February 11, 2016

Your Strategy Needs a

Strategy
How to Choose and Execute the Right Approach
Martin Reeves, Knut Haanæs, and Janmejaya Sinha
©2015 The Boston Consulting Group, Inc.
Adapted by permission of Harvard Business School Publishing Corporation
ISBN: 978-1-62527-586-8

Key Concepts
In Your Strategy Needs a Strategy, leaders will learn how to use the strategy palette to choose the right
approach to strategy and execution for their organizations. The strategy palette consists of five approaches:

1. Classical. Leaders utilizing the classical approach believe that the world is predictable, the basis of competi-
tion is stable, and advantage is sustainable.
2. Adaptive. Leaders use the adaptive approach when their business environments are not predictable or mal-
leable. Adaptive leaders continually vary the way they do business to renew their advantage.
3. Visionary. Leaders using the visionary approach believe that they can reliably create or re-create environ-
ments by themselves. When they see a clear opportunity for the creation of a new market segment or the
disruption of an existing one, they take action.
4. Shaping. Leaders utilizing the shaping approach face a future that is unpredictable but malleable. These
leaders engage other stakeholders to create shared visions of the future, build platforms to orchestrate col-
laboration, and evolve platforms and stakeholder ecosystems over time.
5. Renewal. Leaders using the renewal approach aim to restore the vitality and competitiveness of their orga-
nizations when they are operating in harsh and unforgiving environments.

Business Book Summaries® • February 11, 2016 • Copyright © 2016 EBSCO Publishing Inc. • www.ebscohost.com • All Rights Reserved 1
Your Strategy Needs a Strategy Martin Reeves, Knut Haanæs, and Janmejaya Sinha

Summary
Introduction
Today’s business leaders constantly find themselves facing diverse and rapidly changing environments. Strat-
egy has never been more important, but it has also never been more difficult to choose the right approach
to strategy and execution. In Harvard Business School Publishing’s Your Strategy Needs a Strategy, Martin
Reeves, Knut Haanæs, and Janmejaya Sinha provide a unifying choice framework called the strategy palette. The
strategy palette consists of five distinct approaches to strategy and execution that leaders can apply to differ-
ent parts of their businesses. By utilizing the strategy palette, business leaders can identify the most effective
approach, utilize the right thinking and behaviors, and support the appropriate frameworks and tools to suc-
cessfully navigate today’s complex business environments.

Classical: Be Big
The first segment of the strategy palette is the classical approach, which is used by companies in relatively stable
and predictable industries. These players win by positioning themselves optimally in attractive markets. Com-
panies using the classical approach deploy extensive analysis to determine market attractiveness, the basis of
competition within a given market, and their own organizations’ current and potential competiveness. They use
the results to determine their targeted positions and strategic direction. When companies apply the classical
strategy correctly, they can create durable and valuable leadership positions.

Companies should only apply the classical strategy in environments suited for Constant, small
this approach. Industries that are well established; see infrequent changes in improvements in per-
competitive rankings; and have high returns of scale, stable business models, formance can accu-
strong brands, and modest growth rates are most likely to have the predict-
mulate into a signifi-
able environments in which a classical strategy can thrive.
cant and sustainable
The classical strategy requires a three-part process consisting of analysis, competitive advan-
planning, and execution: tage.
1. Analyze and understand. In the analysis phase, leaders must delineate their
markets, identify and understand industry segments, and establish an objective view of which segments are
attractive. They must look at the relationship between market share and profitability across all companies in
the market and decide if their organizations will compete on scale, differentiation, or capabilities.
2. Plan the strategic direction. In this phase, leaders must create plans that are insight-centered, tailored to the
specifics of their businesses, and flexible to changing circumstances. Plans need to be made actionable by
incorporating milestones and metrics that detail the targets that must be met.
3. Execute thoroughly. Execution is key—classical companies must focus every part of their organization son
efficiently working toward well-defined goals.

