Of all the work that goes on in any company, strategy is one of the sexiest. After all, this is where the big-picture people go; the stars of the corporate world. But the ranks are limited because it’s also difficult to do and executive teams can struggle with being creative, visionary, clear and concise. That’s why so many teams create lists when they really want to develop strategies.
Strategy development is like exercise. You have to warm up and get your head in the game by understanding (and agreeing to) what strategy means to your organization. My work helping companies develop and articulate strategy often starts with an understanding that strategy is about the decisions that organizations must make and the lenses we see it through depending on the scale. For instance, corporate strategies in large organizations may involve lots of data and spreadsheets to analyze and select a company to buy or, for example, to identify the right country for a new factory. But neither of those examples is really the strategy. They are the result of the strategy. The real strategy has to do with the decisions we make for how to grow or operate the business. The factory decision in this case may have to do with a strategy of becoming a low-cost producer (see Michael Tracey, the Discipline of Market Leaders). The factory then is the result of the strategy selected. Another way of thinking about this is still based on the decisions we make but may be easier to grasp. It involves less data, can be executed more quickly, and is easier for smaller organizations to grasp. It’s about visioning and committing to something based on what you know from interacting with your customers, from the confidence you have in your executive team, and from the bets you’d like to place as a result. A recent example in my company is the decision to act like we will be here tomorrow. This sounds small but isn’t. It changes how we think about and operate our business. We hire “ahead of the curve”, we seek to understand where the market is headed and we emphasize and invest in offerings that meet future needs. It empowers us to assume greater risk.
Barriers to Developing Strategy
Envision works with many companies, large and small, to facilitate them through the strategy formulation process. After countless operational strategy development engagements, we’ve compiled a list of what most often gets in the way of organizations creating meaningful strategies.
1) The team itself. Executive teams coming together for the first time are at a disadvantage. The team needs time to gel and some people may not just be new to the team but also be new to the role, having been promoted from a doer position to one requiring broader thinking.
2) Myopia. It’s not hard to imagine a team that comes together to plan corporate strategy yet each participant can’t seem to see beyond their own departmental needs. Corporate strategy becomes even harder to develop when those looking inward are unaware of what goes on outside the company.
3) Differences of opinion. Even great teams can kill time if they don’t agree on what strategy is or have different methods (approaches) for developing it.
4) Secrecy. Arghh! One of the greatest impediments to meaningful contributions is when part of the group is prevented from knowing important business drivers like a plan to go public.
5) Self-facilitation. This is the less costly approach but when the CEO is also facilitating we, at best, risk missing the big picture by getting caught in the weeds. And at worst, accuse the leader of driving an agenda and looking for agreement to their plan.
6) Cadence. Organizations lacking a consistent strategic planning process rarely evolve to a point where strategic thinking and planning become part of the fabric of the culture.
7) Singular financial focus. That is, we spend an inordinate amount of time setting financial goals without a reasonable plan for how to get there or where to invest.
8) Forgetting an important constituent: your customers. Pressure test your plan. If you’re a professional services firm, are your customers front and center, off to the side, or forgotten all together?
All this results in tactical list building for the coming year. There is no vision, no point on the horizon to which we drive forward, nothing galvanizing the team, just a bunch of things to do and empty measures. Revenue will be this, EBITDA will be that, we’ll refresh our website but the important questions remain: How are you going to grow revenue?! What will be different? What will we say “no” to?
Tips for Improving the Process
So while there seem to many things that get us into list building trouble there are fewer that get us out.
1) Be patient. Experience shows that the first year a group gets together to plan they build lists by department. The second year they still build lists but start to see things the company should do. And by year three they explore the world outside their four walls, attempt to integrate that information, and take a serious shot at formulating a handful of strategies before identifying projects and meaningful goals and measures that align with them.
2) Spend time understanding your market; prepare for your meeting and assign yourselves homework. There are many tools out there to help you analyze your situation like SWOT analysis, Michael Porter’s five forces, and brainstorming techniques. List building will come. Just push it further into the meeting.
3) Think of the process as a funnel, going from macro to micro. Three buckets I like to use are (a) external drivers that require a response from us or internal drivers that make us behave a certain way – e.g., going public; (b) multi-year strategies and goals; (c) baby steps of projects that can be accomplished within one year along with goals and interim measures.
4) Make sure your strategies can be measured and collect data to validate your decisions. Some information can be tough to find. How we perform vis-à-vis the competition can be difficult to collect beyond anecdotes. By thinking about collecting the data will help ensure that plans can be executed.
5) Accept the fact that this is hard work. Spend less time word-smithing and more time conceptualizing. Connect the dots between action and results.
Whole books have been written on developing strategy. A few classics include:
• “Competing for the Future” by C. K. Prahalad and Gary Hamel, Harvard Business Press, 1994
• “Competitive Strategy” by Michael Porter, Free Press, New York, 1980
• “The Discipline of Market Leaders” by Michael Treacy and Fred Wiersema, Addison-Wesely, 1995
If you choose to develop your strategies with a group, the two things that prevent practitioners from actualizing the goals of these and other books is in the facilitation and the focus. It’s ok to ask for help so get yourself a good facilitator to obtain important agreements up front and focus on the big picture, not what’s in front of you tomorrow.
By Rob Novick