Chapter 6 - Driving Improvement

Executive Overview: Traditional strategy assumes you can predict the destination and plot a fixed course. In volatile environments, this creates rigidity precisely when flexibility is needed. This chapter recasts strategy as an adaptive operating model—a system for balancing clear intent with rapid course corrections. Like the Tautai adjusting course based on conditions while maintaining direction toward the destination, adaptive strategy navigates by feel, not by fixed plan.

The Strategy Paradox

Organizations face a paradox: they need strategic direction to align effort and allocate resources, but rigid plans become obsolete before implementation completes.

The traditional approach—detailed multi-year plans with fixed milestones and metrics—fails in two ways:

Too rigid: When conditions change, the plan doesn't. Organizations either waste resources executing outdated strategies or undergo disruptive planning cycle restarts.

Too vague: Some organizations respond by making strategy so general it provides no real guidance. "Be customer-focused" or "drive innovation" are aspirations, not strategies.

Neither extreme works. What's needed is strategic direction with tactical flexibility—clear enough to align, adaptive enough to respond.

Strategy as Operating Model

This chapter reframes strategy from a document to an operating model—a system for making ongoing strategic decisions rather than a fixed set of conclusions.

From Strategy-as-Plan to Strategy-as-Practice

Strategy-as-practice doesn't abandon planning—it changes what planning produces. Instead of detailed instructions, planning creates:

• Strategic intent: Clear direction about where the organization is heading
• Decision frameworks: Guidance for ongoing choices within strategic boundaries
• Adaptation triggers: Signals that indicate when course correction is needed
• Learning mechanisms: Ways to update strategy based on what's learned

The Three Layers of Adaptive Strategy

Adaptive strategy operates at three interconnected layers:

Layer 1: Strategic Intent

Strategic intent defines direction without dictating path. It answers:

• Where are we going? (Vision for competitive position)
• Why does it matter? (Purpose and value creation logic)
• What makes us distinctive? (Competitive advantage thesis)
• What boundaries will we maintain? (Non-negotiable commitments)

Strategic intent should be stable enough to provide direction but expressed in ways that allow multiple paths to achievement. "Become the most trusted partner in our industry" provides direction. "Launch Product X in Q3" is a tactical commitment that may or may not remain valid.

Layer 2: Strategic Choices

Strategic choices are the ongoing decisions that translate intent into action. They include:

• Where to compete: Markets, segments, geographies
• How to win: Capabilities, positioning, business model elements
• Resource allocation: Investment priorities and trade-offs
• Organizational configuration: Structure, partnerships, boundaries

Unlike traditional strategic planning, these choices remain open for adjustment. The organization maintains positions on each choice but stands ready to revise based on learning and changing conditions.

Layer 3: Strategic Experiments

Strategic experiments are deliberate tests of assumptions underlying strategic choices. They:

• Probe uncertainty: Test assumptions about markets, competitors, and capabilities
• Generate learning: Produce information that improves strategic choices
• Maintain options: Create possibilities for future direction
• Enable course correction: Provide early warning when assumptions prove wrong

Effective organizations maintain a portfolio of strategic experiments—small investments in learning that inform larger commitments.

The Four Capabilities for Adaptive Strategy

Adaptive strategy requires four organizational capabilities:

Capability 1: Dynamic Stability

The ability to maintain strategic coherence while continuously adapting methods.

Organizations need enough stability to execute effectively and enough flexibility to respond to change. Dynamic stability resolves this tension by anchoring identity and direction while allowing tactical adaptation.

Key practices:

• Clear articulation of non-negotiable purpose and values
• Strategic boundaries that distinguish direction from detailed plans
• Regular strategic conversations that maintain shared understanding
• Change within continuity rather than complete transformation

Capability 2: Emergence Recognition

The ability to recognize and scale innovations that emerge outside formal planning.

Strategic opportunities often emerge from front-line experimentation, customer requests, or competitive responses—not from strategic planning exercises. Organizations need capability to recognize valuable emergence and incorporate it into strategy.

Key practices:

• Channels for surfacing bottom-up innovations
• Evaluation criteria for assessing emergent opportunities
• Resource flexibility to invest in promising emergence
• Integration pathways to connect emergence to strategy

Capability 3: Rapid Experimentation

The ability to test strategic assumptions quickly and cheaply before large commitments.

In uncertain environments, big bets made without testing create risk of spectacular failure. Rapid experimentation enables learning before commitment.

Key practices:

• Fast experiment design and launch
• Minimum viable tests of strategic assumptions
• Clear hypotheses and success criteria
• Systematic learning capture and integration

Capability 4: Learning Velocity

The speed of capturing insights and integrating them into improved approaches.

Organizations that learn faster adapt faster. Learning velocity measures how quickly organizational experience transforms into organizational capability.

Key practices:

• After-action reviews that extract learning
• Knowledge sharing across organizational boundaries
• Practice improvement based on experience
• Capability building targeted to strategic needs

The Improvement Engine

When the four capabilities operate together, they create an improvement engine—a system that continuously enhances strategic positioning.

