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The 3 Choices of Good Strategy Making

Most good strategists will tell you that creating and implementing an effective strategy is all about making choices. I agree with that but I know that this is easier said than done. And, while it’s no surprise that determining what steps your organization must take to be a successful business is important, it may surprise you to know that deciding what your business will do less of or won’t do at all is equally, if not more, important for strategy execution success and business performance results achievement.

So what are these choices and what do they look like in action?

 

Choice 1: Focus your Strategic Reach

The first choice involves deciding what business your company is in, what you make or do, who your specific customers are, and what niche your organization is playing in. Though counter-intuitive, time and time again, successful organizations show us that making clear choices in these areas translates into greater organizational focus and better business results. The bottom line is that it can actually be bad for business to try to do everything and be all things to all people because it stretches organizational capacity too thinly. Often, choosing to specialize in and dominate a focused market space results in better business performance and exceptional business results.

 

Choice 2: Identify the Value Drivers Critical for Strategic Success

The next important opportunity to make choices comes during the strategic planning process when creating your organization’s strategy map. The goal during strategy mapping is to identify the focused set of mission critical value-drivers within your business (in the form of strategic objectives) that allow you to achieve the business results you desire. The key to doing this successfully is to really think about what (and how) your organization truly needs to work on to produce results and achieve your organization’s mission and vision. Take my advice - forget the extraneous stuff!

This can be a very difficult exercise for organizations and leaders to do effectively - it’s only natural to want to include everything in the strategy picture. Why? That’s because it’s hard to know what to leave in and what to leave out, and making choices feels risky. Making decisions about critical strategic objectives requires a really good understanding of how your business works to produce results and, unfortunately, most companies do not have reliable information available to help them validate their theory of how their business works and to identify key results drivers.

For most organizations, strategic planning via the strategy map begins the process of learning about the critical business drivers in their organization. When this is the case, making the choices required during the strategy mapping process can feel a bit like a chicken and egg situation. How can you make choices about the critical business drivers when you don’t have data telling you what really drives business success? The answer to moving forward is to leverage organizational wisdom about your business, make educated choices about what you think really drives the success of your organization, and begin working with that. Over time, as you learn (via the balanced scorecard and strategy review discussions) about the true value drivers in your business, and the cause and effect relationships between them, you and your team will have the opportunity to refine your strategy map. Knowing that your first choices aren’t set in stone often helps business leaders feel more comfortable choosing a focused set of strategic objectives for their strategy map.

 

Choice 3: Prioritize Work Efforts Strategically for Exceptional Results

Even with a goal of limiting the strategic objectives on their strategy map to a vital few selection, most organizations begin with 15 to 20 strategic objectives on their first one. It is largely impractical for organizations to focus equally on this many strategic objectives for a sustained period of time. Successful strategy execution requires focus and prioritization. As a result, your organization should prioritize your strategy map/strategic objectives and make decisions about which components of your value creation strategy your organization will focus on over a defined period of time. Known as strategy map weighting, taking this approach provides your organization with: a method of defining and communicating the relative business priorities to employees and stakeholders; and a means to guiding operational decision making over the short to medium term.

The focus of strategy map weighting is to establish the relative priority of each strategic objective over, customarily, the upcoming twelve to eighteen months. The first step in this process is to weight your strategy map perspectives. This is done by taking 100% and applying it over the various perspectives. The next step is to weight each of the strategic objectives. The best way to do this is to take one strategy map perspective, look at the percentage weighting for that perspective, and distribute that percentage across all of the strategic objectives assigned to the perspective. The percentages applied to all of the strategic objectives in this perspective combined should add up to the percentage weighting for the strategy map perspective. This process should be repeated for each strategy map perspective. The result is a weighted strategy map.

A weighted strategy map is an important tool that clearly shows the relative priority of strategic objectives, and the supporting work effort, over a defined period of time. When clearly communicated to managers and employees, it provides a valuable tool that helps them achieve focus in their work efforts and maintain strategic priorities in the face of changing, and often challenging, operational demands. Successful organizations will encourage managers and employees to use the weighted strategy map as a tool to help them filter work requests, prioritize day to day work efforts, and make important decisions.

Essentially, the choices communicated via the weighted strategy map help employees make their own choices about prioritizing their work and guides them in using their resources and organizational capacity in a way that will help the organization achieve desired business results in the short run without sacrificing the longer term business strategy and goals of your organization.

 

Good strategy making is fundamentally about leveraging information and knowledge, and having the courage to make choices about what to focus on, what to do less of, and what to walk away from. Basically, good strategy making is an ongoing exercise in focus and prioritization – something that most businesses have difficulty doing. However, to be able to execute your strategy successfully, your organization must first excel at good strategy making – your ability to achieve the business results you want is depending on it!

Do Strategic Themes Add Value in Strategy Mapping?

