Why your Forest Investment Strategy is like a Game 

Lessons from Marketing Guru, Seth Godin 

Book the Forest Investment Strategy Workshop Now 

Strategy is the soil, the seed, and the gardener working together over time. Strategy is our chance to make an impact. This is one of the many quotables from Seth Godin’s recent book, This is Strategy. As a strategic thinker I gobbled up this book and of course, couldn’t help but think how its messages translate to forest investment. In this week’s article, I want to walk you through some of the takeaways of this book that are relevant for you if you’re thinking: 

• how do I make a good forest investment strategy?, or alternatively,  

• I don’t need a forest investment strategy.  

In This is Strategy, Godin explains that strategy is comprised of four elements – Time, games, empathy and systems. This article looks into these in the context of forest investment, while focusing on the game analogy, which in a way ties all together.  

Time 

Strategy plays out over time in the way a garden grows. This is especially true in forest investment. Compared to other investment strategies, where long-term might be considered 3-5 years – forests are different. Your investment grows as the forests do. It can’t be rushed, it depends on biology, climate, geology, and several other abiotic and biotic factors. In a forest investment strategy, understanding time – means aligning your investment objectives (financial, environmental, social) with the natural timeline of the forest and the human-induced timeline of things like markets, industrial development, elections and so-on.   

Games 

There are multiple players and different possible outcomes. Trees compete for light and only one grows to be the tallest, but all of them are part of the forest. When we apply game theory in the context of strategizing for forest investment, we consider several elements: players, rules, scarcity, choices, feedback loops and outcomes. I particularly like to look at the players (or stakeholders) when designing a forest investment strategy. 

Who are the Players – The investors, the investment managers, the forest businesses, markets, the forest neighbours, the birds and bees, the understory, the commercial trees, the government, the lawyers, the auditors, and so on. Everyone playing the game sees it differently. All these players have different objectives, or some might be innocent bystanders and are playing the game without choice. Not all the players follow the same rules. If your organization determines the rules of the game by which you want to engage and the tactics you will apply to win, it helps to understand who will be playing your game, the rules they will follow, and what end result they seek. 

Empathy 

Because people don’t see what you see or even want what you want. Plant your seeds in places where the conditions are right. This is where understanding the players in your forest investment strategy is so important and often overlooked or not given enough attention. Your strategy is not going to be right for everyone or everything – but the key is knowing who and what your strategy is for and building it so that these players have the best chance to win. In real speak, it means if the investors have a genuine interest in the climate impacts of a forest investment – you build your strategy around maximizing the climate outcomes you seek. Even if you’ve been a timber-optimizer in the past, you need to understand the needs of today and adjust your strategy. This will mean that deals, which may have been great for your timber-maximization strategy would not be the best for your climate optimization strategy. 

Systems 

Wherever we work together, a system is created. And when we work together, we get far more done. Strategy is a flexible plan that guides us as we seek to create a change. It helps us make decisions over time while working within a system. I love a good system. It helps remove inefficiency – and ensures we consistently see the strategy for its parts.  This is so important when trying to distil the complexity of a forest investment. A forest investment strategy that builds in a system for investment process (getting from deal origination through to signing on the dotted line), through investment management and divestment is at the base. Within this greater system, will be sub-systems – policies which communicate your rules, procedures for how-to execute your rules, evaluation and feedback loops to assess progress on meeting your strategy objectives and course correct where needed. A good system will allow different people to come and go from your strategy, while it still churns on to meet objectives. 

Distilling Key Questions when Designing your Forest Investment Strategy 

In combining the above elements, we see how answering some philosophical questions or likening your forest investment strategy to a game can help you carve the path to meeting your financial and impact objectives. Below are some key questions that can be extracted from the way of thinking about strategy that I’ve discussed above: 

1. Who are the players of the game? Based on their role in the game and the objectives they have – how can we best achieve multiple objectives? How can we set rules that will be agreed and embraced by the key players? Who are the players that stand the biggest risk of experiencing negative consequences of the game? 

2. How will time play a factor in our strategy? Are your financial and impact objectives aligned with your investment time horizon? Don’t underestimate the inter-relatedness of investment geography and time. In the tropics – forests grow fast (but markets may develop slowly), whereas in the boreal – forests grow slow (but markets are already mature).  

3. How should the strategy best reflect what’s important to the key players in the game? What investment characteristics must be sought to meet their goals (a blend of financial, environmental, climate and social objectives – will determine the types of assets, asset maturity and geography on where to invest). What risks need to be avoided or mitigated when choosing assets within the confines of the chosen investment characteristics. To the last point, how do you also ensure that involuntary players in the game are not harmed by it? 

4. How can we build a system for the strategy that will improve efficiency, consistently address key success factors and mitigate the main risks? How can this system ensure that we get adequate information to evaluate if we’re taking the right actions, or if something needs to change? 

Put Pen to Paper on your Forest Investment Strategy 

Perhaps a bit on the philosophical side, but if you’re ready to weave these points into a concrete winning forest impact investment strategy, I’ll be holding an interactive workshop on this on Wednesday, November 27th. You will build out the pieces below on my comprehensive strategy canvas in real time. After the session, you’ll have a clear path forward on how to execute a strategy that’s right for your own organization. There are only 10 spots available in total, and early bird places are going fast! So be sure to Register today!  

REGISTER FOR THE WORKSHOP