Published 10 October 2024 in Strategy • 18 min read • 
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Over recent decades, companies have gone to great lengths to improve their strategic decision-making processes. They have invested a great deal of time and money creating strategy departments that use comprehensive frameworks and standardized methods to help executives determine the long-term future of their organizations. These frameworks and improved processes of strategizing enable managers to conduct holistic analyses of external environments, assess internal strengths and weaknesses, and take a fresh look at target markets, value propositions, organizational arrangements, and partnerships to build competitive advantage.
In our educational and consulting activities, we have worked with a wide range of companies and senior executives and witnessed their progress in improving the way they make strategic decisions. However, we have also observed that within rapidly changing environments, these comprehensive and standardized approaches to strategy development are limited because existing frameworks prescribe pre-determined categories of analysis. In addition, it is notoriously difficult for decision-makers to determine which frameworks to use and how to apply them to address their company’s idiosyncratic challenges.
For sure, executives tell us they have preferred strategy frameworks – the Hambrick and Fredrickson’s Strategy Diamond, Porter’s Five Forces, and the BCG Matrix, to name but a few – but which of those should they use, for instance, when figuring out how their company should respond to the sudden threat by a foreign government to erect tariff barriers? Which standard framework will help executives decide what to do when a component supplier’s production unexpectedly grinds to a halt because of a labor strike? How do they respond when a new competitor enters the company’s most lucrative market with superior technology at a lower price? Challenges like these are critical to a company’s future and require well-thought-out, integrated responses. However, a company’s unique challenges are often difficult to address while relying predominantly on standardized approaches and strategy tools.
Many executives we worked with noted that they would benefit from a customizable and adaptive framework for making strategic choices in uncertain, fast-changing scenarios. Such a framework should also enable key stakeholders to engage in vigorous debates around central trade-offs and build the organizational commitment across multiple functions needed to implement the strategic choices successfully.
“Strategic decisions require making choices across multiple domains that are self-reinforcing or, at least, compatible with one another.”
Based on our experience working with senior executives and insights from classic strategy frameworks and behavioral decision-making research, we have developed the Strategy Stack, a simple, customizable tool for making more effective strategic decisions and building commitment to them.
The Strategy Stack helps leaders integrate the four critical activities required for strategic decision–making:
Bringing these elements together, the Strategy Stack helps promote a productive debate among key stakeholders, which begins with a deliberate focus on the essential and often contentious elements of the strategic decision-making process: laying out options in relevant domains of choice, revealing trade-offs among those options, and promoting alignment of choices across domains.
Although these activities seem intuitive, they often get lost in standard strategy approaches, such as conducting broad external surveys, SWOT analyses, and so on. In contrast, the stack focuses on the specific trade-offs and choices that need to be made in a given situation, facilitating meaningful stakeholder engagement.
Let’s explore the four steps required to assemble a stack for robust strategic decision-making.
Strategic decisions require making choices across multiple domains that are self-reinforcing or, at least, compatible with one another. Doing so requires identifying such interrelated domains of choice. But what is a domain of choice? Well, consider the case of a European precision machinery company that has been successful with its machines globally but is now facing increasing pressure from Asian low-cost competitors and shifts in overall market demand away from the current applications. To address these challenges, the company’s leadership identified five particularly important domains of choice:
Exploring potential domains of choice and ultimately concentrating on only a few of them is vital for two reasons. First, it helps focus attention and resources on what matters most. For instance, in the case above, one team analyzed the underlying opportunities and threats for each selected domain of choice and explored potential strategic solutions. Second, to make the whole larger than the sum of the parts, strategic choices across different domains must be aligned. To achieve such alignment across domains, the teams shared their findings and preliminary preferred options throughout the strategy process to ensure they would complement and reinforce one another. Management thinker Roger Martin calls this alignment of activities across domains the overall “choice architecture” of the decision. Think of this architecture as a checklist of critical domains where aligned decisions are required.