Adaptive: Be Fast
The second segment of the strategy palette is the adaptive approach, which is used by leaders in environments
that are unpredictable. Leaders of adaptive firms must continually vary how they do business by creating new
options, selecting the most promising of those options, and exploiting the best option before repeating the
cycle.

Leaders should apply the adaptive approach when their companies are operating in environments that are hard
to plan for and shape. To react to evolving change, leaders must capture the data that will generate new insights
about changes in demand or competition. Then, three steps follow:

Business Book Summaries® • February 11, 2016 • Copyright © 2016 EBSCO Publishing Inc. • www.ebscohost.com • All Rights Reserved 2
Your Strategy Needs a Strategy Martin Reeves, Knut Haanæs, and Janmejaya Sinha

1. First, they must run experiments to determine which projects or interest areas suggest the highest growth
potential, the biggest threats, or the most important blind spots.
2. Secondly, they should select business models that show the most promising results while discontinuing the
unsuccessful ones.
3. Lastly, they need to scale up successful experiments and put resources to good use. This way, experiments
that have shown promise can quickly evolve into full-blown businesses.

Strategy emerges from the continuous repetition of this vary, select, scale up flow, rather than from the analysis,
prediction, and top-down mandate.

Visionary circum-
stances can arise
when you spot an
emerging mega-
trend before another
firm spots or acts on
it, when technologi-
cal change opens
up the possibility to
Visionary: Be First
The third segment of the strategy palette is the visionary approach. In some
environments, a single firm can create or re-create an industry and, as a result
of that power, create the future with some degree of predictability. Under those
circumstances, a firm is in a position to employ a visionary approach.
Leaders employing a visionary approach to strategy must do three things:
1. Envisage an opportunity by tapping into a megatrend early, applying a
new technology, or addressing customer dissatisfaction or a latent need.
2. Be the first to build the company or product.

reshape an industry . . . 3. Persist in pursuing a fixed goal while being flexible about the means to
overcome unforeseen obstacles.

Companies should apply a visionary approach when they have the opportunity to create an industry single-
handedly. They can do this by:

1. Identifying the opportunity. Companies must spot opportunities before anyone else acts upon them. To find
such opportunities, they should look for megatrends, individual breakthrough technologies, customer dis-
satisfaction, and the activity of players at the fringes of the industry.
2. Formulating the vision. Companies must create visions that address the above opportunities.
3. Sketching the plan. Leaders must define high-level milestones to keep their organizations pointing in the
right direction and moving quickly toward their end visions.
4. Communicating the vision broadly. Visions will not be realized until they are accepted by a critical mass of
customers and investors. Leaders must communicate their visions to employees and customers so that both
groups can become brand advocates.

Shaping: Be the Orchestrator

Sometimes, leaders face an opportunity to shape or reshape an industry at an early point in its development.
These leaders can use the fourth segment of the strategy palette, the shaping approach. Leaders utilizing this
approach must engage other stakeholders to create a shared vision at the right point in time, build platforms
through which they can exercise influence, and evolve these platforms by scaling them and keeping them flex-
ible. To implement the shaping strategy, leaders must do the following:

• Engage stakeholders. Leaders must develop a collaborative shared vision to harness the resources and capa-
bilities of diverse stakeholders. Their visions should outline how the intended collaborators can solve prob-
lems, stimulate demand, build the necessary economic infrastructures, and remove potential constraints.

Business Book Summaries® • February 11, 2016 • Copyright © 2016 EBSCO Publishing Inc. • www.ebscohost.com • All Rights Reserved 3
Your Strategy Needs a Strategy Martin Reeves, Knut Haanæs, and Janmejaya Sinha

• Orchestrate. Leaders must orchestrate collaboration among many different stakeholders. To do this success-
fully, they must build and operate platforms that facilitate interaction and monetization, lock in stakehold-
ers, and provide focal points for leaders to deploy their influence.
• Evolve the ecosystem. Leaders must invest in opportunities that will maximize network effects by either
growing or scaling their platforms. Leaders must also keep ecosystems flexible and diverse.

