like this:

Simply a lack of:

1. Clearly defined roles & responsibilities

2. Clearly defined processes

3. Communication around roles, responsibilities, and processes

4. Training and education on roles, responsibilities, and processes, and upskilling employees when moving positions (especially into a managerial or leadership position)

Leads to “interpersonal beef” which comes across as tension, friction, anger, frustration, resistance, and grievances between employees and teams.

So, if you think about your experiences - is it easy and effective to work in an environment that has a lot of “interpersonal beef?”

Not really. It often feels like dysfunctional family dynamics where we have to dance around the root cause of these exhausting and taxing feelings. Sure, work can get done, but is it getting done well? Efficiently? Clearly? Is it scalable? Additionally, do we even understand the root cause? Is everyone experiencing this? Do we even care?

I worked somewhere that had some horrendous “interpersonal beef.” It manifested as sassiness between teams/employees, talking crap behind each others’ backs, actively resisting helping others because they either didn’t want to, or they didn’t like the person, or they felt it was their job, and unchecked power struggles. Our jobs got done (well, done-ish), but boy was it stressful, and clunky, and just a complete waste of energy.

And the clunkiness was such an easy fix! It was just getting someone to see the misalignment across the organization and clearing up some operational issues. Yet, 😑 every 😑 single 😑 day 😑 we had to endure the burden of this environment because no one would address the “interpersonal beef” and operational issues.

To be fair, some leaders do not know HOW to address it. People get promoted, all the time, because they’re good at their job. And then we don’t UPSKILL them and teach them how to be effective managers and leaders. It’s easy for us to demonize leaders and managers, but in reality, it may just be an innocent outcome of not knowing what to do.

So, you have to ask yourself, does our organization have this? How can we figure out if we do/don’t? Most importantly, do we want to do anything about it?

The problem is, if “interpersonal beef” goes unchecked, it can wreak havoc on your company’s potential and growth. Imagine trying to run a marathon with a bunch of heavy baggage strapped to your body - that is “interpersonal beef” in a rapid growth environment.

If you setup the proper foundation, structures, and strategy, you can successfully support your organization as it expands. This will save you time, money, resources, and - most importantly - your sanity.

If you’re already rapidly growing, no problem! Operational clarity, organizational alignment, and growth strategy creation can happen - and is valuable - at any time!

It is a major accomplishment for a business to enter the middle market. These businesses typically range between $10M and $1B in revenue annually, and hitting this milestone means you are a success. You’ve created, invested, or participated in a growth formula/plan that has taken you further than the vast majority of businesses go.

In Hollywood movies, this is the end of the story. All stakeholders ride off into the sunset on a very clear path where the sky is the limit.

But . . . Hollywood scripts are fiction for a reason.

Truth is, it is well recognized that this part of your story raises more questions, can cause dissent in the team, and, most unsettling, cast major doubts on your growth formula and plans that have gotten you this far. It can also be a time that feels chaotic, disorganized, and stressful, often like a jalopy just getting by.

We know this because we grew with a PE-backed, middle market company. We experienced the highs and lows. We saw:

• The anxiety of trying to produce something new and sexy instead of building strong, quality deliverables

• The continued use of “bandages” and cutting corners on issues that were infectious to the organization

• Not putting the customer/end-user experience first

• Overloading senior leadership so it was top-heavy and bloated, and under-supporting middle management and front-line employees

• Not training and up-skilling middle managers so they could be effective in supporting and executing company initiatives

• Not having a strong (or any!) growth strategy

It’s clear that a company can’t continue this way in the long run. Otherwise, it will only find unrealized growth, an unwelcome exit, or any number of outcomes you want to avoid.

So then, what to do?

At StratThink, we’ve faced this before in a variety of ways with a variety of industries. The answer is building a true growth strategy - which is not to be confused with a plan or the overuse of the word “strategy.” We call it “true” because it is, actually, a growth strategy that will generate the growth you’re looking for.

A true growth strategy will give you an unshakeable belief in its logic, executability, and its ability to deliver results. Beyond PowerPoints, spreadsheets, and PDFs, you’ll have self-efficacy about your future growth that will return you to the certainty you had before.

To get to that point, we follow our quarter-long process known as the StratThink Growth Accelerator.

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True Growth Strategy - Need Realization

You’re busy and under the pressure to deliver growth. This presents two threats to finding your true growth strategy: 1) Never realizing the true growth strategy need (“No Realization”) and 2) Failing to realize the extent of the true growth strategy need (“Low Realization”).

No Realization occurs when strategic triggers are ignored. These can include:

• Missing goals consistently

• Feeling like it takes all your time and effort just to maintain business as usual

• Seemingly mysterious and consistent customer churn

• Failure of new product adoption

It is easy in the day-to-day operations to feel and openly discuss these issues regularly without recognizing the need for a true growth strategy.