How do you decide on a shortlist of domains of choice? One way to develop a domain checklist is by using an existing strategy framework that provides a pre-populated list of domains and then adapting that framework to the company’s unique challenge. Take Hambrick and Fredrickson’s Strategy Diamond, for example, which identifies five domains that strategists should consider: arenas (where to play?), differentiators (how will we win?), staging (how will we roll out the execution?), vehicles (who will we partner with?), and economic logic (how will we make money?). Other well-known domain frameworks include Galbraith’s Star Model, McKinsey’s 7-S model, and Osterwalder and Pigneur’s Business Model Canvas.
Such off-the-shelf frameworks can be valuable shortcuts to help identify which domains to consider, but often won’t be optimal for the specific strategic issue and, therefore, will require adaptation. Sometimes, the process of identifying and selecting domains may call for the development of an “own” domain framework. In short, instead of trying to force-fit your challenge into an existing framework and risk considering domains that are irrelevant or – worse – excluding critical ones, it may be more effective to develop your own set of domains that are relevant in the context of your specific strategic challenge.
Here is a key insight we have gained over the years working with executives who sought to identify key strategic domains: make sure you have conversations about the domains of choice that matter most in your strategic context, not to have “the perfect domain framework” or to just blindly include domains stipulated by existing frameworks. The goal is to gain shared clarity among your colleagues within the management team regarding which domains are generally important, which ones to focus on in the near future, and – equally important – which ones to leave out to avoid diverting scarce resources.
Ultimately, decisions must get made somewhere in the organization – if not by senior executives, then further down. However, suppose line managers far down the hierarchy are knowingly or otherwise tasked with decisions requiring a big-picture, senior management perspective that connects across different choices. In that case, they won’t be able to align them with other linked decisions made elsewhere. The delicate balancing act for senior leadership is to provide enough direction to allow for alignment by defining the critically important domains of choice while at the same time not constraining their teams by overspecifying specific choices. So, specify where decisions are needed but not which options should be selected, and then ensure that the options your teams select build on one another across different domains.
Here, the focus is on identifying potential options within each domain of choice. For instance, with regards to a specific product, you might explore options such as:
1. Pursuing a trajectory into the highly differentiated premium end of a specific technology with a limited customer group.
2. Addressing a broader market with less advanced technology.
3. Trying to do both of the above.
While exploring options, avoid judging whether one is better than another. The aim is to collect enough of them, because the ultimate choice can only be as good as the best option you identified. In this step of the analysis, your goal is to “expand the option space”, creatively consider new options and drop established ones. Central to option creation is to separate it from the evaluation stage because, otherwise, you will likely close off your search prematurely.
We have experienced that this step particularly benefits from openness. For example, you can take a crack at identifying potential options by yourself and let your immediate team contribute. You may also want to enlist wider stakeholders because their diverse backgrounds and responsibilities might trigger different ideas. This will also help you understand and include their perspectives, even if you ultimately don’t follow their advice or preferences. Doing so will enable you to consciously weigh the advantages and downsides of different options, which, in turn, will enable you to better explain your choice to key stakeholders later on. Such open strategizing often has positive unforeseen effects – serendipities – especially as you may create new relationships and bonds with stakeholders through this creative process.
Strategic choices seldom involve maximizing a single criterion, such as product quality or profitability. In light of often permanent underlying tensions or paradoxes, executives typically need to trade off multiple criteria against each other to make an “on-balance” decision. How risky is this new product? Does it fit with our existing range of offerings? Does it support our business unit’s goals? It is, therefore, vital to understand which criteria are relevant to make as fully informed a decision as possible. Criteria often encompass objectives such as desirability (“Do we want this?”) and feasibility (“Can we do this?”).
At times, brainstorming and developing criteria from a blank sheet can be challenging, so we recommend also approaching criteria development “bottom-up” or “inductively.” In other words, begin by evaluating two concrete, diametrically opposed options. Explore their respective benefits and drawbacks, but don’t stop there. Just having pros and cons isn’t enough to systematically compare the two. Instead, step up one level of abstraction and determine, for each option, the underlying relevant criteria that you can then use for consistent, deeper evaluation across different options. For instance, if one benefit mentioned is that “Option A will be much less expensive”, include cost as a criterion; if a drawback is noted that “Option B will be much riskier”, include riskiness as a criterion. This approach means that you can compare all options using the same criteria.
