Leading strategy

Objective

If an organisation has set itself a clear vision, it will also establish a strategy – this is a clear plan which sets out what the organisation’s key goals are and how these are going to be achieved.

Managing the organisation on an integrated daily basis towards its goals demands a strategic plan that sets out key priorities and activities. These activities will be the areas of focus to which all teams’ individual plans contribute, including:

• organic investment;
• acquisitions and partnerships;
• sales, marketing and branding;
• human resource development;
• management succession planning;
• external environment and stakeholder management.

Since the strategic plan becomes a framework and benchmark for many future actions and decisions, as leader you must ensure that your organisation’s strategy has three key characteristics:

• clarity – the strategy must be intelligible and easily repeatable, so that it can be communicated easily;
• realism – the strategy must be grounded in the realities of the business environment in which the organisation operates; and
• achievability – the strategy must be attainable because anything seen to be unrealistic will lose credibility.

If strategic plans meet these criteria, staff will be motivated to support them, and you will be able to marshal all the practical and human resources at your disposal to meet your goals.

Your objective as leader is to shape a strategy which is deliverable – you must motivate your staff through its clarity, realism and achievability.

Context

Your organisation or team requires direction in order to be effective. This is not about your telling staff what to do, but enabling them to make their own decisions about the appropriateness and relevance of their actions.

This self-direction is not simply about striving towards the overarching vision, which in truth may sometimes seem distanced from daily activities and decision-making. It’s also about delivering today’s priorities. Strategy provides this direction – it enables focus on a hierarchy of activities, such as:

• weekly, monthly, quarterly and annual goals;
• prioritisation of new market entry plans;
• prioritisation of acquisition targets;
• prioritisation and selection of projects;
• choice of business partners.

You always have a stark choice to make between effectiveness and ineffectiveness:

• effective strategic direction – all your team’s activities aligned to commonly understood strategic goals;
• ineffective strategic direction – priorities vary by team, by time and, at times, by whim.

Even in organisations famous for ‘skunk works’ (3M, and more recently Google – see also p. 252), time allotted to entrepreneurial stargazing is limited by tightly controlled overall priorities. The effective implementation of strategy requires a clear and ruthless insight that all activities must be aligned – otherwise the organisation will be undermined by strategic drift, a sense that goals are on shifting sands.

Challenge

Strategy can sometimes seem hard to hold onto when you are faced with the vicissitudes of a rapidly changing business environment – especially, for example, as we face continuing economic turbulence following the 2009–10 global recession in which we witnessed some unprecedented and rapid declines in business activity.

However, the most effective approach to such circumstances is to see strategy as a support and not a millstone. If the strategic view of market opportunity is correctly based then you will know whether (to take one example):

• you are planning in a given business segment to harvest short-term sales and profits, and therefore have a (planned) exit strategy; or
• you are investing in long-term value and have short-term financial improvement strategies, if needed.

Strategy will be all the more effective if it is designed to accommodate performance going to plan and not going to plan. The essence here is management of risk and sensitivity to learning:

• management of risk – strategic plans should explicitly confront what actions might be required in the event of unexpected circumstances (e.g. a deviation of sales or profits greater than a target threshold);
• sensitivity to learning – the organisation must have in place market ‘antennae’ which enable it to detect and react to changing circumstances, rather than just pursue agreed strategies because they are agreed strategies.

Strategic decisiveness does not preclude responsiveness – indeed, the most successful strategies are those that have built-in flexibility.

