On importance of strategy development
Every company, no matter how small or large, struggles with the challenge of creating an effective overall business strategy. Typically, the larger and more complex the organization is, the more complicated the strategy development process becomes. Divisions and groups within a large corporation require their own strategies that, in an ideal world, will roll up nicely underneath the overall corporate strategy. Sometimes this process can be quite confusing to navigate primarily because of the number of moving parts needing coordination. Add to the mix the human element of managing various egos or political agendas and the end result can feel much like making sausage.
To turn this "sausage-making" process into an effective exercise within a company, it's important to lay out a clear process. Doing so helps to focus the energies of your team and set clear expectations about individual participation, requirements for contributions, the need for feedback, and a commitment to alignment.
Many companies unfortunately go off track right from the start because they fail to accurately define and understand what a strategy actually is. More often than not, clients will tell me the strategy is merely a compilation of things they will do in the coming year. Perhaps true at a very basic level, this definition fails to recognize the things the company will not do in the coming year. Indeed, a good strategy defines very clearly what a company will focus on and not focus on. On both levels, these are affirmative, non arbitrary decisions that the leadership team will make. Inherent in this decision making process is a willingness to cull and focus efforts on the most important elements of the strategy, leaving to the cutting room floor those ideas and initiatives that don't rise to the level of strategic importance. While a company might want to tackle many strategic initiatives, it may only have the financial and human resources to execute a few. It's during this culling and editing process that the greatest consternation happens. More often than not, the appetite for increasing the list of major initiatives is greater than the organization's ability to deliver.
Typical elements in any strategic plan
In all of our strategic engagements, we hammer home on the linkage between change and strategy. After all, strategy involves, by definition, change. In essence, one is attempting to move a company from where it exists today to where it wants to be tomorrow. Getting there begins by defining not just here but where there is. That may sound elementary, but in reality it is quite difficult for some organizations to align its leadership together. To engage a fully comprehensive strategic development process, we work with our clients through the following major elements of a strategic plan.
Mission, Vision and Reason for Being - Make sure everyone within your organization understands precisely why you exist and what your mission and long-term vision are. In nearly all cases, clients with whom we engage struggle with getting the entire leadership team to agree on these fundamentals. In some cases this lack of alignment stems from a lack of agreement on definitions and in other cases on political positions within the company. Regardless of the reasons for the lack of alignment, getting to alignment is fundamental to the remaining part of the strategic development process. In short, if you get this part wrong, there is little chance the rest of the strategic plan can be effectively crafted and executed.
Brand - In addition to defining the fundamental reason for being in business, a company's brand is essential to its long-term success. Often mis-defined, a brand is not a logo, a set of colors and fonts, or even a specific tagline. Rather, it is a singular concept that you own in the minds of your customers and prospects. Consider it rent-free intellectual shelf space. With our clients, we spend a fair amount of time drilling into various concepts to understand the singular concept they wish to be known for. By means of example, we often use Volvo. Its embrace of the concept of safety is fundamental to its brand. Getting to that similar concept for our clients is both invigorating and challenging.
Values - The concept of values is often pushed aside as a soft element of a strategic plan when in reality it is critical. Values represent a compilation and codification of a company's view and perspective of the marketplace. How it engages or does not engage with clients, customers, partners, employees, investors, or other major stakeholders is indicative of the type of organization it seeks to portray itself as and how it will act in reality. Values are also embedded into product and services in often indiscernible ways. If a company's brand is all about the singular concept it wishes to be known as, a company's values are the guardrails by which it seeks to achieve that brand promise.
Strengths, Weaknesses, Opportunities, Threats - As with any strategic plan there is a need to look both inwardly and externally. Sadly, many companies are ill-equipped to do this on their own, primarily because they are too close to the information to filter it accurately. We often see clients paint more positive pictures of the competitive landscape than what actually exist. Thus, it is extraordinarily important for companies to be brutally honest with themselves about their place in the market juxtaposed to competitors. It's also highly crucial for companies to assess gaps in their human, process, and technology resources to unveil potential impediments to strategic success.
Change Agenda - As mentioned above, developing a strategy entails defining and embracing change. A change agenda is merely a two-column memorial for that change. In the first column is a brief description of the company as it exists today defined through a particular prism, e.g. the company's lead generation programs. In the second column is an ideal future state for that element. For example, “By 2023, our lead generation programs will deliver XX marketing qualified leads each month.” The core prisms of a marketing-centric change agenda are virtually infinite and can entail such elements as: brand awareness, content management, social media, conversion rate optimization, SEO, etc. While the core prisms are infinite, the ability to make change is not. It’s important to prioritize the key elements of the change agenda to focus on only those elements that will have the greatest strategic impact on the organization’s success.