Low Realization occurs when you realize that there is no strategy or a non-producing existing strategy, but you underestimate what it takes to make a true growth strategy. This can look like:

• Making changes from no or minimal market input (e.g., one client wants [x] feature, so let’s roll it out as a total product)

• Ongoing white-boarding/brainstorming sessions with no meaningful changes afterwards

• Monthly or quarterly leadership/executive sessions with constant reporting that don’t produce different results, even if it produces product and sales next steps

• Revising executive leadership styles, mission statements, and cultural norms on a regular basis without it tracking to tangible results

• Justifying bold, new changes based on market sizes and financial modeling alone

• Following moves by competitors at almost each turn

Essentially, you know it is time to stop and think more holistically about what you are doing. But, when you do, it doesn’t actually produce choices or decisions that change the company trajectory and results.

Furthermore, you must manage this as a team and with stakeholders (e.g., fund investors). Therefore, you can be working with a mix of No Realization and Low Realization across all your interactions.

Rule of Thumb: A simple way to think about it is that if you and your stakeholders are giving operational answers to your strategy questions, then you don’t have the right level of true growth strategy need realization. If a critical mass of your stakeholders hasn’t switched from providing quick answers to a strategic curiosity, then you won’t find efficacy in your true growth strategy.

Solving Your Middle Market Growth Problem

Middle-market companies need thoughtful, objective business strategy and strategy alignment across the organization. If you go to ChatGPT, Google, LinkedIn, or the business section of Amazon . . . you’ll see a ton of ways to do this. This is the analytical muscle of getting to a strategy answer. There are frameworks, research methods, and key strategy questions everywhere.

At StratThink, we’re well-versed in all the tools and approaches. But trying to solve this type of problem - and leading your organization, day-to-day - can make it difficult to focus on, or prioritize, your true growth strategy.

Good, thoughtful business strategy looks like:

External Diagnosis

• You built your middle-market company, and you love it. However, what you need right now is the most objective feedback and re-visiting of old assumptions that you can muster. It can be helpful to give current and former customers the space to be honest, respectfully remove personal connections to prior growth ideas (including the successful ones), and give due respect to industry changes, threats, and competitive changes. This is the time to get the most honest and research-backed point of view on how your industry works and your company’s positioning within it. With the cold facts, you have a great new base to re-create success.

Sound Strategic Analysis and Rationale Application

• Here’s where your business acumen kicks back in. On the new facts, develop a new hypothesis for how your business can grow again and test it against what you found in the External Diagnosis. Consider what you would change, what would you keep the same, how have customer views shifted, what unmet needs have arisen, and how can you meet those needs from core operation or not. You also shouldn’t shy away from potentially reassessing your market ambition by recognizing that it needs to be met in a new way or that your original growth formula had a different revenue runway than originally contemplated.

Proactive Decisioning

• In almost all cases, this should lead to discrete strategic choices that should feel like you are closing the door on one growth path for another. Often, there isn’t enough time or resources to choose all paths. These choices should have distinct risks, mitigations, and actionable next steps for the whole organizational to align with.

We won’t mislead you here. There are a lot of ways to do this, and it can get complicated in ways that are too numerous to list. But if you stick with it, you’ll get to a good answer.

Rule of Thumb: It is easy to either leave this step with weak enough choices, which feel like repacking business as usual, or with a feeling that the strategy should be even bolder or more disruptive. The best growth path is usually somewhere in between. If you apply sound rationale to good external diagnosis, you’ll find the best choices available.

Taking Companywide Action

But a good strategy does not exist in a vacuum – it’s not a static PDF that just the senior leaders and board are privy to. It’s a living, breathing structure that interacts with the organization on every level.

So, that means if the organization is a mess, then even the best strategies can only go so far. Your organization is the FOUNDATION for the effective execution of good strategy. Therefore, you’re going to need much broader alignment than just the C-Suite and the boardroom.

Consulting firms make their bread and butter on kickoff meetings, interim reports, and final reports. Of course, the process repeats for any follow-up that focuses on specific business units, departments, or functions/capabilities.

For us, we love to add a Strategy Summit at the right point of the process. This gets everyone in the same room to openly share problems and brainstorm solutions. The success of a summit is only as good as its implementation afterwards. You can brainstorm all the solutions you want, but if you do not structure and implement them, then the summit was done in vain.

At the summit, you want key operational stakeholders beyond the initial team that made your new growth strategy. This helps get everyone on the same page and smooth out any major operational blockers to prevent the true growth strategy from taking off. Teammates can ask questions, poke at rationale, highlight additional risks and mitigations, and leave more bought into the true growth strategy than if just a presentation or PDF was sent.

The summit will surface all the big issues and offer internal experience – as a data point – to further inform grander business strategy.

Execution and Iteration

A summit is a great first step to taking action, and it will be strengthened by a regular cadence of meetings to review KPIs, OKRs, and other materials necessary to keep a clear line of sight on strategy progress. The key is to have productive inquiry and meaningful collaboration to evolving issues, and to remove any “corporate theater” (as it’s described in Playing to Win: How Strategy Really Works) from your process.

