In business today we hear constantly about change: changing markets, changing technologies, changing competitive forces, and so on. But most of us still set and execute strategy using static models that don’t acknowledge the reality of rapid change or the growing importance of data. The dominant mental model of corporate strategy today is still a pyramid: a select few top executives setting goals, some managers translating these goals into departmental sub-goals, then employees working to achieve all of the above at management’s direction.
In an era of ubiquitous and easily accessible data, the fatal flaw of this model becomes obvious. Namely, it confuses organizational hierarchy, which is valid and necessary, with cognitive hierarchy, which is a command-and-control illusion. The strategy pyramid makes an organization deaf and dumb to new and emerging information that contradicts its official view of the world. It assumes that knowledge and insight flow from the top down, when in truth knowledge can and does come from everywhere.
As an alternative to the pyramid model, I’d like to propose what I call the SEEP model. SEEP stands for Scan, Evaluate, Experiment, and Perform. It is not meant to be a single, self-sufficient strategy model — I happen to believe there is no such thing. But it is meant to replace the dogmatic and brittle pyramid as the master model for framing a company’s goals and activities.
Instead of treating strategy as a top-down command-and-control endeavor, SEEP frames strategy as a constantly evolving set of possibilities to identify, examine, and act upon. This does not mean that strategy becomes purely fluid or an act of continuous improvisation. But it does mean that the organization continuously engages and negotiates reality and remains ready to make changes when they are needed and when they have been thoroughly tested. At each layer of the mode, the organization asks critical questions and answers them with data. Each layer clarifies and refines the organization’s understanding, imposing discipline rather than allowing rapid and unjustified changes in direction — the sort of top-down chaos a company experiences when its executives change direction without data or supported hypotheses.
The SEEP model layer by layer
What happens at each layer of the SEEP model?
Scan. In the Scan layer, the business focuses on emerging possibilities in the external world: new products, new markets, potential mergers, acquisitions, divestitures, joint ventures, and so on. It also looks for externalities like new competitors, changing customer perceptions, or fundamental redefinition of the competitive environment. The Scan layer ultimately produces hypotheses about what is happening in the external world and the actions the business should take in response.
Evaluate. In the Evaluate layer, the goal is to build a business case — not simply a set of pro forma financial projections, but a financial, cultural, and architectural evaluation of how the new action would affect the business. The evaluation should lay out potential scenarios and identify proof points that would show whether or not the actions were working.
Experiment. In the Experiment layer, the business uses pilots and proofs-of-concept to test the proposed actions in the real world. This principle of experimentation applies not only to new products and markets, but also to actions like mergers. If the theory behind a merger, for example, is that two companies’ cultures will be compatible and synergistic, this idea should be tested with a series of collaborations before anything is actually merged.
Perform. The Perform layer is where regular ongoing operations occur and standard traditional metrics apply. Is the business growing? Profitable? Gaining share? Generating cash? And so on.
The SEEP model is first and foremost a portfolio tool, a way of evaluating the things a business is doing and could be doing. It is not a standalone model for setting and executing strategy. It doesn’t show the push-and-pull of competitive forces that determine profitability (like Porter’s famous Five Forces), and it doesn’t show the networked relationships between a business, its customers, its suppliers and its value propositions (like the more recent Business Model Canvas). Its purpose is to orient leaders to dynamism and change, and foster greater openness to data in decision-making.
Rob Lawrence 