2.1 Strategy Unlocked: Business Excellence – What it Means, What it Looks Like, How it is Achieved

2.1 Strategy Unlocked

This week starts an exploration of the first of the Nine Disciplines of Business Excellence – Strategy – and I’d like to start with a few “watershed moments”, that have changed the way I think about strategy.

1.The first was a strategy session in my early years in corporate. We were in a two-day strategic-planning workshop, and the consultant asked us to brainstorm what we thought might happen in the next 10 years, and the potential impact on the business. It was such a radical concept to us at the time, that no one said a word. I remember thinking, “I don’t have a clue about next week, let alone 10 years hence”. The consultant paused for an uncomfortably long time, and then said, “OK, think back 10 years, five years, last year, and let’s get up all the significant things that have already happened.” That got the ball rolling. Not only did we develop an amazing list of significant changes, when it came to capturing what could happen in the next 10 years, the ideas started flowing. The counter-intuitive lesson was that an unbounded, zero-based, creative strategy session, stifles the creative thinking process. To stimulate your best thinking, put a frame around it to contextualize and stimulate relevant thought, and looking at history is a great place to start.

2. The second “watershed moment” was when I was involved in starting a couple of new businesses. The first business was started with just two people, and the another, had four in the partnership. At the time, I could write strategic plans in my sleep, but when I took on the task to do the first draft, try as I might, I could not even “put pen to paper”. I was thinking that it was “writer’s block” caused by the anxiety about starting a new business, or may be a subconscious “voice” telling me the business model was wrong, and a multitude of other catastrophic thoughts. It turned out to be two basic things:

• There was a dearth of past information to do any analysis. This one was easy enough to fix, although it did take some time. Sometimes referred to as emergent strategy, we needed to do the desk research, and build our history as we went. This meant writing down our assumptions and rigorously measuring them against actual occurrences until we could demonstrate and articulate the key drivers of the business.
• The second was a little harder to work out, but it became apparent that size matters. The two businesses were small. What you couldn’t communicate, by just saying, “Hey everyone, can we meet and sketch some stuff up on the whiteboard?”, wasn’t worth communicating. However, as the business grew, it became apparent that for the maintenance of shared understanding and alignment, the level of formally needed to increase. For me, the magic number was 20 people, but whatever the number is, the business reaches a critical mass that formality and rigour in development, communication, and deployment, becomes essential to maintain alignment and focus.

There was more than one lesson in this case – the analysis and thinking part of strategic planning is critical, and so too is matching the level of formality to the business’ structure and maturity, but the most potent lesson, was the need for iterative assessment of the key drivers underlying the business model.

3. The third “awakening” was when I did a Strategy Immersion Workshop at the National University of Singapore a couple of years ago. Even though it was an intense couple of weeks, it turns out that the frameworks around strategy development and deployment haven’t changed much since the 90s. These frameworks have stood the test of time and they work. The lesson was that it's not the strategic planning and deployment frameworks that don't work, it is how they are used ... or not used.

So, let me share some of my observations of the common mistakes in strategic planning.

The annual retreat: This is a common occurrence, and it is where the Lead Team have an annual two-day retreat to do the strategic plan, that once done, only gets dusted off again for the next year’s annual retreat. The intervening year is then focused on the short term and delivering the annual budget, at all costs … including at the expense of longer-term aspirations. I even had one company overtly say, “We only do a strategic plan for the Board, then we forget about it until next year.”

Strategic themes: This is always disappointing to see, because a lot of work has usually already been done, but the company is yet to reap the rewards. There are a couple of elements to this one, and they are.

1. There are too many strategic themes – sometimes as many as eight to 12, and more. This violates the rule of focus. If you have that many strategic themes, the complexity exponentially increases when you consider that each theme could have many more supporting initiatives and delivery metrics, which I have seen turn into a tangled mess. More recent commentary has indicated that there should be no more than four strategic themes.
2. This is related to the first, and is where the organisation has gone through a rigorous process of analysis and development, to arrive at the key strategic themes. They have usually a good job of taking people’s feedback and communicated the themes throughout the business, but there is a missing framework, and that is a mechanism to tie strategy to everything else in the business. Without a formal deployment framework, managers then have to interpret the themes, which leads to confusion, misalignment, and often a reversion back to just doing BAU.

The “inside-in” strategy: This is better told by a story. I was asked to observe and give feedback on a company's strategy-update session. It was a disciplined approach where plans were presented on CapEx for capacity expansion, cost-cutting and process-improvement strategies, a supply-chain automation plan, line extensions and the Global product pipeline, and more. The only problem was that in a whole-day session of senior managers, the needs, objectives, and challenges, of their customers and consumers, was not mentioned once – not even by the Sales and Marketing Directors. As mentioned in a previous blog, my favourite questions to continually ask in business, are “What do we sell?”, “To whom do we sell?”, and “Why do they buy?”

Culture is the “elephant in the room”: as Peter Drucker has been often quoted as saying, “Culture eats strategy for breakfast”. Many strategic plans “dance around” this fundamental issue of culture change, by talking about capability requirements, the people plan, or the head-count projections. If culture is not directly addressed in the strategic plan, the status quo will prevail until it is forcibly changed by some other outside and potentially unforeseen force.

Listed below are my Top-10 keys to excellence in strategic planning, which I'll explore further in the coming weeks:

1. The starting point is Vision, Mission, and Values – they are "living" statements that must be routinely tested for engagement, validity, and relevance
2. Value proposition, supported by a clear value discipline, keeps companies away from being trapped "in the middle"
3. Strategy is mostly about what is not going to be done, and if there are any more than four strategic themes, the value of focus will be lost
4. The future is uncertain, and therefore strategy has to be a process of relentlessly reviewing underlying assumptions and continuous iterations
5. Strategy is a whole-business process, not a portfolio of functional aspirations and plans
6. Culture has to be at the centre
7. Uniqueness must drive positioning, and if there is nothing unique, you need to create it, and fast
8. Strategy is about what you need to be doing today to ensure the long-term viability of the business
9. Spend time working on the business, not in it
10. Communicate, communicate, communicate ... oh, and always get feedback along the way

This is not to say, that there aren’t other important elements of strategy, but these are the ones I see companies grappling with most often.

If you like what you read here, please share with your network, and also, if you see areas for improving the quality and relevance of the content, please feel free to share your comments and questions.

Thanks for reading, and I look forward to next week, where I start to dig a little deeper into each of my Top-10 elements of strategy.

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