Chris Bradley, a senior partner at McKinsey & Company and a director of the McKinsey Global Institute, has been a leading voice in the evolution of strategic thinking for over two-and-a-half decades. Through his influential book, Strategy Beyond the Hockey Stick, and his extensive work on strategic frameworks, Bradley has challenged conventional wisdom and provided leaders with data-driven, actionable insights. His work emphasizes a move away from incrementalism and towards bold, decisive actions grounded in a realistic understanding of market dynamics and internal biases.

On the Nature of Strategy and its Evolution

The very foundation of how we approach strategy has been a central theme in Chris Bradley's work. He argues for a more dynamic, empirical, and human-centric view of strategy development.

Learnings:

  1. Strategy is a young discipline. Having only entered the corporate mainstream in the 1970s, our collective experience in strategy is still relatively new, and we are constantly gathering new insights into what truly drives successful strategies. [1]
  2. Strategy has evolved beyond simple frameworks. While frameworks were once the primary tool for strategists, the field has matured to incorporate empirical analysis and a deeper understanding of psychology and adult learning. [1][2]
  3. Strategy is not just an intellectual exercise. It is a social process that involves the thoughts and feelings of a company's leaders. [1]
  4. A strategy is unfinished until resources are shifted. A common pitfall is leaving a strategy as a set of ideas on paper. A strategy is only complete when it is translated into tangible goals, clearly communicated, and backed by a shift in the budget. [1] As one of Bradley's colleagues often says, "I don't want to read your strategy plan, I want to see what's shifted in your budget. Then I'll tell you what your strategy is." [1]
  5. Good strategy requires a multi-disciplinary approach. It combines analytical rigor with an understanding of organizational psychology and learning styles. [1]

Quotes:

  1. "Strategy's not just about what's written on the paper but about the thinking and feeling processes of the leaders of the company." [1]
  2. "Often in our clients a good meeting is defined as a tidy meeting where people said what they were meant to say it all went to plan we stuck to the agenda and everyone signed off. Big strategic calls don't happen like that." [1]
  3. "We have to actually think of designing a social process such that people can really grapple with the big ideas and come to grips with changing deeply held biases about what the company should do in the future." [1]
  4. "If they haven't actually grappled, if they haven't actually changed their beliefs, if they don't have conviction, then the strategy won't actually get implemented." [1]
  5. "One of the trends in the way we're looking at strategy is to be very analytical about it. And what we're finding is a whole series of empirical norms that are actually challenging many of the ways companies actually do strategy." [2]

The "Hockey Stick" and the Social Side of Strategy

A cornerstone of Bradley's research is the critique of the ubiquitous "hockey stick" financial projection and the social dynamics that produce such unrealistic plans.

Learnings:

  1. Beware of "hockey stick" projections. These charts, which show a future of rosy growth after a brief dip, are often a product of optimism and a desire to secure resources rather than a realistic assessment. [3]
  2. The "social side of strategy" is a major obstacle. Personal agendas, risk aversion, and cognitive biases within the strategy room often prevent the development of bold and effective strategies. [3]
  3. Human nature complicates strategy. The strategy process is often clouded by self-interest, internal politics, and biases like risk aversion and confirmation bias. [3]
  4. The odds of an average company's strategy succeeding are low. An average company has only an 8% chance of moving into the top quintile of corporate performance. [3]
  5. Overcoming social dynamics is key. To break the cycle of hockey stick projections, companies need to introduce reliable, external benchmarks to ground their strategic conversations in reality. [3]

Quotes:

  1. "There are far more agendas in the strategy room than just developing a winning strategy. Understandably, budgets are being negotiated, resources are being protected, and jobs and promotions are on the line." [3]
  2. "The process is clouded by self-interest, internal politics and biases, such as risk aversion and the desire to see your assumptions confirmed. We call this ‘the social side of strategy.’" [3]
  3. "What you typically see in strategy meetings are hockey stick charts. They confidently swoop upward to a rosy future growth, after an initial dip to account for investment in the first year." [3]
  4. "Their primary goal is to get a ‘yes’ for resources the manager is requesting, so they have to be highly optimistic." [3]
  5. "You need reliable calibration that lets you gauge the odds of a given strategy succeeding." [3]

The Power Curve and the Importance of "Big Moves"

Bradley and his colleagues introduced the "Power Curve" to illustrate the distribution of economic profit. Their research shows that a small number of companies capture the vast majority of economic profit, and moving up this curve requires significant, deliberate actions.

