Why the 5 Ps of strategy are the best tool for strategy formulation
I am not usually a big fan of academic papers, especially those steeped in theory with questionable application in the real world. But “The Strategy Concept I: Five Ps of Strategy” by Henry Mintzberg is not one of those. It allows a deceptively simple yet deep look at strategy.
It’s a Swiss army knife of strategy perspectives
The 5P framework is a tool for managing the strategy formation process—and it's great if you want to get others involved. It is a meta-tool that allows you to see how different parts of the strategy contrast and complement each other and what might be missing.
Importantly, it’s a collaboration tool that shows people that strategy is not about function or position in the company, or even experience but about ways of perceiving and processing information. Anyone can contribute to creating a richer and more balanced strategy picture.
Surface level insights of the 5Ps – what they stand for
Plan
o What most people think of as strategy – written down goals
o The intended course of action
o Logical, future-focussed, based on historical data and trends
Ploy
o Tactics. This is the dynamic part of the strategy and part of the plan.
o Focussed on competition
o Grounded on military strategy
Pattern
o What hat the company does, a consistent pattern of behaviour
o Strategy can be intentional and deliberate, or simply arise from actions, hence be emergent
o It records a historical view of how the organisation got here
o It can also be an outside view, often concluding there was a plan when maybe there wasn’t
Position
o This part considers the organisation’s place in the market
o It’s a view of the competition and compares resources
o It’s the place where choices of who to compete with become clear
Perspective
o It describes who the organisation is
o It contains choices about how to compete
o The place of culture, ideology and world-view
The 5Ps can be used as a clarity tool
Mintzberg’s 5Ps of strategy can show you that there are more views than one and that strategy as a plan – which is what many people consider a strategy - has quite a few limitations.
You might like the comfort of a deliberate plan, but the world is too complex to chart a neat course ahead. So, if in the past your plans have failed consider this paraphrase from another Henry: “If you always do what you’ve always done, you will always get what you always got.” It could be time to try something new.
By inviting teams or any employee of an organisation to express how they see the organisation from the five perspectives, many valuable insights can be gained.
Another situation in which this framework shines is if you want to move away from growth plans that lead to incremental growth as the best-case scenario. At this point, you need insights from others and think differently.
Your plan may be logical and great, but if you need others to carry it out, you will save yourself a lot of time if you involve them from the start. The 5Ps show you how.
The 5Ps are a communication tool
Just like DeBono’s 6 Thinking hats, the 5P framework allows people to contribute their insights at specific times when their argument fits and then move on. This allows you to unlock stalemate in arguments and speeds up your move to execution. It forces everyone to keep the bigger picture in mind and consider what you can do as an organisation.
The competition will remain a force to be reckoned with, but it will no longer be centre stage. Communication can open up to include ideas beyond being a bit better than the competition and head towards real differentiation and competitive advantages.
The 5Ps are an empowerment, motivation and collaboration tool
Using the framework invites people to volunteer insights even if they are not perfectly developed. It does so by highlighting there are no perspectives which are complete or better. We all know that robust strategies depend on more than the opinion of the highest-paid person in the room.
This framework doesn’t slice the cake by function or rank, but rather by personality – quick thinkers, deep thinkers, historians and future gazers. All can contribute to a richer picture of possible strategies.
And when it finally comes to strategy execution, the employees that were involved in the strategy formation, will have more of a sense of ownership and the context in which the strategy was created, which will make it more meaningful, integrated and memorable.
The 5Ps as an alignment tool
An important insight of the original 5P paper by Mintzberg was the idea of emergent strategy. Here, Mintzberg explained that only part of a deliberate - intended strategy - ever comes to fruition, and what actually results as the realised strategy has input from what he called “emergent strategy”.
Source: California Management Review; Fall 1987; 30, 1; pg. 14
Managing people’s actions is hard work, and reasoning and incentives will only get you so far. Accepting that strategy is emergent, whether you like it to be or not, leads to recognising the benefit of involving others in strategy formation, which leads to better execution because the context is baked into the strategy.
The 5P framework can be used instead of or in addition to the balanced scorecard, another popular alignment tool.
Compared to the balanced scorecard, the 5P framework is less formal, less analytical and lends itself to the early, more creative part of the strategy discussion.
When to use the framework
Use the 5Ps when creating a strategy from scratch. This might be the case if you realise that you need to learn from others in your organisation to synthesise a better strategy. Or maybe your company has grown too big to rely on ad-hoc decision-making.
Another great time to use the 5Ps is if you worry that your strategy is about to stall. You know you need to coordinate activities before infighting ensues and the collective spirit is lost. Satya Nadella turned around Microsoft by stopping the warring factions in different departments and creating a united vision that everyone could work towards. Prior to his appointment as CEO, the cartoonist Manu Cornet drew this hilarious picture of the Microsoft org chart.
Source: Manu Cornet
And finally, if strategy has failed and you need to motivate staff to consider a fresh start, the 5Ps are perfect. The framework might give them an appreciation for the difficulty and complexity of creating a workable strategy, which in itself could aid willingness to partake in the execution.