Strategy can be defined as a set of plans and actions to achieve an important goal. Its first appearance dates back to the battlefields. The importance of correct planning and smart moves to win wars has been understood by seeing their effects. Word origin ancient Greek stratiyeia It is based on the word and consists of the combination of two words: “stratos” i.e. army and “ago” that is, do not lead. Famous Chinese general who lived approximately 2,500 years ago Sun Tzu‘s words about military strategies remain valid even today. For example:
- “Strategy without tactics is the slowest path to victory. Tactics without strategy is just noise before defeat.”
- “If you know others and yourself, you will not be in danger even if you fight a hundred times; If you don’t know anyone else but know yourself, you win and lose; If you know neither yourself nor others, you are in danger in every war.”
- “The best strategy is to win without fighting.”
Nowadays, we mostly associate strategy with the business world. We consider the path that organizations will take and the approaches they will follow to achieve a common and important goal within the scope of business strategy. In fact, when it comes to strategy, the first thing that comes to mind is CEOs, and strategy is thought of as their job only. Strategy is not a concept limited only to organizations; teams and individuals can also have strategies. If you have an important goal and a series of efforts are required to achieve this goal, then strategy can be mentioned. There is a common question for everyone who has a strategy, whether it is an individual, a team or an organization: Are you sure of your strategy? In this article, I will try to answer this question and suggest a different approach that will help you be confident in your strategy.
Dynamic Modeling of Strategy
You have created your strategy. Your goal is clear, and the path you will follow to reach this goal is ready. The vision, mission and values are clear. You know your strengths, weaknesses, opportunities and threats. Your strategic plan is also in front of you. Still might be missing something? Is there a possibility that you may miss your target and you may not realize it? Of course it can, because everything you prepare is static. So you took snapshots and made your calculations accordingly.
But in a world where nothing is static and constantly changing and transforming, even the slightest change your strategy It may collapse. If both the world and the business world are changing and, moreover, this transformation is accelerating day by day, what you need is is dynamic modeling. In other words, it means understanding the relationships between the main components of your strategy and being able to dynamically see what will happen when they change. In this way, you can determine the sure steps and take precautions to achieve the main goal that you have placed at the center of your strategy.
Causal Loop Diagram for Dynamic Modeling
So how do you do the dynamic modeling you need to be confident in the strategy? We can find the answer to this question in System Thinking. The Causal Loop Diagram used here can be used for dynamic modeling of our strategy. In the Causal Loop Diagram, you can dynamically model the system you are considering to achieve your strategy. You can define the variables that will affect this system, show the connections between them and determine the relationships.
In summary, you can create a dynamic model of your strategy by following these steps:
- Determine your main goal in the strategy and the main variables that will affect this main goal. These variables may be parameters such as turnover, profit, market share, efficiency and speed.
- Analyze your variables. Determining the correct variables is the most critical step to the success of the dynamic modeling you will achieve. Therefore, take your time when determining variables. Variables may interact with each other. However, they should not include each other.
- Identify variables that depend on each other. Focus on direct reports. If they do not have direct relationships with each other, determine indirect relationships and reveal the transition variables in between.
- Determine the type of relationship between variables. Relationships can be linear, inverse, or lagged. In a linear relationship, as one variable increases, the other will also increase. In the reverse direction, as one increases, the other will decrease. In delayed mode, while one increases, the other will start to change after a while (with phase difference).
- Identify external factors that will affect the variables and complete the Causal Loop Diagram.
- Dynamically simulate and test the entire model. Make sure it works consistently within itself.
- Repeat the simulation for your main goal in your strategy. Test whether the dynamic system can take you to the main goal.
- Revise your strategy and strategic plan with the results you get from the simulation. Repeat the analysis accordingly.
If you are working on the strategy of a company or institution, you should work on the Causal Loop Diagram as a team, not alone. This team should be T-shaped, containing different competencies and complementing each other. In this way, it will be possible to present the dynamic model more accurately from different perspectives. You should continue working as a team until you feel comfortable and an agreement is reached. While implementing your strategy, you should review the Causal Loop Diagram study again and again, determine if there are new variables or changes in the relationships between variables and test your model. In this way, you can make sure that your strategy is valid and take your next steps more confidently.
