5 Tips to Take Your Strategy Beyond "Hope"

I just returned from a two-day planning session with my business partner. As I said in a recent blog, a plan is nothing; planning is everything. This is the season of the budget and also, hopefully, strategy development, so I’d like to offer my perspective on the things that can make your strategy discussions more productive:

Get away if you can: staying in the office is a terrible idea, mostly because there is a clash of priorities; and the immediate and urgent (but not necessarily the critical) almost always win.

Begin with the end in mind: Thank you, Stephen Covey. For our business, this meant going out to 2014 for a lot of good reasons, including succession planning. Many initiatives can take several years to get right and leaving them until they are urgent is risky in today’s business environment.

Swim into a Blue Ocean: even if it’s going to take longer than 12 months (which may be a long time in American business), dare to create scenarios where your business is doing new and innovative things. This kind of activity expands your thinking and generates more options. Without ideation, your "ocean" gets redder by the minute, as the sharks circle the boat. By the way, reading Blue Ocean Strategy is good preparation for a strategic retreat.

Bite the bullet and take on the tough stuff: Effective strategic thinking means putting the skunk on the table. If you don’t talk about what’s hard, opportunities may never present themselves and, at the same time, challenges are never articulated until they rear up and bite you. Then you’re stuck spending a lot of useless time cleaning up after the skunk.

Boil down your strategy into a memorable sentence: a strategy statement by its nature can be complex and the risk is that a critical piece of your business becomes lost in verbiage. Try explaining two paragraphs of strategic direction to your employees and watch their eyes glaze over. We got ours down to “In It to Win It”. It means something to our company and it’s a lot easier to make decisions when judging them against an easy-to-recall strategy sentence.

The first step in any strategic thinking is to leave the spreadsheets and PowerPoints at the office and focus on the future. Whether your company is large or small; whether you head up a department or the entire business, strategy demands attention and dialogue. Are you using this budget season to take your thinking about your company to a new level?

What Makes a Good Business Strategy?

That question was asked by Veena Houston at one of our recent Leading Engaged Companies webinars; it’s a good one. I’ve been an internal practitioner and external consult of strategy for 25 years and it’s interesting how strategy formulation goes in and out of fashion, seemingly more in vogue when the economy is tough. For me, business strategy is one of the CEO’s KPI’s and there is the additional responsibility for communicating it and for ensuring it is executed.

First, my definition of business strategy, as I see so many references to “strategy” in the blogosphere but their message is really about tactics (marketing strategy, CRM strategy, HR strategy, etc.). The late Peter Drucker defined business strategy as “Analytical thinking & commitment of resources to action and innovation. Making decisions today about an uncertain future. Taking the right risks while exploring opportunities.”

Back to the original question: good business strategy components. Here are my must-haves:

Foundation of Vision, Values and Mission. Strategy can’t tell you what you stand for or why you’re in business but it should guide you in how you’re going to be different, competitive and successful.

Thorough Understanding of the External and Internal Environment. Knowing where you are now in terms of competition, customers, economic and regulatory issues and creating a report card of internal resources are imperatives; otherwise, strategy and direction are built on hope or dumb luck.

Evaluating Options in the Context of Your Reality. Strategy is about moving in a new direction which means building capability (human, structural, financial and relationship capital) that will support these decisions. Because strategy is a 3-5 year look ahead, not everything can be or needs to be accomplished Year One. That’s why we love annual action plans and budgets.

Scenario Planning. I came across this tool while working in England in the 80s through Royal Dutch Shell and the concept was so blindingly obvious that I’ve never thrown it out of my toolkit. We don’t have a crystal ball to predict our future so strategy development is, by its very nature, imperfect. We mitigate the risk by assessing our assumptions and using those to create scenarios of “What Ifs” and responses to those. Scenarios can lessen the impact of a flaw in the original strategy by allowing rapid course correction.

Measures and Monitoring. Failure to execute is the single greatest reason for strategy failure. These days, with financial and business modeling, strategy maps, scorecards and the like, there is no excuse not to design short- and long-term measures. Good strategy also demands that it cascades into departments, regions, and functions; and, ultimately to the individual level through a performance management system. If KPIs and compensation are not tied to business strategy, there is no skin in the game and therefore no incentive to change the status quo.

Communication, Involvement and Celebration. Communicating strategy is not a one-time event; it needs to drip continuously into the organizational consciousness until it is part of the fabric of all discussions, meetings and reviews. Keeping the message simple makes it easier to weave it into everyday activity.

Involving the workforce is critical, not just so that they are engaged but also because employees are in a perfect position to immediately discern a problem, which, if diagnosed quickly, can avoid strategy disaster.

Yes, celebrate. Every success; every mistake as a learning experience; every time a goal is achieved.

