Strategy Underpinning Performance

As you develop your business strategy, you are also influencing, and likely, determining the level of performance of your business. But that performance is not directly influenced by the growth strategies – new markets, new products etc. – set in your strategy, but rather how the strategy uplifts or deflates the ability of the business to compete. Strategy is in essence, how a business has chosen to compete, but many strategic plans fail to address the catalysts of competitiveness.

Active Knowledge Question:

What are the ways in which your current strategic plan uplifts the ability of your business to compete?

To Compete

For any business to be successful, it must be competitively fit, and the more fit it is, the greater its ability to win in its chosen markets; to be able to outcompete everyone else.

Think of your favourite sports team and their ability to win. Each week they go out to compete against other teams whom they know well, and in environments with which they are familiar. They drill continuously to be able to win that competition, but it all comes down to what they able to muster on that day in that match. However, if their training is structured well, the more they train and focus on what is important, the more likely they will be able to win.

In business, your team competes every day against others whom they know well. It is not a competition once a week but every moment of every day. That requires a degree of fitness that very few business leaders contemplate nor invest in.

A competitively fit business is one that is wholly focused on customer need and the value they are able to deliver into that need. This is the domain in which they compete – customer value.

They achieve this fitness by investing in the competitive engine that exists in their business. An engine that operates 24/7, whether they are aware of it or not, and which sets the floor and ceiling of the performance of their business. With a weaken or malfunctioning engine, the floor will collapse in your business, and there will no limit to the losses that may be sustained. A strong, well-tuned engine will, however, lift the performance of your business to a level you never thought possible.

A competitively fit business will orienteer itself in fulfilment of purpose and to reach the vision you have set for it. It will predict, adapt, move, shift, grow and out-perform all competitors.

Strategy

Developing strategic plans in businesses is often a regimented process that occurs every year, or every three years, with the board and senior management team members coming together to consider data, options and map out actions to be taken. These actions may be in the shape of various growth strategies, cost reductions or capacity expansions etc. It is a process of formulation with implementation to follow.

These plans are usually linked to financial returns and market value, with profit being the net evaluation metric.

All this is good, but it does not directly support performance or expressed another way, the organisation’s capacity to compete.

Being able to compete is not the same as being able to implement a plan that someone has formulated; it is not following a set of directions or even pursuing goals set by others. Think again of your sporting team, when they go out on the field, they may well have a game plan, but the effectiveness of that plan is totally dependent of how the other team plays on that day.

In business, there are many variables that are continually evolving, which influence customer value and therefore, the competitiveness of your business’s offering. Being able to compete in business, is all about being able to orienteer your way through the competitive landscape to not only reach your goal but importantly to do it in a way that lifts your strengths to the forefront.

In a strategy session, you may form a view that XYZ is a market of opportunity for one of your products but making that a reality is another matter. And it’s not just the challenges of delivering on a strategy; rather, I would express it as the ability of your team to compete. That is, their ability to make that market a success for the business and that may require a completely different approach to what was initially envisaged.

When you develop your strategic plans, how are you investing in building the capability of your business to compete? How are you developing your business's ability to predict, adapt, move, shift, grow and out-perform all competitors?

Strategy is not just about a list of growth options; it is really about the ability to compete. A business which can compete, will not only be able to deliver on the growth options but more importantly will self-define those options because they are immersed in the market in creating more customer value than anyone else can.

Customer value is never about yesterday, it is partially about today, but it is more fully about tomorrow. How do we set the customer value for tomorrow that everyone else will be chasing?

And always bear in mind, that the core of the competitive strength of your business rests wholly in the combined effort and talent that everyone working within and with your business are willing to invest in your business.

Leaning In

How can you begin to develop an approach to strategic planning that allows you to consider not only growth options but also understand the catalysts of competitiveness in your business?

Well, the starting point is to recognise the existence of the competitive engine in your business, to truly appreciate the workings and impact of its various agents, understand how to influence them, and be willing to place self-interest to one side.

In developing an effective strategy, you are seeking high levels of participation from those persons involved. I would use a language of contribution, immersion, breaking barriers, deconstructing paradigms and intimacy with customer need. You will need to challenge and extend the team’s thinking, create new insights and understanding and build a confidence and knowledge for them to embrace an evolving strategy. This requires that you have the team ‘leaning in’ to the process and not sitting back in their chairs.

Two aspects of achieving this outcome; firstly, a process to guide the strategy discussion and secondly, a methodology for its conduct. Examples of each are StrategyPlay for the process and Lego Serious Play as the methodology.

Strategy Play is a process that I have developed to lead a team through all the issues that they should consider in crafting effective strategies. Here is a diagram that reflects its macro elements. 

Speaking to Lego Serious Play, this is a methodology to enhance thinking, communication and problem-solving in groups. It is certainly not picking up a handful of Lego bricks and playing with them.

It is a very structured methodology delivered by facilitators trained and certified in this approach. It has been extensively researched and used in businesses around the world for the last 20 years. Above is an example of a model that reflects the way the team believes its business operates.

Connecting Strategy and Performance

So how can strategy support performance? Let’s consider the competitive engine which determines performance:

There are three groupings of elements in the engine – core, focus and fuel. Lifting out some of those elements that strategy impacts:

• Purpose: is expressed in a way that draws a focus on delivering ever-improving customer value. The business exists to meet a customer need.
• Motive: is only ever about competing to meet the customer need identified through purpose, and profit is the outcome of competing well.
• Vision: is crafted in a way that sets a new level of customer value and draws everyone into the quest of reaching that summit.
• Culture: is one that seeds the type of organisation that is required so that the competitive posture set in the strategy process can be delivered and continuously improved.
• Employees: are not a cost centre but are recognised as the core of the competitive strength of the business.
• Customer Focus: reflects the existence of a customer-first mandate that requires all actions only proceed if they will improve the customer value delivered, and thereby strengthen competitiveness.

The manner in which strategy addresses each of the elements above will either strengthen or weaken the ability of the business to compete. If any of the elements of the competitive engine are not operating in the right character competitiveness is weaken. For example, if a business’s motive is clearly profit first, then self-interest, politics, bureaucracy and short-termism will be seeded. And no matter how clever the strategies develop may be, the engine that is required to take the business forward will be operating well below its potential.

In developing strategy regard must always be had to the agents of competitiveness in a business, and that has nothing to do with product features, pricing, distribution channels etc., it is the catalysts captured in the competitive engine.

An entirely new level of performance.

Want to become a part of the Entrepreneurs+ Community and learn how to make your business competitively fit? Join now.

All the best in the success of your business,

Richard Shrapnel