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The art of responding to change with strategic agility with Daniel Montgomery (Agile Strategies)
Episode 121st December 2021 • Goal Diggers: OKR, KPIs, strategy, and growth. • Perdoo
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If the last few years have taught us anything; it's that change is constant. We're often inclined to just adapt and accept such circumstances. But it's time to respond with strategic agility and engrain strategic foresight into our organizations, in order to build a desired future, not a compromised one.

So let's talk strategy! Together with Daniel Montgomery, Managing Director at Agile Strategies, we'll uncover:

  • What strategy really is
  • The meaning of strategic thinking and foresight
  • How to respond to internal and external changes with strategic agility
  • How OKR (Objectives and Key Results) boosts clarity on an organization's strategic choices

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Additonal resources: Playing to Win by Roger Martin & A.G. Lafley

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Want to learn how to set a great strategy? Head over to our blog post: Looking to get aligned? Put strategy first, OKR second

Looking to communicate and plan out your strategy in a way that everyone understands? Set up your Strategic Pillars and Strategic Timeline in Perdoo. You can get started here.

Transcripts

HJ:

Hi everyone.

HJ:

And welcome to another episode of Goal Diggers, the podcast for

HJ:

OKRs, KPIs, strategy and growth.

HJ:

I'm Henrik, founder, and CEO of Perdoo.

HJ:

The tool for strategy and growth management for fast-growing businesses.

HJ:

I'll be the host of today's episode.

HJ:

With me today is Daniel Montgomery.

HJ:

Daniel, could you tell us a bit about yourself.

Daniel:

Sure.

Daniel:

Thanks, Henrik.

Daniel:

It's great to great to join you.

Daniel:

I guess I would say that what I've always been interested in is how

Daniel:

people work together and collaborate.

Daniel:

I think even when I was a kid, that was just the kind of thing that I

Daniel:

paid a lot of attention to whether it was, you know, how things worked

Daniel:

in my school or how things worked in my church or whatever was going on.

Daniel:

And I think, you know, to be honest, I noticed very early on

Daniel:

how it seems like an awful lot of people get frustrated with this.

Daniel:

Like we don't work together as well as we could.

Daniel:

And I think these days, when you look at everything that's going on, like,

Daniel:

you know, climate change and pandemics, we really need to, we need to change.

Daniel:

I mean, we need a greater level of awareness about how we have

Daniel:

conversations with each other, how we plan, how we commit to things.

Daniel:

And that led me from initially a career in human resources into

Daniel:

the whole question of strategy.

Daniel:

And my sense of what strategy is, has really evolved.

Daniel:

Like I went to business school here.

Daniel:

I live in Boulder, Colorado.

Daniel:

I went to business school years ago and I actually found strategy very boring

Daniel:

because it was all about abstractions.

Daniel:

It really wasn't that much about people and it actually took me..

Daniel:

It took me probably 15 years after I got out of business school to realize

Daniel:

that strategy was actually really fascinating, but you needed to look

Daniel:

at it from a different kind of angle.

Daniel:

It was about the orientation that people have toward the future together.

HJ:

Okay.

HJ:

How would you define strategy?

HJ:

Cause I, I mean, on the internet, you always see many different

HJ:

definitions of strategy.

HJ:

So what's your definition of strategy?

Daniel:

Yeah that's a really good question.

Daniel:

Cause I think there are a lot of different views of what strategy is because some

Daniel:

people will say, if we have a mission and a vision and values, we have a strategy.

Daniel:

That's not a strategy.

Daniel:

Other people will say, if we have a list of initiatives that we're

Daniel:

committed to, that's a strategy.

Daniel:

I don't think that's a strategy either.

Daniel:

To me, strategy, it includes those things, but the key decisions that you

Daniel:

have to make once you've established, what your purpose is as an organization

Daniel:

is to say, where are we going to play and how are we going to win?

Daniel:

And I credit Roger Martin for coming up with that series

Daniel:

of questions, which we use.

Daniel:

Yeah.

Daniel:

You know, Roger Martin, a great thinker on this, but like where to play is a question

Daniel:

of, well, what geographies are we in?

Daniel:

What are we selling?

Daniel:

And that's, that's based on, you know, I hope we get around to

Daniel:

talking about strategic foresight.

Daniel:

There's a perception of where your market is going, where you're playing

Daniel:

in it, where you want to play in it, how you want to transform that.