Naturally, criteria aren’t all equal in importance. Maybe, to create growth, you value revenue generation more highly than profitability. Having clearly defined agreed criteria enables you to debate the relative importance and weightings of different objectives and evaluate options. When push comes to shove, what matters to you most in your effort?
As with options, it pays off to force yourself to include criteria that are relevant for different stakeholders. For instance, you may not need to make the unions’ request for job preservation your key priority, but it is sensible to include it in the process to be more inclusive, generate a better outcome, and provide a compelling explanation for your decision to your stakeholders – particularly those who would have preferred a different path forward.
“Instead of trying to force-fit your challenge into an existing framework. it may be more judicious to develop your own set of domains.”
Ultimately, strategic decision-making boils down to trade-offs – you can’t have it all. So, what are you willing to let go of that you value because it enables you to get something you value even more? Making these decisions is hard enough on your own, but it is even harder with stakeholders who have different assumptions, ideas, and preferences.
In these complex situations, using a simple decision matrix can help, particularly for those one or two domains of choice most contested among stakeholders involved in the decision-making process. Laying out options on one axis and criteria on the other and evaluating the options on every criterion, the matrix surfaces the trade-offs among the options, enabling a meaningful debate. For instance, although focusing on the highly differentiated premium end of a specific technology might be challenging from a feasibility perspective, as new capabilities need to be developed, it might be desirable to do so to be able to achieve a unique value proposition, as compared to staying in the more contested, lower-end segments of a market. No matter what the criteria and options are, a decision matrix will help you think through the trade-offs between options in a more systematic and comprehensive manner and come up with an “on-balance” decision that takes into account the various criteria previously specified.
Researchers in design thinking have long proposed that visualizing key aspects of a problem is instrumental in driving the problem-solving process forward. A matrix enables such visualization, creating a kind of “external memory” that helps free up mental space because the mind does not need to occupy itself thinking of things but can instead focus on thinking about things.
Further, a matrix can foster collective understanding and structured debate. The decision matrix is as much a stakeholder engagement enabler as a decision tool. We have observed that when executives use a matrix, the quality of the debate improves: the matrix helps them move back and forth between the evaluations within the matrix and the options and criteria on the outside to troubleshoot issues or address disagreements.
Surfacing each option’s specific trade-offs also helps develop better, new options that integrate the benefits of multiple existing options while reducing their drawbacks. This integrative thinking, as Roger Martin calls it, is enhanced by exposing opposing options in a structured manner.
Notably at times, executives criticize the effectiveness of decision matrices, pointing out that they could make any matrix produce their preferred outcome by adjusting the criteria’s weights and changing the evaluations of different options. Sure, you can do this, we reply, but a written matrix will enable others to “check your math” a lot easier than if the process occurs during a fleeting verbal conversation. Committing your thinking to paper in a structured manner provides accountability and rigor that can’t be achieved otherwise.
In sum, the Strategy Stack’s four actions are the essential building blocks for developing a sound strategy. Without domains, there can’t be a deliberate targeting of the critical issues and alignment across choices. Without a diverse range of options, there is nothing to choose from. Without pertinent criteria, there are no trade-offs or choices to be made.
For simplicity, we represented the Strategy-Stack process in a linear way, with clear start and end points. However, in practice, you can start the Strategy Stack anywhere along that route as long as you continue to iterate through the other three steps, with the goal of aligning key choices across the different domains.
Using the Strategy Stack can help clarify complex issues by leveraging insights from your stakeholders and AI or even might help executives engage stakeholders by creating a sense of procedural fairness.
In turbulent and complex times, developing solutions to strategic challenges alone is impossible. There is too much information to consider. Instead, you should create and sustain engagement with stakeholders, capture their ideas and concerns, create a safe space where productive debate is encouraged, and, only at the end of this process and if still needed, make the decision on how to move forward.