Renewal: Be Viable
The fifth segment of the strategy palette is the renewal approach. This approach renews the vitality and compe-
tiveness of an organization when it is operating in a difficult environment. Such a challenge can be caused by a
protracted mismatch between the firm’s approach to strategy and its environment or by a shock, either inside
or outside of the company. The renewal approach is temporary and consists of three steps:

1. Reacting. Companies need to detect or anticipate deteriorating environ- You should deploy
ments as early as possible. This includes detecting signals of impending a renewal approach
harshness.
when your firm faces
2. Planning to economize. Leaders must restore the financial viability of their harsh circumstances,
companies and fund the road back to growth. To do so, they must create
plans that focus on core activities, reduce costs, and preserve capital.
because of either a
protracted mismatch
3. Pivoting to growth. Leaders must pivot to other approaches to ensure
long-term growth. They then must invest in the strategic innovation to
between your firm’s
support this growth. strategy and its envi-
ronment, or because
Ambidexterity: Be Polychromatic of internal or external
Most large organizations operate in multiple business environments that shocks.
change quickly, span increasingly diverse geographies, and are supported by
a wide range of enabling functions. Leaders of such organizations must be ambidextrous, meaning they must
be able to apply multiple approaches to strategy and execution in different parts of the business. The following
are the four main approaches to ambidexterity:

1. Separation. Leaders deliberately manage which approach to strategy belongs in each subunit, and they ap-
ply the approaches independently of one another. Separation is the simplest and most common approach
to achieving ambidexterity and is typically used by businesses that are moderately diverse but relatively
stable over time.
2. Switching. Leaders manage a common pool of resources, switching among approaches over time or mixing
them appropriately at a given moment. Switching can be difficult to manage because it requires both flex-
ibility and effective oversight.
3. Self-organization. Leaders allow units to self-organize and select their own best approaches to strategy. Self-
organization can be very challenging, as organizations potentially incur significant costs from duplication.
4. External ecosystem. Leaders source different approaches to strategy externally through an ecosystem of
players that self-select the appropriate approach. External ecosystems are only appropriate in the most
complex cases because of the high costs and risks involved.

Lessons for Leaders: Be the Animator

Organizations must be able to select, combine, and implement the appropriate combination of strategic
approaches and adjust dynamically as circumstances change. Leaders must be the ones who animate this stra-
tegic collage across their organizations. They must be able to read the external context to determine which
Business Book Summaries® • February 11, 2016 • Copyright © 2016 EBSCO Publishing Inc. • www.ebscohost.com • All Rights Reserved 4
Your Strategy Needs a Strategy Martin Reeves, Knut Haanæs, and Janmejaya Sinha

approach to strategy should be applied where. Further, they must be able to put the right people in the right
places to execute each approach.

Being the animator of a dynamic combination of multiple approaches to strategy can be challenging. Leaders
who successfully accomplish this excel in the following eight roles:

1. Diagnostician. Leaders take an external perspective to diagnose the degree of predictability, malleability,
and harshness of each business environment. They then match it with the required strategic approach for
each part of their organizations.
2. Segmenter. Leaders structure their organizations to match strategic approaches to their environments at the
right level of granularity. They balance the trade-off between precision and complexity.
3. Disruptor. Leaders review the diagnosis and segmentation on an ongoing basis to protect organizations
from becoming too rigid.
4. Team coach. Leaders select the right people to manage each unit based on their capabilities, and work to
further develop the right capabilities in employees.
5. Salesperson. Leaders advocate and communicate strategic choices in a clear and coherent way to employees
and investors.
6. Inquisitor. Leaders establish and refine the correct context for each particular strategic approach by asking
probing questions. They stimulate the critical thinking flow appropriate for each approach.
7. Antenna. Leaders look outward and selectively amplify important signals to ensure that each unit stays in
tune with the changing external environment.
8. Accelerator. Leaders put weight behind select critical initiatives to speed up their implementation.

