‘What Holds Companies Back From Developing Great Strategies?
Recession-weary executives have a new challenge to face. Times have changed and businesses must re-evaluate their pre-recession strategies. The elephant in the room is in full view, but organisational leaders do not like to talk about it or even think about it. Yes, the elephant in the room, that no one likes to address, is outdated strategy and the need for new and improved strategic thinking. Changing the way we have operated in the past in difficult. A starting point for change is to correct the self-inflicted organisational dysfunction that occurs during strategy development. Half-baked strategic decision making based on wishful thinking and antiquated assumptions must stop now.
Corporate strategies will never be perfect or foolproof, but they can be systematically improved through process changes and “testing” strategies ahead of committing to them and gambling our reputations, jobs and the very life of the business. To see our economic recovery continue, we need to see smart strategies from our business leaders and the brilliant teams of people working for them.
The truth is that bad decisions never go unpunished. Strategies that are based on decisions and assumptions which don’t get reviewed thoroughly enough and challenged enough to "harden" the overall premise are compromised from the beginning. Strategic planning is a journey which spans a long-range time horizon, not an annual project to be crossed off a checklist. Strategy must be sound to begin with, so that it does not zigzag and change course often. Nonetheless, the strategy should be stated and spelled out in terms that it can be understood and acted upon. The term "strategy" and "strategic planning" tend to get co-mingled. Setting strategic goals around business performance is not a substitute for strategy that determines corporate directions such as markets to be entered or exited, products to be enhanced through innovation programs and acquisitions that will solidify competitive price advantage through supply-chain integration.
The Process Can Stifle Creativity
The planning process itself can be to blame. It can shut-off creative ideas and strategic thinking by forcing participants into the box of a spreadsheet template that contains ambiguously stated financial goals and growth targets. Where is the strategy behind the goals?
We should never forget that the entire point of the strategic planning process is to devise a plan of both offensive and defensive actions intended to maintain and build an advantage over the competition through strategic and organisational innovation. That is what strategy is all about. First, we endeavor to understand as much as possible about our own organisation’s core values, culture, structure and core competencies (the internal aspect of the business ecosystem).
Our strategy development process should facilitate drawing out and analyzing this information to use to our benefit. Likewise, since businesses do not operate in a vacuum, the external environment is equally as important to understand and then integrate into our strategic thinking.
Strategy must be the product of a process that stimulates creative thinking and identifies real opportunities; then defines action within the context of the business plan. The same is true for identifying and planning for threats to the business. They both fall into the category of strategic priorities. Failing to identify the "true" strategic priorities and devise strategy to address them in our long-range planning is folly for the business’s long-term viability.
A strategy that neglects to enrich customer value through intentional strategic actions misses the point. Such inwardly-focused strategies signal trouble down the line for the business that commits this omission. As leaders in our organisations, we must be aware of the core essence of goodness we provide in our products and services, whom we serve as our customers and what it is that we do better than our competitors. We should plan for value creation and at a minimum, for strategic planning, to yield competitive advantage, it must address value creation for the customers of our business – current and future.
Basic questions like these will steer our thinking outward to the customer so that we might consider how we go about creating additional value for our customer base and leverage that in our sales in marketing.
As indicated earlier, a well-formed corporate strategy should be something that can be articulated and understood. The underlying goals, metrics and measurements commonly passed-off as strategy do not sufficiently lay out the bumper-pads to keep organisational momentum aimed in the proper direction. Yes, strategy is accomplished through unambiguously expressed strategic goals (outcomes) and operational actions to achieve those strategic organisational outcomes. Strategy is not the goals on their own. Changes will occur in the environment in which the business operates, but having a sound strategy helps the organisation be predictive instead of reactive.
Recession-weary executives have a new challenge to face. Times have changed and businesses must re-evaluate their pre-recession strategies. The elephant in the room is in full view, but organisational leaders do not like to talk about it or even think about it. Yes, the elephant in the room, that no one likes to address, is outdated strategy and the need for new and improved strategic thinking. Changing the way we have operated in the past in difficult. A starting point for change is to correct the self-inflicted organisational dysfunction that occurs during strategy development. Half-baked strategic decision making based on wishful thinking and antiquated assumptions must stop now
With the confines of a spreadsheet as the beginnings of the strategy development, it is no wonder that the people involved with corporate strategy development sometimes shut-off their creative sides and only focus on the analytical task in front of them. Most people will operate within the box they are placed in and not bother to try tearing down those walls.
So what else goes wrong during the act of planning strategy, you may ask? What about the exclusion of potential "key contributors" to the planning process? Where are the people who know what is going on and how things really work? Too often, the executive team, by default, locks out key people from the planning process who might well have contributed beneficial ideas and information.
This is not done intentionally of course. It is done out of habit. "Let’s get the executives and their managers into planning sessions and get this done…" Planning is treated as a task or a mini-project to complete, overlooking the fact that it is instead a journey. Even the prefabricated planning agenda (edited to refresh the date from the previous year) contributes to the squashing of creativity. Such agendas can inadvertently close off discussions that should be a part of a healthy planning process and to do so is harmful to the organisation. Usually the planning approach is to blame.
What about our competition? All too often, corporate strategies are devised without thinking in our competitor’s shoes. If they are smart competitors and coming from behind us in terms of market share, their eyes are on us already. What manoeuvres will they make to overcome us competitively? What proactive elements of our strategy can put additional distance between us and them? Our strategy must consider our vulnerabilities and account for them through counter-actions. If we are exposed in one area of our business, then why? What must be done to shore it up? It is distinctly possible that strategic analysis will lead us to make decisions to exit one or more areas of our business in order to better focus on more profitable or viable segments. In other cases, strategic analysis may trigger innovation initiatives to support a strategy of expansion – capitalising on a dominant competitive position.
Redefine Your Box
In the end, corporate strategy can be regarded as a necessary risk that we must take. When companies get it right, they thrive. When they swing and miss, fallout occurs and sometimes business disasters follow.
Hope is not a strategy and strategies are only as good as the assumptions and data on which they are based. We must challenge the underlying strategic assumptions as part of the planning process and avoid deluding ourselves with "happy talk". If the strategy isn’t tested through critical evaluation, we put much at risk. Harness the available creativity in your organisations and channel it through a process that puts a laser beam focus on developing a multi-dimensional and holistic strategy to fuel long-range planning.