Have you ever found yourself stuck following a stupid strategy? You know - continuing to do something that may have worked in the past but isn’t working now (or is even counterproductive) given the current situation? I know that I have. You know how it is. You just get caught up taking the same approach to life/a situation because it has always worked. And then, something in your environment changes but your approach doesn’t and, suddenly, you find yourself going nowhere fast.
Basically, you don’t change and then you find yourself caught following a “stupid strategy”.
So what does this have to do with business? Well, this phenomenon doesn’t just happen to individuals - it happens to organizations too.
Have you seen companies that do business by having an annual planning event and then not talking much about strategy until the following year? Sure they meet on a monthly basis to go over the financials and business stats, and discuss tactical adjustments but this isn’t the same as talking about their business strategy. The truth is that 85% of executive teams spend less than one hour a month talking about strategic issues between planning events.
Organizations that operate like this run the risk of getting stuck following a stupid strategy. The reality is that things change – the economy, your markets, your competitors, your customers’ needs, your stakeholders’ demands, technology advancements, etc. And sometimes things can change really, really fast! Just look at how much and how fast the economy changed recently….
Since your business environment is changing, annual strategy discussions just won’t cut it – this approach actually increases your risk of getting caught following a stupid strategy.
As a leader, your goal is to make sure that your business strategy remains agile, responsive (or even pro-active), and flexible to change when it makes good sense. Here are four steps you can take to eliminate the stupid strategy risk:
(1) Establish an integrated change early detection system
Many businesses fail to change their strategy because they actually miss the changes that are going on around them. More often than not, changes are subtle and it is the combined effect of many changes in a variety of areas that eventually reduce the effectiveness of a company’s strategy.
Organizations that display strategic agility implement mechanisms that allow them to pick up and integrate the myriad of changes occurring in their operating environment early across the spectrum of their business. One example is a communication pipeline that allows employees at all levels of the organization to add their insights and observations about important changes into the strategy management process. Internal online communities, open email access to the CEO, executive round table forums, CRM database updates, etc. are just some of the ways this can be done. The bottom line is that agile companies take the time to open the lines of communication and capture critical insights in a forum that can be leveraged by all to discuss strategic implications.
(2) Make strategy a continuous process
Agile companies realize that strategy is a journey that must be continuously fine tuned to stay on course. As a result, they move away from the annual planning event and replace it with a series of (at minimum) quarterly strategy progress review sessions. Questions reviewed during these sessions include: How have our strategic objectives been performing over the past quarter?; What are the implications for strategy execution? Are we moving forward?; What are our key strategic issues?; and, Are any changes in direction required (objectives, relationships, strategy)?
In addition to these regularly scheduled sessions, strategically agile organizations will discuss the need to change their business strategy any time a significant event happens in their operating environment.
(3) Implement a strategy governance framework
A lot can change in a business environment so how do you know when a change in business strategy is required? Who decides and what’s the process? Agile companies take the time to work all this out by establishing a defined strategy governance framework. This framework usually details the four step approach to making strategic change (i.e. gather change/improvement information and feedback; assess and determine the type of change/improvement required; develop the improvement solution/determine the change in strategy required; and implement the improvement solution/make the required changes to strategy management tools and systems), roles and accountabilities, decision-making authorities. Establishing a strategy governance framework in advance gives agile companies an organized approach so they can focus strictly on strategic change matters when required.
(4) Develop a strategy change cascading process
Many organizations avoid making strategy a continuous process because they worry about the “messiness” of making a change in strategy mid-implementation. Strategy execution excellence requires organizational alignment - projects, balanced scorecard indicators, budgets, resource plans, and people’s personal goal plans. Getting it all re-aligned after a change in strategy both quickly and efficiently is virtually impossible without a structured approach and process. Rather than take the time to establish these systems, many companies avoid change by not reviewing their strategy outside the annual planning event. In contrast, agile companies define and implement a fast and flexible strategy cascading process that allows all elements of the organization to re-align with changes in strategy almost seamlessly so that business carries on without missing a beat.
Getting stuck following a stupid strategy isn’t usually fatal in the short run for a company – that’s why most of them don’t feel the need to change their approach to strategy formulation and management. However, the long term effects of serial stupid strategies include dropping employee morale (your employees know when your business strategy is out if sync with the operating environment), reduced stakeholder loyalty, and sub-optimized business results.
Is this enough of a burning platform for change?
Start working on your company’s strategic agility today.