Personally Mastering the Strategy Palette

Leaders and managers must build the skills needed to put their strategy palettes to work. They can do so in four
ways:

1. Deepening the understanding of the palette. Leaders must work on deepening their understanding of each of
the different approaches to strategy.
2. Applying the palette to business and life. Leaders must consider which strategy is best for the challenges that
they face. They must focus on using the correct mental disciplines and thought flows in their problem solv-
ing.
3. Diversifying the experience. Leaders must try to work in different types of businesses to gain hands-on experi-
ence with each strategy.
4. Setting the context for others. Leaders must build their strategic leadership skills by creating and managing
teams to deploy each strategy. They must learn to identify the right individuals with the right skills for each
desired strategic approach.

Features of the Book

Estimated Reading Time: 4–5 hours, 288 pages

In Your Strategy Needs a Strategy, business strategy specialists Martin Reeves, Knut Haanæs, and Janmejaya
Sinha provide research gathered from The Boston Consulting Group Strategy Institute, a survey of 150 firms
from a range of diverse industries, a 60-year analysis of business conditions in different industries, case stud-
Business Book Summaries® • February 11, 2016 • Copyright © 2016 EBSCO Publishing Inc. • www.ebscohost.com • All Rights Reserved 5
Your Strategy Needs a Strategy Martin Reeves, Knut Haanæs, and Janmejaya Sinha

ies, and interviews with more than 20 CEOs to teach leaders how to apply strategic approaches to their own
businesses. The appendices of the book also provide surveys, suggestions for further reading, and additional
information for readers wanting to deepen their understanding of the strategic palette. The book is accom-
panied by the Your Strategy Needs A Strategy game, available on Apple and Android devices, which builds an
experiential understanding of the Strategy Palette.

Links to supporting online materials:

• The Book on Amazon

• TED Talk
• Strategy Palette Video
• Your Strategy Needs A Strategy HBR Article
• The Book’s Homepage

Contents
Chapter 1: Introduction
Chapter 2: Classical: Be Big
Chapter 3: Adaptive: Be Fast
Chapter 4: Visionary: Be First
Chapter 5: Shaping: Be the Orchestrator
Chapter 6: Renewal: Be Viable
Chapter 7: Ambidexterity: Be Polychromatic
Chapter 8: Lessons for Leaders: Be the Animator
Epilogue: Personally Mastering the Strategy Palette
Appendix A: Self-Assessment: What Is Your Approach to Strategy?
Appendix B: Further Reading
Appendix C: Multi-Armed Bandit (MAB) Simulation Model
Notes
Index
Acknowledgments
About the Authors

Further Information
Information about the authors and subject:
www.bcgperspectives.com/yourstrategyneedsastrategy
Information about this book and other business titles:
hbr.org

Click Here to Purchase the Book

Business Book Summaries® • February 11, 2016 • Copyright © 2016 EBSCO Publishing Inc. • www.ebscohost.com • All Rights Reserved 6
Your Strategy Needs a Strategy Martin Reeves, Knut Haanæs, and Janmejaya Sinha

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By Robert Simons

About the Authors

Martin Reeves is a senior partner and managing director in BCG’s New York office and leads the BCG Hender-
son Institute, BCG’s vehicle for research. He was named a BCG Fellow in 2008, and he has published and spoken
widely on strategy issues. He has led numerous strategy and organizational assignments, both for individual
companies and for industry associations across the globe.

Knut Haanæs is a senior partner and the global leader of BCG’s strategy practice. He also leads the BCG Geneva
office and has previously been office administrator of BCG Oslo. He has published more than 20 articles on
strategy and sustainability in journals such as Harvard Business Review, MIT Sloan Management Review, Business
Strategy Review, Journal of Applied Corporate Finance, European Management Review, and Scandinavian Manage-
ment Review, and has authored a number of BCG reports.

Janmejaya Sinha is chairman of BCG’s Asia Pacific practice. He is also a member of BCG’s global executive com-
mittee and chairman of the Confederation of Indian Industry’s (CII) Committee on Financial Inclusion. He is
a coauthor of the book Own the Future: 50 Ways to Win from The Boston Consulting Group. In 2010, Consulting
magazine named him one of the Top 25 most influential consultants in the world.

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