Recap

Facing middle market challenges can be daunting. But it’s not the end of your story if you use the true growth strategy blueprint.

Growth Strategy Need Realization

• Assess the status of your company for the presence of No or Low Realization.

• Build a plan to increase this realization until key stakeholders and teammates are aligned to a total true growth strategy need.

• Warning: If need realization drops at anytime, then the efficacy of your true growth strategy is at risk.

Solve Your Middle Market Growth Problem

• External Diagnosis- This is the time to get the best “outside-in” point-of-view for everything. Look at everything with a new eye to accurately capture your industry changes, customer needs, and company positioning with each.

• Sound Strategic Analysis and Rationale Application- Develop a hypothesis about how the business could change for growth and test it against your external diagnosis information. Let the rationale and data shape your next best idea.

• Proactive Decisioning- Think through the choices, risk, mitigations, and next steps associated with those choices and choose the best path ahead.

• Warning: The best path ahead is typically a reasonable and logical extension or new application of what you’re doing today. It does not have to be something “new and sexy.” It could be as simple as focusing on building strong, quality deliverables.

Taking Companywide Action (Strategy Summit)

• Think about your expanded stakeholder group outside of the C-Suite and Boardroom/ Use a Strategy Summit to get everyone on the same page and highlight ongoing iterations to the strategy.

• Warning: Not everyone takes this step. More traditionally, the action comes in the form of bold announcements, speeches, PowerPoints, and PDF distribution. Don’t make the mistake of being too top-down at this point. Organizational alignment is key to successful growth strategy.

Execution and Iteration

• Establish an ongoing cadence to review KPIs, OKRs, and continual iterations needed to keep strategy momentum and to highlight any true growth strategy need realization.

• Warning: Without follow-up, it is very easy for everyone to silo into their corners with the demands of their day-to-day responsibilities and to, altogether, forget about the true growth strategy. A follow-up cadence will build strategic execution muscle.

We’re confident the True Growth Accelerator can get you out of the pains of middle market growth and into being the effective, streamlined, profitable company you know is possible.

Hi! We’re StratThink! We help companies form a true growth strategy. Learn more about us and our approaches by subscribing!

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As much as the title of this article makes some people feel curious and excited, it also can make some people feel annoyed, irritated, and even cause someone to write me off in the business world.

Why?

Well, business culture, at large, has done a pretty exceptional job of scrubbing our humanity from its doings.

Essentially, the sole purpose of business is to make money - I get it and I don’t disagree with this, because if you don’t make money, then you don’t have a business.

Many business decisions are sometimes framed as sinister or evil - calling dramatic movie scenes to our minds - when in reality, a business is just doing what a business was designed to do - make money.

The catch is, some people want businesses to do more - to have more humanity, more responsibility, more of a “soul,” and to be more cognizant of how connected our world is (which is often painted as isolated silos where our choices won’t impact others instead of an interconnected system).

This can be difficult because if we actually have to think about and reflect on our interconnectedness, then it challenges some of our choices and behaviors. Maybe it even makes us feel trapped because we have to work in our modern society, and there are only so many companies and jobs out there that fully align with our personal values.

Eventually, you can hit a point where you’re just doing what you need to do to survive in our modern society. I get it.

So, when I discuss psychology + business, I have both seen and personally experienced this human vs. business tension (I mean, I experience it daily 😅).

My goal here is to share some insights I’ve gathered from my experience and education that will hopefully resonate, and help some folks, with their business goals while opening up discussion for what others have experienced.

The Psychology of a Business Decision: Overview

The way I see it, a business decision goes through a series of influential layers that seemingly start at larger, external factors and boil down to more internal, personal, factors.

Each of these layers, and the included concepts, are not exhaustive. Humans are complex and human systems are even more complex. Instead, this is a simplistic overview with higher-level concepts because each layer could be its own rabbit hole of perspectives and angles.

At the top we have business reasons/influences, mainly the Permanent Growth Environment (per Patrick Norton ) which includes urgency, pressure, and avoidance. Also, we have training, education, and experience (and upskilling employees into promoted positions - something I strongly advocate for).

The next layer is culture and group dynamics, which includes the organizational & individual (for example regional) culture, group dynamics like groupthink, and conformity and compliance.

Then it moves onto social cognition which includes elements like the primacy effect, fundamental attribution error, and self-justification.

And finally, heuristics – which includes biases and mental processes.

The entire process can be better shaped and guided by the use of appropriate data.

Each one of these layers requires a more thoughtful deep-dive, which is my intention over the next few weeks.

I’m sure this has already stirred up some thoughts and reactions, which is great! I’m excited to share the rest of it so we can further virtually explore these concepts and see what influences people and organizations with their decision-making. Stay tuned!

Hi! We’re StratThink! We help companies form a true growth strategy. Learn more about us and our approaches by subscribing!

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