Questions
How to test a strategy before it spends a year
To test a strategy, write it as a few clear choices, list what must be true about customers, rivals, costs, and your own abilities for those choices to work, and check the evidence for each. Then run small, time-limited tests on the conditions with the least support and the highest cost if wrong, with the result that would change course written down in advance.
From slogan to conditions
A strategy worth testing makes choices: which customers, which offer, how you will win them, and what you will stop doing. If the statement could describe any company in your industry, it is a slogan, and a slogan cannot fail a test. Rewrite it until it names something a rival might reasonably do differently.
Then ask, for each choice, what would have to be true for it to succeed. The question, associated with the strategy writer Roger Martin, moves the debate from whether the plan is good to which conditions hold, and conditions can be checked. Typical ones concern demand, price, the cost of serving, the response of rivals, and whether you can hire or build what the plan needs.
Test the weakest condition first
Score each condition on two things: how much evidence supports it today, and how much is lost if it is false. Conditions with strong support need watching rather than testing. Those with thin support and a high cost of being wrong get the first test, designed to be cheap, quick, and capable of failing.
Write the threshold and the date before the test begins. A result that falls short should lead to a reshaped strategy or a stop, not to a longer test. Alongside the tests, choose a few early signals, such as proposals sent or win rates, that would show the strategy drifting long before the year-end numbers do.
A worked example
An accounting firm with forty staff plans to move from small-business tax returns toward advisory work for mid-sized manufacturers. Its conditions include thirty manufacturers within two hours' drive willing to pay $3,000 a month, two senior hires with manufacturing experience found within six months, and 400 small returns dropped without losing the referrals they bring.
The money looks compelling. Thirty retainers would bring about $1.08 million a year at a 45 percent margin, around $486,000, against $120,000 earned from 400 returns averaging $1,200 at a 25 percent margin. Yet the demand condition rests on three manufacturing clients, none of them on retainer.
So the firm offers a paid 90-day review at $7,500 to fifteen manufacturers, and agrees in advance to reshape the plan unless four accept and two become retainers within 120 days. Dropping the 400 returns is the step hardest to undo, so it comes last, after the demand test has passed.
How the room tests a strategy
The room splits the strategy into the decisions it contains, and each condition becomes a claim whose support Inspector grades. Historian checks how similar shifts have gone for others, and Red Teamer runs the scenarios that could break the plan, such as a rival cutting prices or a key hire leaving.
Strategy discussions often agree too quickly, so the Contrarian attacks the room's consensus directly. Grandfather marks the steps that are slow to undo and asks for the cheapest way back. The Verdict names the conditions that would reverse it, and the Human Decision stays with the leadership that owns the plan.
Questions
- How is this different from a SWOT analysis?
- A SWOT grid lists strengths, weaknesses, opportunities, and threats, but says little about which matter most or how to check them. Testing names the conditions the plan depends on and gathers evidence on each.
- How long should a strategy test run?
- As short as the evidence allows, often a single quarter. Long tests drift into commitments, and a test without an end date rarely ends.
- Who should take part?
- People who will carry out the plan, and at least one person who does not benefit from it. The second is the likeliest to name the condition everyone else is avoiding.
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