What do you think makes good business strategy? Can you add to my “must-have” list?

Got a Game Plan? Dispelling Some Myths

What's your game plan? Do you have one? Despite the rumors that strategy is dead, it's never been more important to know where you're going and how you're going to get there.

First, let's dispel some myths about creating a game plan:

Things Move Too Fast - No Time: unless you have unlimited resources and access to capital, it's never been more important to get a handle on how you're going to be more successful.

It's Too Hard: The old process of a never-ending planning cycle has had its day. You can use just 5 steps to get from Purpose to Execution. That's it. Five steps.

We Do Fine Without One: Are you sure about that? If you can't draw a straight line from programs, initiatives and campaigns to the business results you want, you may seem fine but you'll do a lot better with some direction. Without a game plan, how do your employees understand where the company is going and how they can play their part?

In the video clip below, I outline the five steps to get a successful game plan:

As the Cheshire Cat said to Alice, ' if you don't know where you're going, any road will get you there.'

What process do you use to get your game plan? Are you actively engaging in strategic thinking or just bumping along?

Strategic Decision-Making: Bottom-Up or Top-Down?

One of the many challenges facing business leaders when changing strategic direction or reviewing new opportunities is knowing how or when to involve the company at large in the process. It used to be that strategy was strictly for the Board of Directors or the most senior executives and it's true that the final decision -- the buck -- stops with the CEO and perhaps a few executives at the top. However, there is a golden opportunity to engage the workforce up front so that they know what they are going to execute and why. This approach also can make for better decision-making.

A few thoughts below on why gathering ideas and information as well as assumption-testing and implementation is a Bottom-Up process while the final decision is Top-Down.

Diversity of Thought: Once we get to the top of wherever we are, we tend to share the space with others who think like us. Introducing other people who are at the front end with customers and suppliers or who have a unique perspective like Human Resources, Marketing, etc. will provide a broad spectrum of information and insight that is invaluable when evaluating opportunities. Experience tells me that there is always at least one person who brings a point of view so different from the business leaders and so on the mark that it changes the course of strategy development for the better.

Utilize Bias: Rather than thinking of bias as a negative, consider it a necessary part of evaluating strategy and opportunities. Our experiences and the work we do shape our perspectives; we recognize other peoples' biases and tend to view them unfavorably unless they mesh with our own. The leader's job is to acknowledge the biases, including her own, balance them with good dialogue and help the contributors have their say without dismissing their ideas prematurely.

Use Scenarios: It's a rare thing to find that a strategic decision is correct 100% of the time. There are complex ideas, a lot of information and many assumptions that go into the process. There also is a need to avoid paralysis and make the best decision in the time available. That's why it's critical to have all assumptions documented with alternative scenarios or plans in the wings to course correct. The worst case is having the company execute the strategy, get a long way down the road before it's discovered that certain assumptions were incorrect and the strategy is flawed. Aside from wasted time and resources, employee could see the failure as their own and will be reluctant to get behind the next important decision. It's important to let employees know that testing assumptions is part of strategy execution and that raising a red flag is a critical part of their jobs. This is how successful strategies are designed: they aren't perfect 100% of the time at the outset but there is a process to modify and move on.

Make Timely Decisions at the Top: That's the job of the CEO. It's why they are called decision-makers.

Use Strategy Maps, Metrics and Scorecards: Translating complex ideas into visual representations and creating metrics that test the success of a strategy are both helpful tools for the business leader and employees who have to implement. It isn't necessary to invest in sophisticated technology. Below are a couple of examples using only the software on our laptops (thanks go to my business partner, Cathy Missildine-Martin, SPHR for creating these).

Scorecards should be created at the lowest level that can be properly measured and aggregated. Metrics are relevant to that level (can be aggregated or disaggregated) and are designed to help everyone understand what is being done, what they are responsible for and how they are contributing to the success of the company. Isn't that the definition of engagement?

So, the final decisions including those that pull the trigger or the plug as well as the tools and the responsibility for idea gathering is still Top-Down. Idea generation, testing assumptions and providing feedback on what's working and what isn't is Bottom-Up. It's a two-way street.

Better. Faster. Cheaper: The Evolution of Competitiveness

I've been getting ready for a webinar on how to design a winning strategy, which meant some research to emphasize the point that strategy isn't dead or even on life support. It's just that for some, the last decade meant getting real big (and rich) real fast; and strategy seemed so yesterday. Who had the time? Maybe if those responsible for two bubbles in the last ten years had taken time to figure out how to really create wealth and not play shell games, the global economy wouldn't be in a shambles.