Many organizations use strategic themes on their strategy map.  Strategic themes can help organize, or group, related strategic objectives that work together to deliver a specific, valuable business result. Strategic themes can help simplify the communication of the strategy map to stakeholders by providing a concise bridge between the mission and vision and the details of the strategy map (i.e. the strategic objectives).

Examples of strategic themes include:

● Service/Operational Excellence

● Clinical Leadership

● Innovation in Service Delivery

● Product Development Leadership

● Build a Safety Culture

● Focus on Continuous Improvement and Knowledge Generation, etc.

Strategic themes are very specific to the company, its ultimate business objectives and goals, and its business strategy.

One approach to building themes into a strategy map is to define the 3 – 5 strategic themes that are critical to mission and vision achievement BEFORE creating the strategy map. Once the themes have been defined, the next step is to define and organize strategic objectives on the strategy map in relation to each strategic theme. Many organizations taking this approach will create “theme teams” to complete this activity. Some organizations will even create “mini” strategy maps for each strategic theme, displaying only the relevant strategic objectives and cause and effect arrows on each mini strategy map. Organizations may then assign the management of each strategic theme, and the associated strategic objectives, to specific individuals in the organization using these “mini” strategy maps.

It is important to be aware of the potential pitfalls associated with introducing strategic themes into the strategy mapping and strategy implementation process:

● Be sure that by starting with strategic themes you are not placing limits on the identification of strategic objectives – In many instances, greater insight is achieved, and a better set of strategic objectives is created, when strategy mapping is done in an “unfiltered” way using all of the usual information inputs (i.e. SWOT Analysis, environmental scan information, stakeholder needs and expectations information, etc.). Being able to consider the broad variety of inputs that support an integrated value-creating business strategy without theme constraints often facilitates the creation of critical strategic objectives that do not fit specifically under one strategic theme or another.

● Strategic themes may create unnecessary complexity for stakeholders – Strategic themes add a layer of non-actionable information to the strategy map that may actually act as a distraction for stakeholders and employees. Since the focus of the strategy map is to highlight the vital few, value-creating strategic objectives, written in operational terms, many organizations opt to keep it simple and not add extraneous information, such as themes, to their strategy map.   

● Managing by strategic theme may perpetuate a “siloed” approach to business thinking and operations – Strategic objectives are ideally cross-functional in nature and cause and effect relationships exist across an organization’s entire strategy map. The goal in strategy implementation and management is to leverage the strategy map and get the organization working together cross-departmentally on, and thinking more broadly about, the paths to mission and vision achievement. While asking a sub-team to manage a “mini” strategy map, focused on a specific theme area, may ensure the successful achievement of the strategic theme, it may also result in sub-optimizing the achievement of other strategic theme areas and/or the entire business strategy as a whole.    

● Strategic objectives may contribute to more than one strategic theme, making management of these strategic objectives confusing – While the simplicity of the idea of identifying a specific set of strategic objectives for each strategic theme is attractive, reality is a bit messier. That is, strategic objectives rarely relate to just one strategic theme. This is particularly true for the strategic objectives in the organizational capabilities perspective – the foundational objectives that directly support numerous strategic objectives (and strategic themes). Using the example of a foundational strategic objective such as “Build a High Performance Culture”, it is easy to see it contributing to many of our sample strategic themes: Service/Operational Excellence, Clinical Leadership, Innovation in Service Delivery, Product Development Leadership, Build a Safety Culture, Focus on Continuous Improvement and Knowledge Generation, etc. The practical result would be that this one strategic objective, “Build a High Performance Culture”, could appear on several “mini” strategy maps, making management of this strategic objective confusing.   

Despite these concerns, many organizations like using strategic themes to simplify the communication of areas of strategic emphasis to those stakeholders not participating in strategy implementation and to other audiences who are concerned with the “what” of the business strategy rather than the “how”.

The best advice when defining strategic themes for these purposes is to first create the strategy map and strategic objectives and then identify the three to five strategic themes that arise naturally from the strategy map. This can be done simply by looking at the strategy map and grouping together strategic objectives that seem to relate to the same or similar topic. Many organizations try to ensure that there is at least one strategic theme for each strategy map perspective: an organizational capabilities theme, an internal process theme, a customer or stakeholder theme, and a financial/resource management theme. Additional strategic themes may become apparent as you look more closely at your strategy map.

It is up to each organization whether they wish to introduce strategic themes to the strategy map they use to implement and manage strategy. Many organizations choose to include them so that employees see this new layer of information and understand how the themes and strategic objectives align with each other. Other organizations believe that the focus for those involved with strategy implementation and management should be on the action-oriented strategic objectives on the strategy map alone.

I’ll be honest – this is my preference.

If you feel strongly that you want to add themes to your strategy map, here is an example where themes have been layered in after the fact and cause and effect linkages are permitted between themes.

Download Sample Hospital Strategy Map (web)

Essentially, each organization must make its own choice regarding the use of strategic themes based on its assessment of information needs and the unique culture of their organization.