The Improvement Cycle

1. Clarify intent: Maintain clear strategic direction that guides decisions
2. Make choices: Take positions on strategic questions based on current understanding
3. Experiment: Test assumptions underlying choices through targeted probes
4. Learn: Extract insights from outcomes of choices and experiments
5. Adapt: Adjust choices based on learning while maintaining intent coherence
6. Repeat: Run continuous cycles of choice, experiment, learning, and adaptation

Each cycle through the improvement engine strengthens strategic position. Over time, the organization accumulates advantage through compounded learning and adaptation.

Metrics for Adaptive Strategy

Traditional strategy metrics focus on plan execution. Adaptive strategy requires different metrics:

Strategic coherence:

• Alignment between strategic intent and resource allocation
• Consistency of decisions with strategic direction
• Clarity of strategic boundaries across the organization

Adaptation capability:

• Speed from signal to strategic response
• Number and quality of strategic experiments
• Rate of learning integration into practice

Improvement velocity:

• Competitive position change over time
• Capability development rate
• Innovation adoption speed

Leading vs. Lagging Strategic Metrics

The chapter introduces a framework for measuring strategic adaptation:

Leading Metrics (Future-Oriented)

Dynamic Stability:

• Purpose-Anchored Decision Ratio: Percentage of decisions explicitly linked to strategic intent
• Coordination Latency: Time from strategic shift to organizational alignment
• Performance Drift Index: Variance between intended and actual strategic behavior

Emergence Recognition:

• Frontline Idea Capture Rate: Volume of bottom-up innovations surfaced
• Idea-to-Greenlight Lead Time: Speed from idea surfacing to resource commitment
• Cross-Pollination Spread: How widely emergent innovations spread across units

Rapid Experimentation:

• Experiment Velocity: Number of strategic experiments launched per quarter
• Time to First Test: Speed from hypothesis to first data
• Scale-Decision Lag: Time from experiment results to scaling/stopping decision

Learning Velocity:

• Insight-to-Process Cycle Time: Speed from learning to practice change
• Knowledge-Sharing Penetration: Breadth of learning distribution
• Learning Culture Pulse: Survey measure of learning behaviors

Lagging Metrics (Confirmation)

• Market position changes
• Revenue from new initiatives
• Customer satisfaction trends
• Competitive response success rate

Core Concepts

Key Takeaways

1. Strategy is a practice, not a document. Fixed plans become obsolete. What organizations need is capability for ongoing strategic decision-making.
2. Intent must be stable; tactics must flex. Strategic direction provides coherence. Tactical flexibility enables adaptation. Both are necessary.
3. Four capabilities enable adaptive strategy. Dynamic stability, emergence recognition, rapid experimentation, and learning velocity work together as a system.
4. Lead with leading metrics. Traditional lagging indicators confirm past performance. Leading indicators measure adaptive capability.
5. Each cycle builds advantage. Organizations that run more improvement cycles learn faster and adapt better. Speed compounds.

Practical Applications

Monday Morning Actions

1. Clarify Strategic Intent: Can your leadership team articulate strategic direction in one paragraph? Do their statements align? Where is there confusion between intent and tactics?
2. Audit Your Experiments: How many strategic experiments is your organization running? What assumptions are they testing? How fast do you get from hypothesis to learning?
3. Test Emergence Pathways: How does a good idea from the front line reach strategic decision-makers? Trace a recent example. Where did information get lost or delayed?
4. Measure Learning Velocity: When your organization learns something strategically important, how long does it take to change practices? What would accelerate this?

Strategic Capability Assessment

Rate your organization (1-5 scale):

Dynamic Stability:

• We maintain clear strategic direction amid tactical change
• Decision-makers understand strategic boundaries
• We adjust methods while preserving strategic coherence
• Our identity remains stable through adaptation

Emergence Recognition:

• We have channels for surfacing front-line innovations
• Leadership evaluates emergent opportunities regularly
• Resources can flow to promising emergence quickly
• Bottom-up ideas influence strategic direction

Rapid Experimentation:

• We run strategic experiments regularly
• Experiments test assumptions before big commitments
• We get from hypothesis to data quickly
• Learning from experiments influences strategy

Learning Velocity:

• We capture learning systematically
• Insights spread across organizational boundaries
• Learning leads to practice changes
• We build capabilities based on strategic needs

Scoring Interpretation (per capability):

• 4-5: Capability operational and strong
• 2-3: Capability present but inconsistent
• 1: Capability largely absent

Related Concepts

• Chapter 2: The Fitness Delusion - Viability as the foundation that adaptive strategy must serve
• Chapter 5: The Organizational Nervous System - The continuous adaptation infrastructure that enables strategic adjustment
• Chapter 1: Why Your Strategy Is Too Slow - The speed gap that makes adaptive strategy essential
• Chapter 14: Navigate by Riding the Flow - Estuarine mapping for navigating strategic uncertainty
• Chapter 16: Master an Uncertain Future - Immediate actions to begin building adaptive strategy capability