When I first started in strategy development, it was called "corporate planning" and while it was valuable for decision-makers, it also had such a long cycle that the plan was out of date before it was bound (yes, we had nice binders). So, the planning part had to go away but in the process, the real substance of strategy got lost for a while.

I put my research into a timeline (see below) and it was impossible to lose sight of the enormous changes in the business climate since WWII. During each major cycle, lasting about twenty years, companies adapted to the forces shaping the economy and the climate for business. Each cycle was created by unique circumstances and the successful companies developed new strategy as well as tools and techniques that not only ensured survival but in many cases, created a unique advantage and wealth. Businesses were getting Better. Faster. Cheaper.

As the business climate entered a new cycle, what was a competitive advantage or a winning strategy had become at best, the cost of doing business and at worst, a commodity.

As we enter the 21st century, we've wrung the efficiencies from process reengineering; we've de-layered and downsized people; off-shored jobs and invested in the same technology everyone else has. Now what? Where is growth coming from?

I think companies will set themselves apart by living up to their Mission (Purpose) and by standing up for their Values. Their real competitive advantages will be people, even though the traditional workforce may not exist. Ideas will be the new currency and innovation the new capital. Even economists are using tools called "Behavioral Economics" to explain market forces instead of relying on traditional financial tools. Companies that develop strategies for this new cycle before anyone else will be Better. Faster. Cheaper. Then, I had an epiphany: this is what the Engagement Thing is all about. It's not a program or slogan or campaign. It's about design: integrating elements that are unique to you and creating a company that Engages. This could be your winning strategy for 21st century growth and business results.

Or, if you think it won't happen, sit back and watch what all of the burned out employees, self-starters, young entrepreneurs and Boomers looking for an encore career do with Engagement.

Is your business ready for this new cycle? How are you going to be Better.Faster.Cheaper. Is your company Engaging?

The Wisdom of Strategy

In his Wisdom Manifesto, Umair Haque shreds the idea that strategy development is anything other than a wallet grabbing scam for consultants. I'm trying not to be hurt by this sentiment, but it's hard. The author suggests that strategy be replaced by organizational "wisdom" and goes on to offer some rather pithy contrasts between the two concepts. My question is: why is it either/or? Why can't strategy design and wisdom co-exist? I don't believe they have to be mutually exclusive. In fact, where would strategy be without wisdom and vice versa?



Let's start with some definitions to establish whether strategy and wisdom are exclusive. Wisdom is the ability to discern or judge what is true, right or lasting; insight. Strategy is a plan of action designed to achieve a particular goal. Logic dictates that applying wisdom to a business opportunity is absolutely correct. An example of strategy without wisdom is the Dot Com bubble, when a sock puppet could appear on television to persuade you that buying pet food over the Internet instead of the grocery store was an idea whose time had come (RIP, Sock Puppet).



Umair Haque suggests that wisdom ignites, energizes and channels. Maybe, but to what end? As Walter Kiechel, author of The Lords of Strategy suggested recently in a Harvard Business Review interview, "If you don't think strategy is important, look at what happened to GM and Chrysler when they forgot about their customers and how to meet their needs." And then there's Toyota, who seemingly abandoned a 60-year strategy that frankly had been working well, and pursued a growth-at-all-costs strategy (and what a cost) without bringing its considerable wisdom to the opportunity. Strategy without wisdom is not confined to the auto industry, sadly.



Strategy allows businesses to think about their people, operations, customers and opportunities in an integrated way. It doesn't have to be painful or drawn out or rely totally on numbers. As Walter Kiechel suggested, a new way of thinking about strategy design today is bringing together people and analytics in a systematic way to be more granular and to become adaptive.



A process I've used for twenty years, adapted over time because of shifts like globalization and prcess engineering and the like, strongly relies on organizational wisdom.

• Values: know your Purpose and what you are about. In a crunch, do you stand by your Values or jettison them?



• Know where you are now: your competitive environment, your market(s), competitive advantages, customer base and internal resources including debt structure and access to financial capital.



• Frame the opportunity(ies) that are present. Assess the risks to your existing environment that each opportunity presents and the rewards that could accrue.



• Close the gaps so that your existing business is not strained beyond it capacity to absorb the inevitable change that new opportunties bring with them.



• Develop scenarios ("What if...") Changes in strategic direction never happen in a vacuum. Assumptions should be documented and become the source of a Plan B, Plan C, etc. Scenarios allow swift course correction when necessary.



• Use action plans to execute the strategy and metrics/scorecards to measure the reality against expected results.



• Keep on keeping on. Strategy design should be on the agenda of every Executive Committee and Board of Directors meeting. This is not a once a year project.

Does your business engage in systematic thinking about your future? Do you apply organizational wisdom or fly by the seat of your pants? Or, do you think the environment is too complex to design a long term strategy?