Stakeholders across the organization can be powerful allies in developing the Strategy Stack. Whether domains, options, criteria, or choices, they will have insights you might not have. To that end, the stack deliberately does not dictate the content of these categories; it merely provides a platform to share, debate, and integrate relevant views.
On the other hand, you want to avoid involving people needlessly, as this generates a sense of waste and increases opportunity costs. Avoid spectators, seeking instead to involve people likely to provide insightful perspectives and those whose commitment is important for execution.
AI tools such as OpenAI’s ChatGPT or Anthropic’s Claude can provide insightful initial ideas when working through the Strategy Stack. You need to know, however, how to prompt them to help you make strategic decisions. The stack’s elements of domains, options, and criteria provide a guiding framework for making aligned trade-offs and choices. AI tools can help populate them in a meaningful and creative manner. For instance, you might prompt a large language model (LLM) by asking, “What are the most important domains in which strategic decisions need to be made about how to enter a new market?” In return, you will get a lengthy checklist of potential areas such as market entry modes, the timing of entry, the scale of entry, and so on. Similarly, regarding options, say for different entry market modes, LLMs will produce a list of potential approaches, such as direct exporting, licensing, franchising, JVing, or using a wholly owned subsidiary; the same applies to criteria. Often, these lists will be more exhaustive and creative than you might conjure on your own. However, since AI tends to hallucinate, it is your responsibility to challenge these suggestions and add your own critical analysis to ensure that nothing important is missing, and that your analysis focuses on the domains, options, and criteria relevant to your specific context.
Your most important role remains in thinking through the merits and drawbacks of individual options, say whether to enter a market with a licensing approach or a wholly owned subsidiary, and then to converge on a decision compatible with the insights surfaced by your analysis. LLMs can also provide pointers here, but ultimately, you need to reason why a certain option provides, on balance, the best set of trade-offs and is, therefore, the preferred way forward.
Integrating stakeholders’ perspectives does not just help develop better solutions; it also enables you to get their commitment. Strategic challenges involve multiple stakeholders, making it all but impossible to find a solution that is everyone’s favorite, which creates challenges. As management professor Richard Rumelt points out in his book Good Strategy, Bad Strategy: “There is difficult psychological, political and organizational work involved in saying NO to whole worlds of hopes, dreams and aspirations.” But just telling them what you have decided without being able to explain why is likely to backfire.
The stack can help. Research on procedural fairness in courts has shown that defendants are more satisfied with even a relatively severe punishment when they feel their perspectives have been earnestly considered throughout the trial. In other words, people want to be heard.
What applies to court proceedings holds in strategic decision-making. You can create procedural fairness by demonstrating that you are considering others’ perspectives even though you might ultimately not adopt their perspective. To do so, it is paramount to integrate their preferred options and relevant concerns into the stack before making any choice. Only by doing so will you be able to provide a more balanced account of your final decision, pointing to the strengths of those options that were not chosen and anticipating pushback for the decision you made. Research has shown that this type of balanced perspective inspires more confidence and trust in your leadership than overly rosy yet unrealistic portrayals of your decision.
Strategic decision-making is, by definition, a risky affair with many unknowns that require making bold predictions amid uncertainty. If you leave out or don’t pay sufficient attention to just one of the critical elements – domains, options, or criteria – you will inevitably struggle to make well-thought-out, aligned choices. In our experience, the Strategy Stack gives executives a simple yet powerful checklist to help them make better trade-offs and aligned choices. However, unlike strategy frameworks that predefine these elements, the stack remains agnostic about which domains, options, and criteria to consider, enabling you to adapt it to any specific decision-making challenge.
Furthermore, robust strategic crafting entails systematically reconsidering and re-assessing previous conclusions in light of new insights and changing realities. The stack enables you to embrace this iterative nature as part of the process. For instance, you and a colleague might debate a decision that lays out two mutually exclusive options. As you move forward in the process – identifying criteria and evaluating these options – you might also move backward, revisiting the option space to check whether evaluating these two did not trigger the generation of additional ones.
