In my ‘Most useful….in strategy’ series of articles, I cover a range of timeless, repeatedly proven, growth strategy fundamentals. But why do firms need to follow them carefully when making their strategic investment choices? Why not be spontaneous, or go with gut feeling, or follow the natural entrepreneurial instinct, or just do what worked before? I’m sure we can all find examples of that working.

I have two answers. The first answer is for another article one day. I have studied iconic technology sector entrepreneurs like Bill Gates, Andy Grove, Michael Dell, Steve Jobs, and Jeff Bezos. And, I see timeless, repeatedly proven, growth strategy fundamentals in their choices everywhere. See one quick example later.

The second answer is to look at the alternative. How else should strategic investment choices be made? We often hear how decisions are made in alignment with the HIPPO (Highest Paid Person’s Opinion) or to appease “those who should loudest”. The world’s leading strategy consulting firm, McKinsey & Company, warn us about the “social side of strategy”. I think this is the most useful concern to keep in mind when developing strategy.

But what is McKinsey & Company warning us about? Business leaders are human. So, sub-consciously and with good intent, they bring natural human biases to their decision making. All my working life, I’ve witnessed biases like confirmation bias (cherry picking evidence to support a pre-chosen argument) and survivors’ bias (I did it before and I’m still here). And, being less generous, business leaders have been known to bring their personal agenda to the decision making process. They’ve got their bonus, reputation, team, and favourite projects to fight for.

So, how do you address the social side of strategy? Instead of yes/no decisions to each isolated choice, McKinsey & Company recommend building a set of investment options. The leadership should then debate them all as a team. And then choices should be made about which ones to invest in based on all available information. In terms of decision support information, look to the timeless fundamentals for guidance.

Let me close with an example. Andy Jassy, CEO of Amazon, speaks about how he and Jeff Bezos would drive their regular ‘Innovation Board Meetings’ by testing each idea with timeless fundamental questions: How big, profitable, and sustainable could the business be? How well are target customers currently served? And how differentiated could Amazon be? Simple, powerful, and timeless questions to help make strategic investment choices!