By Gareth Burton

Of all the quotes that I can recall from my trip to Silicon Valley then that was one that still rings in my ears to this day.

To give you a bit of perspective we were fortunate enough to be in a meeting in the main offices of salesforce.com in San Francisco and were doubley lucky in that we were being entertained by salesforce.com‘s chief scientist and global thought leader J.P. Rangaswami as well as their EVP of strategy, Clarence So.

Clarence was talking about the way that Salesforce approach many of their new ventures and he casually threw away a remark that didn’t sit right in my mind. As I wrote the words on the paper then it seems to go completely against all the formal business training that I’d ever had at University or the numerous CPD courses that I have subsequently attended.

“Let tactics dictate strategy” I just didn’t get it!

Surely we first establish our vision, then build a strategy that maps out our path toward that ideal and use short term tactics to deliver the many milestones that we have set out to achieve our plan? I.e. Strategy dictates tactics, not the other way round?

Yet here I am at one of the most globally recognised companies for innovation and their VP of strategy is telling me that they do things the opposite way round to the rest of us! So I ask Clarence to backtrack a second and enlighten us further on exactly what he means.

Now the ensuing conversation is too long to repeat verbatim but let me try and give you the gist of it.

You see us Brits have this vision of these funky Americans with their great ideas that they just unleash on the world and build billion dollar companies; the truth is very far removed from that. All of these companies have iteration burned into their very core. These are huge companies with such incredible internal systems that they have measures, targets and contingencies in place for every new development and for every new direction they turn.

I’m a huge advocate of the lean start-up movement that is starting to sweep the globe and this is very much in line with these principles. These companies don’t just come up with a great idea and build it. They come up with some general hypotheses about what they ‘think’ will work and then they test, measure and improve continuously until they have a perfect product/market fit or a strategy that potential customers will actually respond to.

You see they don’t bet the house on a single bet. They test a small hypothesis with a minimum viable product and then learn what improvements to that initial assumption will actually deliver real value to the customer. And what follows delivering real value to the customer? Real growth!

So when Salesforce break into a new market they don’t create a war and peace marketing strategy and follow it to the letter (sound familiar). No, they undertake many small experiments around their various options and work out which give the greatest returns. Once they find out what works, only then can they start to up the ante but they don’t make big bets on the unknown, they make calculated bets when the odds are strongly in their favour.

So next time you’re thinking of creating and delivering a long and complicated plan maybe think again? Think about the minimum investment you need to make in order to learn what you need to know. Establish failure early and cheaply then iterate and improve until you reach success. Only when you have iterated to the point that you know what you are about to do is going to deliver value, only then maybe you might want to start releasing a decent part of the budget!!

Hope you enjoyed a different view on strategic decision making, I’d love to hear your thoughts?!

Gareth

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