Success

Strategic planning will always follow specific guidelines and processes, which differ across organisations. However, successful leadership in strategy will be based on a core set of approaches, which are market- and people-orientated:

• Staff involvement – the team responsible for strategic planning should be clearly defined with specific accountabilities in a fixed timetable.
• No boundaries set – within the agreed vision and goals of the organisation, a clear rule for strategic planning must be that no ideas are rejected out of hand just because they are new, or even were previously considered and rejected.
• Market analysis and the unpredictable – whether analysing product categories or geographies, strategising should include ‘thinking the unthinkable’; no assumption should be made that current parameters will apply indefinitely.
• Paradigm shifts – a specific search should be made for paradigm shifts which fundamentally alter the terms of trade in the given business segment. If none appear likely then the search should be repeated again, and then again – they are there!
• Geographic market entry – if your organisation is considering entering a new geographical market, it should identify the potential visible and invisible barriers, and talk with experts in that market for verification; it should not make market assumptions at a distance.
• Product market entry – if a strategic plan includes the launch of new product categories, the strategic review process should consider not simply the opportunity as seen today, but also how the landscape may have changed by launch, especially driven by competitor reaction.
• Competitor analysis – a series of competitor SWOTs should be completed from an internal viewpoint and from their perspectives. A review process should attempt to gauge how competitors will respond to a new entrant’s activities.
• Supplier analysis – suppliers should be reviewed not only for programmes of cost reduction (this should be a given) but also for your organisation’s vulnerability to them; a reduced supplier base can be a fragile supplier base!
• People resource and competence – nothing in a strategic plan happens without people, and a key litmus test of the achievability of a strategic plan is the alignment of opportunity and people competence.
• Value proposition – clarity is essential whether competition is based on price or value. These Porterian distinctions remain as valid today as ever and drive key assumptions about all aspects of product, cost and marketing.
• Brand and marketing execution – these are not the preserve of consumer goods environments; how customers are aware of products and services is a key component of any strategic plan.
• Technology and innovation – it is not whether technology can transform your activities, but how.
• Financial planning – strategy must challenge the basis of all price and cost assumptions, especially those with which the organisation is most familiar; the complacency of familiarity represents the highest areas of opportunity and risk.
• Contingency planning – the strategy plan should have provision for the unexpected and for things to go wrong; it should not assume perfection in execution and market circumstances. A good tool is to stress-test financial projections with variances up to –25 per cent.
• Development milestones – strategy plans are not start–end processes, they have significant delivery stages. These should be treated as milestones that are measured in order to assess progress.
• Non-committed options – development options should be retained in the strategy plan, representing potential additional growth drivers outside the plan’s commitments.

Successful strategic planning is often facilitated by the leader’s key team brainstorming in an ‘awayday’ setting away from the office and its distractions.

Pitfalls

Clearly it can be argued that not taking into account the criteria set out in the ‘Success’ section above represents the totality of strategic pitfalls. However, some are worth highlighting in particular.

• Partial strategising – seeing strategy as essentially the creation of products and/or entry into markets without due focus on delivery, especially development, sales and marketing. The key risk here is underestimating the effort required to drive strategy forward.
• Overstrategising – including in a strategic plan too many initiatives at once. Here the flaw is to assume that an opportunity is relevant because it exists, combined with a reluctance to make hard choices between opportunities.
• New market blindness – underestimating the barriers (especially invisible ones) to market entry and making over-optimistic forecasts of sales growth.
• Business model blindness – failing to understand the dynamics of a new business model, possibly including transferring to it (even subconsciously) assumptions relating to more familiar models.
• Incorrect or inconsistent value proposition – failing to crystallise whether competition is based on price or value, and mixing the two, leading to a confused competitive positioning.
• Inattention to the importance of people – believing that staff are an appendix or afterthought to successful delivery, rather than instrumental to it.

In strategy there is always a finer balance than seems evident between risk and recklessness, and between ambition and hubris. As a leader you have to learn to take necessary but manageable risk.

Leaders’ checklist

• Remember that this is a team process – you lead to empower, not to decide for others.
• Agree to strategic goals which are clear, realistic and achievable.
• Never forget that strategic planning is multi-dimensional and requires commitment as much to delivery as to entrepreneurship.
• Ensure that the profile of people is never diminished – your staff and their competence make the most important contributions to successful delivery.
• Avoid the pitfalls of trying to do too much or underestimating the challenges associated with what you are committed to.
• Make your organisation a learning one – ensure that you have the ‘antennae’ which can detect and respond to market changes.
• Maintain focus at all times – don’t allow yourself or your team to be diverted by interesting but peripheral activities.