Daniel:

And so where we play is really important.

Daniel:

So in conventional terms, you're picking your target

Daniel:

market, your product market mix.

Daniel:

And then the next question is once we've decided that: how will

Daniel:

we win or how will we succeed?

Daniel:

If you're a nonprofit, they want to phrase it more as how will we

Daniel:

succeed, but what is actually going to make us successful with that?

Daniel:

And then from there, you can get into a lot of discussions about

Daniel:

what capabilities you need to build, what risks you need to manage.

Daniel:

Those kinds of things.

Daniel:

And as you get further through those questions, then, OKRs start

Daniel:

to become a very useful language for being very precise about

Daniel:

where you're trying to get to.

Daniel:

So that's essentially my view of strategy.

HJ:

Yeah.

HJ:

I'm well familiar with Roger Martin's approach.

HJ:

And what was this book called again in which he explains the...

Daniel:

Oh, I'm sorry.

Daniel:

I'm drawing a blank.

Daniel:

I can bring it up in a couple of seconds.

HJ:

Yeah, same for me.

HJ:

I just think that the title, all of a sudden it slips my mind, but

HJ:

we use it a lot ourselves as well.

HJ:

And what I also really like is how he connects the, how to win

HJ:

choices to the chosen playing field.

HJ:

Right.

HJ:

And if the playing field changes, then also your strategy

HJ:

should be reviewed again?

Daniel:

Exactly.

HJ:

You mentioned strategic foresight and that you'd love to talk about that.

HJ:

Like what would be strategic foresight then and how does that relate to,

HJ:

for example, strategic planning?

Daniel:

Well as I mentioned, I like to think of OKRs as a way to describe

Daniel:

the future that you want to create.

Daniel:

And there's a whole interesting question, by the way, the name

Daniel:

of the book is Playing to Win.

HJ:

Yes.

HJ:

Exactly.

HJ:

Thank you for that.

Daniel:

Roger Martin and Alan Lafley, HBR press 2013.

Daniel:

All right.

Daniel:

We got that out of the way.

Daniel:

So I like to say that OKRs are something that clarifies strategic choices, and

Daniel:

they're a language for talking about the kind of future you want to create.

Daniel:

And where foresight comes in is that I think often what happens,

Daniel:

we read about all of these trends that are going on in our world.

Daniel:

And I think you have to pay attention to the mood you have about what

Daniel:

you think the future is bringing.

Daniel:

And I say this because frankly, I think a lot of us are in a state of

Daniel:

existential anxiety about the future.

Daniel:

When you think about climate change, when you think about social

Daniel:

inequality, population, disease, all of these kinds of things.

Daniel:

So you can choose to see these trends as pushing you somewhere and forcing you into

Daniel:

some kind of a reaction, or you can take a bigger view of how is this happening?

Daniel:

Why is this happening?

Daniel:

What possible multiple range of futures might happen?

Daniel:

What kind of future do I want to see?

Daniel:

What do we want to see and how do we actually move ourselves in that direction?

Daniel:

Because nobody can predict the future.

Daniel:

In fact, I mean, all of our ideas about the future are happening in the present.

Daniel:

And, you know, we don't tend to realize that because we're so used

Daniel:

to thinking forward that way..

Daniel:

So strategic foresight is a way to look at what's happening map that,

Daniel:

imagine multiple positive futures, and then think about how we're going to

Daniel:

move toward a future that, I mean..

Daniel:

It's reasonably possible, but it's something that we're actually creating.

HJ:

Yeah.

HJ:

But that thinking further ahead.

HJ:

I mean, if we look at the pandemic..

HJ:

If the pandemic taught us anything, we've also learned that, sudden

HJ:

and unexpected things can happen.

HJ:

Right?

HJ:

And that it's very important for organizations, but like for any

HJ:

important factor in this world to remain agile and to accommodate

HJ:

disruptions, but also changes that, that the climate issues demand from us.

HJ:

Right?

Daniel:

Absolutely.

HJ:

So I think in theory, as we say strategy, isn't really

HJ:

time bound, but with these constantly changing circumstances

HJ:

and these, also the competitive environments that can change, right.

HJ:

And where unexpected changes can happen.

HJ:

Organizations need to be agile enough to adapt those to those changes.

HJ:

And I think that sounds simple, but in fact, it's very difficult in reality.

HJ:

And I also think as the organization grows, this

HJ:

becomes increasingly difficult.

