Finding the right framework
In addition to evidence, you need a decision-making framework. Being surrounded by marketers, I tend to see a lot of the Ansoff Matrix, SWOT analysis, and the occasional (which is a shame, because it’s a great tool) Growth Share Matrix. At this time you need something much more responsive and flexible so that you can start making decisions confidently, whilst recognising they are the best decisions for the context and knowledge we have now.
Management research repeatedly finds that decision-making velocity is just as important as decision-making quality - and a strong predictor of success. Whilst this may sound scary, it makes sense to make fast adaptive decisions in response to a volatile, uncertain, complex and ambiguous environment.
However, those decisions need to be realistic in that they take into consideration the administrative, financial and cultural history and situation of the organisation. I’ve become a huge fan of the Dynamic Capabilities Framework. It does exactly what it says on the tin in that it takes a dynamic (responsive) and capabilities (resources) based approach to decision-making. Organisations thrive, survive or fail based on their ability to do three things:
Sense - opportunities, but also risks, in the ever-changing environment
Seize - the moment by responding in an effective and timely way to what is sensed
Transform - capabilities by efficiently executing these changes
The 3 Ps
So far, so much common sense. But it doesn’t look like much of a framework as is. This idea, developed by management scholar and entrepreneur David Teece, is operationalised through the analysis of an organisation’s three most important attributes - paths, positions and processes.
Positions: are the organisation on paper - financial, human and other resources, including brand and relationships - that can be complex, and can also hide untapped value. Understanding the true position of the organisation and leveraging all the assets at its disposal is the key to a secure new path and building new assets or positions.
Paths: the idea of a path is that no matter how ambitious we are, we have a limited number of options available to us. Our next step on the path is constrained by our current position and the previous choices we have made. So to find our way to a new position, we have to find a new path and take it step by step. These are the limiting factors that can feel difficult to overcome.
Processes: I believe are the most often overlooked parts of our organisations. We spend huge amounts of time refining the way we generate, realise and communicate our artistic ideas, whilst being occasionally uncreative (or too creative) about every other process in our organisations. One reason for this is the extent to which we rely on tacit knowledge and routines that derive from cultural norms and social cues. This is also the reason we find ourselves as a sector constantly wishing for greater diversity and never achieving it. When so much is unsaid, how can people know what they don’t know, let alone learn it. Processes are also key to the idea of sensing, seizing and transforming - pivoting our framework back to the strategic from the operational.
There’s no magic formula to the application of the 3 Ps. They require good evidence and great analysis. But what really makes them dynamic is that they are a way of thinking that can be applied to SWOT or PEST and developed as skills by the whole organisation. So if you’re struggling to find a way forward right now, my advice is to take your situational analysis or strategic planning and consider it from a dynamic capabilities perspective, starting with the 3 P’s:
Analyse what positions you have - be specific and forensic about the assets and resources you have including intangibles. These are your raw materials that can be used to respond to the identified opportunities and risks (in your SWOT or similar). So make sure you are leveraging all of your assets. Positions include cash, contracts, technologies, staff skills, creative and design, the list could be longer than you think.
Assess what path options you have and let simplicity guide you - there is no point chasing a change that is ahead of the organisation’s current capabilities and culture, so what’s the next best step you can test as a way forward. Incremental change toward a big goal reduces risk. Your staff positions are vital, try to limit this step to no more than one path change per team.
Design not just a plan, but also a process for reviewing the tests and analyses in the previous points - this is how you will get there in a way that limits risk and don’t forget to think about the cultural factors that will help or hinder progress. Planning a simple implementation and review process as part of the path and position decisions is what makes the framework dynamic and avoids information overload. In other words, how and when will you know if, for example, the chosen path is achieving the desired improvement in revenue or relationship positions?
Putting your plan into action
The ultimate goal in assessing and acting on the 3 P’s should be to develop the organisation’s paths, processes and positions, such that it can more easily sense, seize and transform. This is the fundamental building block of resilient, adaptive and collaborative organisations.
Curious to know more? This is part one of a series devoted to evidence-based decision-making. The next parts will delve into more detailed, specific and practical applications of this framework in relation to common marketing and business metrics and planning for a return to business.
Written for WeWillRecover, an initiative designed to help organisations get back on track during these unprecedented times, in which The Audience Agency is a leading partner.
Eisenhardt, K.M., 2008. Speed and strategic choice: How managers accelerate decision making. California Management Review, 50(2), pp.102-118.
Kownatzki, M., Walter, J., Floyd, S.W. and Lechner, C., 2013. Corporate control and the speed of strategic business unit decision making. Academy of Management Journal, 56(5), pp.1295-1324.
Teece, D.J., 2007. Explicating dynamic capabilities: the nature and microfoundations of (sustainable) enterprise performance. Strategic management journal, 28(13), pp.1319-1350.
Teece, D.J., Pisano, G. and Shuen, A., 1997. Dynamic capabilities and strategic management. Strategic management journal, 18(7), pp.509-533.
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