Strategy Map - A Balanced Scorecard—often abbreviated as “BSC”— is a strategy management framework that includes four perspectives of your strategy: Financial, Customer, Internal Process, and Learning and Growth. It is in essence your strategy on a single page. The work involved to get to that single page is not insignificant however. Hundreds of data points and decisions will go into developing this strategy map and scorecard which will serve as your master road map for executing your strategy. With it, you will have all the necessary information and tools required to effectively implement and execute your major strategic initiatives. Without it, your strategy development process will end in a 3-ring binder safely housed in a dusty bookshelf never to be heard or seen again.
Key Metrics - No strategy is complete without a clear definition of the metrics by which you will measure progress. Inherent in this process of defining metrics is a clear articulation of important parts of your strategy. These include :
1. Objectives are high-level organizational goals. The typical BSC has 10-15 strategic objectives.
2. Measures help you understand if you’re accomplishing your objectives strategically. You might have 1-2 measures per objective, so you are aiming to come up with 15-25 measures at the enterprise level of your strategy.
3. Initiatives are key action programs developed to achieve your objectives. Most organizations will have 0-2 initiatives underway for every objective.
4. Action items typically arise from review meetings, and are tasks typically delegated to one person or a small team.
Typical challenges along the way
As mentioned above, developing a strategy is no easy task. It involves the collection of massive amounts of information and data, an accurate and honest assessment of that data, a willingness to engage various leaders and personalities in an open and transparent fashion, and a commitment to defining a master document that all can be aligned with and to. Clearly, there are major opportunities to get off track and for this process to implode of its own weight. This being the case, it's critical that the leader in charge of the strategy development process have and maintain complete and total backing from the chief executive officer. If a strategy development process is viewed as anything but a critical strategic activity, the strategy will easily be forgotten or ignored.
To avoid this disaster and waste of time, we work closely with clients to ensure that all major stakeholders are a part of the process and are able to contribute their perspectives to the effort. In bringing many voices into the strategic planning tent, we ensure that everyone has a seat at the table and everyone's voice can be heard.
In addition to including people in the process, we also spend a fair amount of time highlighting and demonstrating the relevance of various decisions up and down the line. For example a recommendation to focus more financial and human resources on lead generation makes it important that those resources be deployed effectively. Therefore, there will be more attention placed on the metrics involved in lead generation at the strategic level than perhaps other important marketing metrics. To the individual chiefly responsible for developing and implementing lead generation initiatives and programs, this focus on their particular responsibilities can be both daunting and exciting. In essence, the important element is to demonstrate the clear connection between a strategic initiative, the metrics by which that strategic initiative will be measured, and the change in behavior required by the individuals chiefly responsible for achieving that strategic initiative. More than any other major benefit from the strategic planning process, this immediate and direct connection between an individual's change in behavior and a specific strategic initiative is powerful. It brings the strategic planning process down to earth and makes it real.
Why so many strategies fail
Estimates vary but the general consensus is that most strategies fail between 60 to 90% of the time. That's pretty astonishing on so many levels. The reasons for failure are many, including:
Starting too early
Including the wrong people
Not including the right people
A lack of specificity
A lack of honesty
Not taking advantage of core competencies
Resistance to change
Lack of rigor
Lack of accountability
While all of these reasons are self-explanatory, one deserves more attention than the others. The issue of accountability is of paramount importance in developing and executing strategy. Without it, the strategy is a paper tiger, full of fury but signifying nothing. It becomes a tree that falls in the forest and makes no noise. It is this amorphous blob held off in the corner to be respected from afar and ignored at every turn. With accountability, a company can develop the right means by which it drives change throughout an organization. By making that accountability visible, clear, fair, and focused, the likelihood of positive change is greater. The clients with whom we work understand the importance of driving accountability throughout their organizations. They take meaningful steps every day to ensure their strategic initiatives are immediately and directly tied to the actions of specific individuals or groups of individuals. In these environments, it is impossible to hide. The strategy is always front and center, as is the individual's role.
Summary: Learn how to play connect the dots
As children we all learned how to play connect the dots. By easily tracing a line from one number to the next, a complete picture would ultimately appear. The strategy development and execution process is not dissimilar to playing connect the dots. We start in one place and then connect to the next and next and next. With each connection, we add more and more definition, more clarity, more measurements, more elements, and more accountability to the individual level. Regardless of company size, the end result is a clear and complete picture of the strategy and the individual elements within it.
Every leader worth their weight has been involved in some form of strategy development. If the research is accurate, odds are it was an interesting but ultimately fruitless exercise. To avoid a repeat, it never hurts to have an outside voice helping to facilitate and guide the strategy development and execution process. We've helped many hundreds of organizations along this path, so feel free to ring us for more information.