HJ:

How can organizations create this strategic agility and how at the

HJ:

same time can they foster a strategic learning culture to account for

HJ:

these potential future disruptions?

Daniel:

Right.

Daniel:

Well, I think partly.

Daniel:

It's moving away from the idea of strategic planning, into the idea of

Daniel:

strategic thinking, because from some perspectives, well, professor Henry

Daniel:

Mintzberg, from McGill university in Montreal pointed out: he says strategic

Daniel:

planning is actually an oxymoron.

Daniel:

In other words, those are actually two contradictory terms

Daniel:

that have been mashed together.

Daniel:

You know, like a Camaro, some mythical beast that's got, you know,

Daniel:

the body of a lion and the wings of an Eagle or something like that.

Daniel:

So it's actually a mess.

Daniel:

You know, planning is necessary from a business perspective and

Daniel:

that's when you get into, you know, how many people do we need?

Daniel:

How much money do we need?

Daniel:

How do we organize?

Daniel:

That's essential.

Daniel:

But to me that's not strategy.

Daniel:

That's something that follows on from strategy and that needs to be

Daniel:

very nimble and fluid in order to respond to change in the environment.

Daniel:

But yeah, the whole thing with learning, I think flows from having this sort of

Daniel:

culture where you're able to have really open conversations about what's going on.

Daniel:

So number one, you've got to have a higher level of strategic

Daniel:

awareness in the organization.

Daniel:

You know, because earlier in my career I have to admit, I worked in some

Daniel:

pretty dysfunctional organizations and often you'd have, "Well son we'll

Daniel:

tell you, you know, we communicate on a need to know basis", which

Daniel:

basically means, okay, I'm the boss.

Daniel:

And when I need to tell you to do something.

Daniel:

I'll tell you that, but otherwise just do your job and you don't

Daniel:

need to know until I tell you.

Daniel:

But a knowledge organization that's adaptive needs to have a

Daniel:

much wider awareness throughout the whole organization.

Daniel:

And then, so you're having conversations and you're listening both ways.

Daniel:

So there's a lot of collective intelligence in the organization and

Daniel:

you're paying a lot of attention to it.

Daniel:

So, and I think this was, we really started seeing this

Daniel:

in Silicon valley years ago.

Daniel:

Cause they're so fast moving.

Daniel:

And so competitive.

Daniel:

So even Steve Jobs who was reputed to be fairly dictatorial in terms

Daniel:

of his management style, he also said, you know, I don't hire smart

Daniel:

people to tell them what to do.

Daniel:

You know, I hire them to come up with ideas and bring them to me.

Daniel:

So he's playing what I call more of a catalytic role as a leader in

Daniel:

that he's setting out a big vision.

Daniel:

Like we want to have a computer and a phone.

Daniel:

I didn't know I needed one of these in 2007 and now I can't live without it.

Daniel:

I'm completely addicted to it.

Daniel:

Which whether that's good or bad is another story, but he created that

Daniel:

kind of a vision and people got to work on how to actually make it happen.

Daniel:

You could say the same thing about, you know, our president Kennedy here in

Daniel:

America said, let's go to the moon by the end of the decade, nobody had done that.

Daniel:

He didn't know how to do that.

Daniel:

He needed a lot of help from a lot of engineers and other kinds of

Daniel:

people that actually make it happen.

Daniel:

So it suggests a kind of leadership that we have and how you encourage

Daniel:

leadership is that kind of learning is putting out a vision, letting

Daniel:

people collaborate on how to do it.

Daniel:

Psychological safety is enormously important.

Daniel:

People have to feel like, I have a crazy idea.

Daniel:

I want to bring it up.

Daniel:

I don't know if it's going to work and it's okay to bring that up.

Daniel:

It's okay to try something and not succeed.

Daniel:

So, you know, it's the freedom to fail, fail fast, learn

Daniel:

fast, psychological safety.

Daniel:

So, I mean, this is a thing that we, I have to admit, struggle a

Daniel:

little bit with OKRs because..

HJ:

I was just about to say this, this will be a very nice bridge to the

HJ:

OKR topic and talk a bit about like, when organizations have that bigger

HJ:

vision and embark on a great mission.

HJ:

When organizations have a strategy, like what role can OKRs play to help

HJ:

organizations realize that strategy?

HJ:

And at the same time, stay agile.

