Smart people often struggle with strategy. I know because I’ve seen it many times. They may lose their way in the mechanics, get bogged down in detail or simply end up with a document which gets dusted down twelve months later for the next so-called “strategy round”. Amongst the most common challenges are:
- Confusion about what strategy is and how to go about it
- Short-term thinking and lagging indicators
- A silo mentality combined with an absence of over-arching, strategic themes
Let’s start with confusion. Strategy means different things to different people; for some it’s the “how” rather than the “what” in a plan, while for others it may be the plan itself. Mintzberg1 describes five perspectives of strategy including a plan, ploy, pattern, position and perspective. Rather than getting bogged down in semantics, an effective strategy needs to cover all of Mintzberg’s “P”s. Above all, strategy needs to describe how to make best use of finite resources – or create alignment – in order to shape the future and realise your vision.
In simple terms, strategy needs to make it clear where you intend to play and how you intend to win.
Short-term thinking and lagging indicators
The day-to-day pressures of achieving the next quarter’s numbers are very real and can be all-consuming. Indicators such as sales, EBIT and customer satisfaction are very important but they are lagging indicators. In other words they see the world through the rear view mirror. A balance with more prescient, leading indicators is needed to manage the longer term strategic goals. Measures of organisational culture, innovation and perhaps even succession planning could be appropriate leading indicators.
Developing strategy needs to involve the leadership team as a whole. It can be a messy process, it takes time and it needs to be joined up – both between and within departments. Organisations which think in silos tend to plan in silos. The problem with this is that the big strategic themes are over-arching, transcending departments. For the walls to come down it is important to build trust and a sense of common purpose. Approaches to breaking out of the silo mind-set can range from organisational change programmes to job-shadowing and even the process of strategy development.
The biggest challenge to keeping the strategy process alive is hanging on to the big picture and creating alignment, which is one of the reasons why outside help is often used to facilitate the process. The good news is that organisations who manage the process effectively can reap huge rewards by unleashing unexpected creativity, creating a buzz and re-kindling passion.
1. Henry Mintzberg, “Five Ps for Strategy” in The Strategy Process, pp 12-19, H Mintzberg and JB Quinn eds., 1992, Prentice-Hall International Editions, Englewood Cliffs NJ.