I rated
Strategy Dynamics Essentials by Kim Warren
as a Four Stars book in my review on Amazon.co.uk. This means I think the book Is Good and Well Worth Reading.
Here is my book review.
Turn your strategy into a detailed model and stop it being wishy-washy good intentions
This is not an ordinary book on strategy and therefore it won’t be suitable for many people who are looking for a how to guide.
The author recognises the problem of well meaning but wishy washy strategic plans that are intended to increase long term profits and cash flows but fail to provide a link from strategic objectives through to tactics and performance numbers.
The book introduces a concept of business modelling based on cause and effect relationships between resources and flows.
- Resources are measured at a snapshot in time e.g. cash at the bank at the end of a particular day.
- Flows are movements in or out of the resources over a period of time. It’s easiest to think of this concept as a bank account or a bath tub without a plug.
Important resources that need attention include the number of customers and the number of skills that employees have of good standing since they determine the performance of the business.
These relationships are presented in a diagram using special software although the same logic could be done with a spreadsheet but presentation would be an issue.
The diagrams are easy to understand when you look at a single resource affected by several flows in or out but adding additional resources means the diagrams become more complicated until you become much more familiar with reading them.
I must also point out that the diagrams are very hard to see and read using a normal kindle reader so, after looking at the sample and finding it interesting, I think you’ll be much better off with the printed book.
It’s not an easy read, just as reading about any software is hard going but, I think it can fire up your imagination. It did mine.
Yes the strategy dynamics model of a business is complicated but it’s still a simplification of the real business where it’s hard, perhaps impossible to identify and understand cause and effect relationships, especially when there is a time delay e.g. increasing marketing in month 2 may only see an increase in sales revenue in month 5 and in cash in month 7 when the customer pays.
Without such a model that looks forward as well as back, you’re left with theoretical ideas about how the business works but these are unlikely to be shared with colleagues and may be full of inconsistencies as you attribute good and bad events to multiple causes.
I was first introduced to the idea of systems dynamics by the book The Fifth Discipline: The art and practice of the learning organization: where the idea of stocks (resources) and flows and reinforcing and balancing feedback systems in the mid 1990s. I was excited by the possibilities these ideas could bring to competitive strategy but the field hasn’t developed as I’d hoped or expected.
This is a good step in the right direction although I should point out that, unlike general systems thinking that tries to give the big picture view of what’s happening, this strategy dynamics modelling approach works the other way. It breaks down the business into smaller cause and effect relationships which are of more practical use to tactical decisions. I’d like to think that both approaches can be used and reconciled.
I bought one of his earlier, larger books in the early 2000s. I found that book very hard to read and I don’t think I finished it but this is easier, partly because it’s smaller.
It’s still tough unless you get excited about the insights that the modelling approach can provide. I think it’s useful to start thinking about part of your business in terms of resources together with inflows and outflows so that you can gain an impression of the improved understanding that can be available from building a strategy dynamics model and how it can link through into ideas like strategy maps and the balanced scorecard.
Ultimately it’s a long marketing letter for the author’s company training and software. I think I’m impressed enough to take this further.
It is available to buy from Amazon.co.uk and Amazon.com.
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