Daniel:

Right.

Daniel:

And so I think you have to find the right balance between top-down and bottom-up

Daniel:

and sideways when you're doing the OKRs.

Daniel:

Because some people who have more of a command and control

Daniel:

tendency as leaders will say, okay, I've got my OKRs at the top.

Daniel:

And then your OKRs will support my OKR.

Daniel:

The next level will support those.

Daniel:

And that was the idea of Management By Objectives (MBO).

HJ:

Yeah.

Daniel:

From Peter Drucker, which was a very innovative idea in

Daniel:

1954, but that's a long time ago.

Daniel:

So you have to, you have to have the right amount of freedom in different functions

Daniel:

in the organization to set their own OKRs.

Daniel:

And so, you know, we talk about the 50/ 50 principle that well on any given team,

Daniel:

start with the idea that 50% of the OKR support some larger corporate vision or

Daniel:

organizational vision and the other ones address some kind of a local problem or

Daniel:

a problem you've got with another team.

Daniel:

Now, 50/ 50 is not going to work for everybody.

Daniel:

In some cases, maybe it needs to be 80/20.

Daniel:

I mean, we even see this in Google, like the salespeople it's very

Daniel:

top down, as far as setting goals.

Daniel:

The engineering people, it's very bottom up and there are reasons for that, right?

Daniel:

Because Google makes a lot of money off a few products , they

Daniel:

want to invest in new ideas.

Daniel:

So they want to encourage their engineers to be trying new things all the time.

Daniel:

Sales is more cut and dry.

Daniel:

You get into some of their operational areas and they don't even use OKR.

Daniel:

They have KPIs.

Daniel:

And I think the challenge is, especially for the people who are

Daniel:

less involved in creatively, coming up with OKR to feel like they still

Daniel:

care about the OKR and that they're not being left out of the process.

Daniel:

I think that's really challenging.

HJ:

Yeah.

HJ:

I think involving them though, because I mean, if there's one thing, for sure, if

HJ:

you do have these, these great idea or this greater mission and vision that you

HJ:

like to realize, if you do need to deliver the strategy, you need to have your

HJ:

entire organization working toward that.

HJ:

Right?

HJ:

And I mean, in these old industrial firms that were still quite dominant, I think

HJ:

in the 1950s, when they came up with MBO, this command and control, right.

HJ:

That you spoke about.

HJ:

And having everything trickled top-down will work, but in more creative firms

HJ:

that were just learning how to run these more creative firms, you need to really

HJ:

crowdsource the knowledge of your people.

HJ:

Right?

HJ:

So, Basically, I mean, you've worked with many, many different organizations, right.

HJ:

And consulted them on how to become successful.

HJ:

Not only with OKRs I guess, but also with strategy.

HJ:

What are some of the things that you've seen and that you've learned

HJ:

that work well to keep your entire organization actively involved and

HJ:

actively engaged with these topics?

Daniel:

I think a lot of it is communicating from the

Daniel:

top that it really matters.

Daniel:

So I think it's frequent conversations.

Daniel:

You know, one idea I really love of, Don Sull, who's another business professor.

Daniel:

I think he's at MIT is the idea of fast goals.

Daniel:

Like we've talked about SMART goals forever, but they're frequently discussed.

Daniel:

They're aspirational.

Daniel:

They're very specific and they're transparent, fast.

Daniel:

And I think that, you know, the problem is we often don't focus on the things that

Daniel:

are truly important to us because we're so busy with things that feel urgent.

Daniel:

And you know, when you've got Facebook and LinkedIn and email and all this

Daniel:

stuff, it's throwing stimuli in your face constantly, you lose track

Daniel:

of like, what's the real purpose of your life or your business.

Daniel:

And so we like to say that OKRs — they're a way to bring those

Daniel:

important things, they're a way to make the important things urgent.

Daniel:

I think that's, that's the best way to put it.

Daniel:

Um, and so.

Daniel:

Having that there having a way to keep track of it, having a discussion about

Daniel:

it every week to remind ourselves what's the big picture of what we're

Daniel:

trying to do is, is really essential.

HJ:

And based from your experience, like if you have these open

HJ:

conversations and if you have that level of transparency in companies,

HJ:

do you then see that automatically the employees and the teams become more

HJ:

engaged and become actively involved?

HJ:

Or are there still things that managers and leaders should promote or be working

HJ:

on to, to make sure that you keep a good pace that you keep them engaged.