Learnings:

  1. Economic profit follows a Power Curve. A small percentage of companies at the top capture most of the economic profit, while the majority in the middle generate very little. [4]
  2. Incrementalism is a recipe for mediocrity. To move up the Power Curve, companies must overcome corporate inertia and make "big moves" rather than spreading resources thinly. [3][5]
  3. There are five key "big moves." These are: programmatic M&A, dynamic resource reallocation, strong capital expenditure programs, differentiation improvements, and productivity improvements. [6]
  4. Big moves are more effective in combination. Making three big moves can increase a company's odds of rising to the top quintile to 47%. [7]
  5. Big moves can overcome a poor starting position. Even companies with a weak initial endowment can dramatically improve their performance by making several significant strategic moves. [7]

Quotes:

  1. "It is nearly impossible to make big strategic moves if resources are spread thinly, like peanut butter on toast, across all businesses and operations." [3]
  2. "Our data show that you're far more likely to make a major move up the Power Curve because one or two businesses break out than because every business or operation improved in lockstep." [3]
  3. "If I meet your average company and I know nothing else about you except that you are in the middle quintile of economic profit, I know your base-rate probability of a strategic breakthrough is 8 percent, or one in 12." [8]
  4. "Making strong moves with a poor inheritance is about as valuable as making poor moves with a strong inheritance." [7]
  5. "Even if you are improving on all five measures, what matters is how you stack up against your competitors." [7]

Eight Shifts to a Better Strategy Process

To counter the social pitfalls of strategy and enable "big moves," Bradley and his co-authors propose eight fundamental shifts in how companies approach strategic planning.

Learnings:

  1. Shift from annual planning to strategy as a journey. Strategy should be an ongoing dialogue, not a once-a-year event. [3]
  2. Shift from getting to "yes" to debating real alternatives. Encourage genuine debate and consider multiple strategic options rather than seeking quick approval for a single plan. [3]
  3. Shift from "peanut butter" to picking the 1-in-10s. Focus resources on the few breakout opportunities that have the potential for significant returns. [3][9]
  4. Shift from approving budgets to making "big moves." The focus of the strategy process should be on identifying and committing to game-changing initiatives. [3]
  5. Shift from budget inertia to liquid resources. Actively free up and reallocate resources to where they can have the most impact. [3]
  6. Shift from sandbagging to open-risk portfolios. Manage risk at a corporate level and create a culture that is open to taking calculated risks. [3]
  7. Shift from "you are your numbers" to a holistic perspective on performance. Evaluate performance based on a broader set of metrics than just short-term financial results. [3]
  8. Shift from long-range planning to forcing the first step. Translate grand visions into concrete, immediate actions to build momentum. [3][9]

Quote:

  1. "If you want to drive strategic change in your company, you should be its chief liquidity officer. You can't move resources that aren't liquid. In other words, you cannot reallocate if you don't also de-allocate." [10]

The Ten Timeless Tests of Strategy

Before the publication of his book, Bradley co-developed a framework to help executives assess the quality of their strategies.

Learnings:

  1. Will your strategy beat the market? A good strategy must aim to outperform the competition, not just keep pace. [11]
  2. Does your strategy tap into a true source of advantage? It's crucial to correctly diagnose why your company earns returns. [11]
  3. Is your strategy granular about where to compete? Defining markets in a conventional way can lead to static resource allocation. [11]
  4. Does your strategy put you ahead of trends and discontinuities? A robust strategy anticipates and adapts to major shifts in the market. [11]
  5. Does your strategy contain privileged insights and foresight? It should be based on more than just commonly available data. [11]
  6. Is your strategy uncertain and yet resolute? Acknowledge uncertainty without it leading to paralysis. [11]
  7. Does your strategy balance commitment with flexibility? It should make clear choices while allowing for adaptation. [11]
  8. Is your strategy contaminated by bias? Be aware of and challenge potential biases and untested assumptions. [11]
  9. Is there conviction to act? A great strategy is useless without the collective will to implement it. [11]
  10. Have you translated your strategy into an action plan? The strategy must be broken down into clear, actionable steps. [11]

Quote:

  1. "Take prescriptions of greatness with a grain of salt. In particular, watch out for the common tendency to underplay the role of context and luck, and over-attribute success to things that are easily visible, controllable or flattering." [12]

Learn more:

  1. The art of strategy, with Chris Bradley and Angus Dawson - YouTube
  2. The art of strategy | McKinsey
  3. “Strategy Beyond the Hockey Stick” - An Interview with Chris Bradley, Martin Hirt and Sven Smit - The Marketing Journal
  4. Strategy Beyond The Hockey Stick: A Summary | Lucidity
  5. How to measure your strategy's odds of success | McKinsey
  6. Strategy Beyond the Hockey Stick | Workpath Magazine
  7. Strategy to beat the odds | McKinsey
  8. How to make the bold strategy moves that matter - McKinsey
  9. Eight shifts that will take your strategy into high gear | McKinsey
  10. Jumpstart a better way to do strategy - McKinsey
  11. The Ten Timeless Tests of Strategy | PDF | Market Segmentation | Competitive Advantage
  12. Chris Bradley on the high-growth industries reshaping the global economy - YouTube