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monday morning manager

Setting strategy is an art. Perhaps you could use a palette.

Three management experts from Boston Consulting Group have developed one, intended to show the various ways you can approach strategy in this complicated, turbulent world.

"It's not that we lack powerful ways to approach strategy; it's that we lack a robust way to select the right one for the right circumstances," Martin Reeves, Knut Haanaes, and Janmejaya Sinha write in Your Strategy Needs a Strategy.

Since strategy involves problem-solving, the best approach depends on the specific problem at hand. They zeroed in on three dimensions by which business environments can differ: Predictability (whether you can forecast what's ahead), malleability (whether you can, alone or in collaboration with others, shape it), and harshness (whether you can survive it).

The spread between companies in the intensity of those three dimensions has increased dramatically recently, requiring far more care in choosing how to approach strategy than when the discipline was first developed as a concept in the late 1940s and early 1950s. "There are incredibly more conditions. There is no single approach that can meet all these conditions," Mr. Reeves, director of BCG research arm the Bruce Henderson Institute, said in an interview.

Considering the first two elements, predictability and malleability, they came up with a matrix that revealed five distinct approaches:

1. Classical
I can predict it but I can't change it

This is the approach historically taught in business schools, where planners meet to figure out the important elements of the environment and how they can best position themselves within it, confident major disruption is unlikely. He points to the confectionery industry as an example of where this approach is still viable. The method's steps include analyzing, planning, and executing. The overriding imperative: Be big.

2. Adaptive
I can't predict it and I can't change it

A lot of companies feel they are caught in this Twilight Zone of unpredictability with any advantage short-lived and not controllable. At best, you can gain an edge repeatedly over competitors that will only come through constant experimentation. The semiconductor and textile industries are caught in this drama. Companies need to vary their approach, select the most successful paths, and scale up those opportunities. In short, Mr. Reeves says, vary, select, and amplify. The overriding imperative: Be fast.

3. Visionary
I can predict it and I can change it

Leaders in this environment – Apple's Steve Jobs was a prime example – believe that they can reliably create or recreate an environment largely by themselves. They are usually the first to introduce a revolutionary new product or business model. Entrepreneurs have always done this but big companies are now getting in on the act. He says the success algorithm is envision, realize the possibility, and persist in scaling up the opportunity. The overriding imperative: Be first.

4. Shaping
I can't predict it but I can change it

When a company can write or rewrite the rules of an industry at a nascent stage of its evolution, this strategic approach is recommended. It can apply in highly fragmented, young, dynamic industries, freshly disrupted industries, and emerging markets. Shaping is often done with others, an ecosystem collaborating, as with software apps or Amazon's online platform. The shaper orchestrates the effort following a three-pronged approach: Influence, co-evolve, and maintain. The overriding imperative: Be the orchestrator.

In a harsh environment, however, a company may need to turn itself around, restoring vitality and competitiveness. That leads to a fifth approach they call:

5. Renewal
My resources are severely constrained

You need to step back and transform the organization, acting decisively, knowing that the odds of a turnaround succeeding is probably only 25 per cent. Often cost-cutting will be an immediate goal. But after balance is restored, you must shift your approach to one of the other four elements on the palette. The overriding imperative: Be viable.

A painter wouldn't succeed with one colour. And you probably won't succeed with just one strategy on your palette. Different arms of your organization are probably competing in different environments, and you must select accordingly.

It's hard for companies to embrace contradictory strategies. They might, for example, be pushing cost restraint. But a new business unit within the company might require deliberate inefficiency in order to test the market and find its way.

This is not a dilettantish idea, despite the artistic metaphor. He says that statistics show that 32 per cent of companies will be gone in five years' time, dead or swallowed by another organization. In such stark conditions, some argue that strategy is dead. But you need strategy – and that strategy needs a properly picked approach.

"Strategy is not dead. It's more important than ever. What you learned in business school – classical strategy – is not a panacea. It works in some situations and not in others," he warns.

Harvey Schachter is a Kingston, Ont.-based writer specializing in management issues. He writes Monday Morning Manager and management book reviews for the print edition of Report on Business and an online work-life column, Balance. E-mail Harvey Schachter