Daniel:

Well I think there's a lot of subtleties about how you actually run

Daniel:

a meeting that are really important.

Daniel:

How you make decisions, how you give feedback to people that are

Daniel:

really important that are there.

Daniel:

I mean, you can observe those kinds of things because you could just have a

Daniel:

meeting and kind of tell people what's going on and tell them what to do.

Daniel:

And that's not going to engage them.

Daniel:

And yet, well, you know, you're actually having a meeting,

Daniel:

you're having a conversation.

Daniel:

You can check the box that you did that, but what was the feeling in it?

Daniel:

Right.

Daniel:

You know, so I think there's, that's why, I mean, we need to keep track of

Daniel:

objectively how are we progressing.

Daniel:

And subjectively, how do we really feel about the whole thing?

Daniel:

How engaged are we?

HJ:

Cool.

HJ:

Yeah, I've one more question Daniel.

HJ:

We've spoken about strategic planning, you mentioned how that's actually an

HJ:

oxymoron, if I pronounce that correctly.

HJ:

And you mentioned..

Daniel:

That's how I say it.

Daniel:

I don't know.

HJ:

It's the first time I heard the word, but I love the definition

HJ:

of it and I think you're right.

HJ:

I think the two do indeed counteract.

HJ:

And you mentioned that strategic thinking and strategic foresight is more important.

HJ:

What will be your number one piece of advice to organizations like looking

HJ:

to integrate strategic thinking or strategic foresight using OKRs.

Daniel:

Well, don't use OKRs for everything.

Daniel:

Don't think of it as a command and control mechanism.

Daniel:

So, you know, I wrote a book several years ago, here it is actually.

Daniel:

It's called Start Less, Finish More.

Daniel:

So that's really our tagline around it.

Daniel:

OKRs are not a way to manage everything in your organization.

Daniel:

So actually the fewer that you have, the better.

Daniel:

I mean, we are focusing on one thing right now in our company at Agile Strategies.

Daniel:

The rest of it are things that are business as usual that we will do anyway.

Daniel:

But, you know, what's the big theme for moving things forward and you need to

Daniel:

make that meaty enough that people feel like everybody's got a stake in it.

Daniel:

So, you know, and that's often a challenge, you know, we were talking

Daniel:

with an IT organization yesterday and well, okay, we have somebody whose

Daniel:

whole job is applying patches to server software, you know, how do we get them

Daniel:

excited about where the company's going?

Daniel:

And our answer to that is you need to focus on the value that you're providing.

Daniel:

Like at the end of the day, the person who's getting the data that

Daniel:

went through that server in this case, it's a medical device company.

Daniel:

You know, these are used in surgeries, this is affecting people's lives.

Daniel:

And so you need to come up with a few OKRs that really tap into

Daniel:

a deeper sense of meaning and creating value for other people.

HJ:

Yeah, I couldn't agree more.

HJ:

And I love what you said about like your business as usual and

HJ:

the things that you'll do anyway.

HJ:

I also think it's important for teams and organizations to keep that into account

HJ:

when setting OKRs, it feels as if lots of people are assuming they'll have a hundred

HJ:

percent of their time available to work on those OKRs, but that's not the case.

HJ:

You have tons of business as usual, and you only have 20, maybe 30% of your time.

HJ:

I guess that varies a bit from team to team, available to work on these OKRs.

HJ:

I think if you realize that then you also realize that there are only

HJ:

so many OKRs that you could really be working on at any point in time.

Daniel:

I agree.

Daniel:

And I think I've actually heard you say that on a webinar.

Daniel:

And I thought that was a great idea because how much time do you

Daniel:

really have, because you get into some departments that are driven

Daniel:

by transactions like people walk in the door and you're servicing them.

Daniel:

How much time do they actually have to do something that's transformative?

Daniel:

So I think you need to be aware of that and empathetic with what

Daniel:

other people are dealing with.

Daniel:

And I think you have to, you have to acknowledge that those things,

Daniel:

those health metrics you might measure with the KPIs are equally

Daniel:

important and find the balance there.

HJ:

Couldn't agree more.

HJ:

Listen Daniel, it was absolutely great to have you on this podcast with us today.

HJ:

I've learned lots of new things and I think it would be great to have you

HJ:

again, at some point in the future.

Daniel:

I'd love to love to.

Daniel:

Thanks.