Finally, its flexibility enables the stack to become an impactful roadmap for stakeholder engagement, integrating different viewpoints, clarifying how to respond to pushback, and informing how to explain decisions. We have found that executives who use it to engage can better convey a sense of procedural fairness.
In conclusion, strategic decision-making focuses on what an organization should and should not commit to. When making these important decisions, the Strategy Stack seeks to help executives think systematically through the trade-offs associated with different options to make better choices aligned across the organization while engaging productively with critical stakeholders.
The existing strategy literature provides numerous frameworks to help managers navigate the complexities of strategic decision-making. Well-known examples include the Five Forces, the BCG Matrix, the Business Model Canvas, and the Strategy Diamond.
Although these frameworks are insightful when applied to the problems they were designed for, managers often struggle to use them judiciously. We frequently see executives who do not understand the specific scope of strategy frameworks and default to using their favorite, force-fitting the problem to the solution. This often results in much work for little new insight, causing frustration, confusion, and sometimes unwarranted confidence in the analysis.
Providing a perspective that sits one conceptual level above most strategy frameworks, the Strategy Stack serves as an overarching tool that can help leverage different strategy frameworks according to their function in strategy making.
Consider the Strategy Diamond, which lays out five areas where decisions are needed: arenas, differentiators, vehicles, staging, and economic logic. In other words, it is a checklist of domains where managers need to make aligned decisions when considering how to launch a new product. Similarly, the Business Model Canvas lays out nine domains that require decisions; the Star Model, five. Note, however, that none of these frameworks recommends specific options within each domain, nor do they specify criteria to evaluate options. They are domain frameworks that provide a checklist of where decisions must be made. It’s up to the strategist to populate these domains with options and then make decisions that connect options across domains judiciously.
In contrast, take the Five Forces framework, which helps executives evaluate the attractiveness of an industry. Unlike domain frameworks, the Five Forces list some criteria to help managers choose between options. Similarly, the BCG Matrix uses the criteria of company competitiveness (here measured by market share) and market attractiveness (measured by market growth) with the goal of helping companies prioritize their businesses. Using a different set of criteria, the VRIO framework helps you evaluate whether the capabilities under consideration are valuable, rare, or hard to imitate and whether the organization can exploit them to help assess which capabilities to build or reduce. Thus, these frameworks are criteria frameworks that help you compare options. However, to make an overall strategy work, you will still need to identify domains that require decisions and generate options within each.
Finally, there are also frameworks, albeit fewer, that provide managers with options for addressing a specific challenge. For example, Porter’s Generic Strategies framework lays out cost leadership, differentiation, or focus as options from which to choose. Once again, these option frameworks only suggest what could be done but remain silent on domains and criteria.
We’re often asked how different strategy frameworks interrelate. The stack answers this question. By clarifying the key activity of strategic decision-making – making aligned choices in multiple domains – the stack makes explicit the nature of strategy frameworks (see table above) and outlines how to use them.
All strategy frameworks can bring insights, but you should decide whether they are useful for your specific challenge. In addition, it becomes clear that any strategy framework, even if it fits your challenge, only covers one aspect of the process, suggesting domains, options, or criteria. You need to complement the missing two elements, either by using other frameworks or creating your own.
A simple solution to complex problems – Arnaud Chevallier and Albrecht Enders (Pearson, 2022)
The opposable mind: How successful leaders win through integrative thinking – Roger Martin (Harvard Business School Press, 2009)
Creating great choices: A leader’s guide to integrative thinking – Jennifer Riel and Roger Martin (Harvard Business School Press, 2017)
Good strategy, bad strategy: The difference and why it matters – Richard Rumelt (Crown Business, 2011)
Both/and Thinking: Embracing creative tensions to solve your toughest problem – Wendy Smith and Marianne Lewis (Harvard Business Review Press, 2022)
Connect the dots: The art and science of creating good luck – Christian Busch (Random House, 2022)
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