SFO Blog - Helping You Build Your Company into a Strategy Focused Organization

Your Company is in WHAT Business?!?

When Facebook founder/CEO Mark Zuckerberg testified last week in front of Congress, I nearly feel off my chair when I heard his answer to the question “Are you a media company or a technology company?” Now – realizing that the options offered in the question may have been too limiting PLUS the fact that Zuckerberg was likely advised to stick to answering the questions (not correcting them), I was still shocked at his reported response: “I like to think that we are a tech company”.

Given the reason why Zuckerberg was called up to Congress in the first place (the Cambridge Analytica situation), it appears that someone (many someones?) at Facebook had the impression that the social networking platform is actually a data company. And, as a result, those folks made the business decision to monetize the data Facebook has invested in accumulating (a strategic move aligned with being in the data business).

Did someone forget to let Zuckerberg know that Facebook’s business has morphed over time from just a place for people to connect to a serious data company? (hint: I think he knows).

My goal here isn’t to get into a debate about what business Facebook is actually in. It’s really to point out that this kind of disconnect happens in companies of all sizes every day.

When people in a company (including executives) aren’t on the same page about what business the company is in, they make business decisions based on what business they think the company is in. And, when several decision-makers make different/conflicting guesses, business leaders and their company can be heading for a heap of trouble.

So what should you, as the leader of your company, do to head off the “what business are we in?” disconnect in your organization?

 

1 Decide what business your company is REALLY in and keep it up to date over time

There are lots of different factors that play into the decision about what business a company is in: the problem it’s solving; who the target customer is and what they need/expect from a provider; what others in the marketplace are doing to solve the problem and how the company plans to set itself apart; the customer value proposition the company is primarily focused on delivering, etc. I could go on.

To illustrate, let’s look at a hotel. Here are just some of the different businesses a hotel could be in:

1. Putting a roof over peoples’ heads at the lowest possible price
2. Providing a place to interact with/test out all the coolest tech amenities
3. Being a home away from home
4. Designing a luxury experience that anticipates and fulfills every wish
5. Supporting the ability to travel with the smallest possible carbon footprint

It really doesn’t matter which you select for your hotel – the important thing is to be clear about what business your hotel is in because that choice will have implications for all the business decisions, big and small, that follow.

Remember – your choice of what business you are in probably won’t stay static over time. Your customers change. The marketplace changes. Your company grows. And you learn. So, if you want to be in business tomorrow, you’ll have to be flexible and adaptable to change. And this can include tweaking or changing the business your company is in (companies re-position and rebrand all the time).

However, the important thing in step 1 is to be purposeful about, and clear on, what business your company is in at this point in time.  

 

2 Make sure that everyone is on the same page

Once you’ve settled on what business your company is in, and can state it clearly, it’s time to ensure that everyone in your company has the same understanding. Even when you think that the business that you’re in should be obvious to everyone, don’t take it for granted. Take my advice - don’t skip this step!

First be sure that everyone on the executive team is on the same page. Then begin communicating across your company. But don’t just use a one-way communication approach – be sure that part of your communication strategy includes having employees tell you what business your company is in and what that would look like in action. Taking the time to be sure that everyone has heard the same message and is indeed on the same page about what business your company is in will help prevent disconnects in the future.

Be sure to repeat this step with all new hires, from time to time with existing employees, and every time there’s an adjustment to what business your company is in.

 

3 Monitor the alignment between intent and follow through

Once you’ve clarified what business your company is in, and you’re sure that everyone is on the same page, you can’t stop there. It’s not a once and done proposition! You’ve got to keep everyone’s eyes on the follow through, making sure that business decisions, investments, actions, and priorities across your company stay aligned with the nature of the business you are in. Staying on top of the follow through across your company allows you and your team to pick up mis-alignments with your business intent early and make the required course corrections quickly.

The actions you and your team take to course correct will depend on the root cause behind the mis-alignment - the key is to learn and adjust before small mis-alignments snowball into a serious business problem.  

 

Disconnects between what business your company is in and the business your employees think your company is in happen all the time. Unfortunately, this disconnect almost always shows up as costly, misaligned business decisions and sub-optimized business results.

The good news is that, when you follow these three small but important steps, it’s possible to minimize, and even eliminate, the “what business are we in?” disconnect in your company - making it possible for everyone across your company to focus with certainty on doing the right things to maximize company performance, customer outcomes, and financial results for your business!

 

The Three Business Management Horizons All Executives Must Juggle with Ease

To ensure the ongoing success of their company, every business leader must excel at keeping their eye on three important business “horizons” at the same time. This can be tricky to do but all effective leaders/leadership teams manage to find a way to do it. Let’s take a closer look at what these horizons are as well as the business-critical questions that frame them.

  

Horizon/Question #1: Are we doing the RIGHT things right?

What this horizon is getting at:

Once you have your strategy and business model straightened out, the next challenge is to define (a) the critical activities (i.e. processes and projects) you need to have in place to put your strategy successfully into motion, and (b) the level of performance these activities must achieve to produce the results and outcomes spelled out in your strategic and annual plans. This horizon is all about confirming that your company is doing what you said you were going to do in your strategic plan so that you’ll be optimally positioned to answer the question associated with business horizon #2.

SUMMARY: Horizon/Question #1 is designed to confirm that your organization is putting your strategy and business model into action as planned.

 

 

Horizon/Question #2: Is our strategy and/or business model producing the RIGHT results?

What this horizon is getting at:

No one wants to waste time pursuing a strategy or employing a business model that’s not producing the desired results. Asking question #2 regularly allows business leaders to consider whether their business strategy, including what the organization is focusing on, is actually moving the company forward positively. When the answer is “yes”, that’s great! You’ve received INTERNAL validation that your hypothesis about how your business needs to work and, what you need to work on to produce results, is probably right. However, when the answer is no, you need to dig further to understand what it is about your strategy and/or business model that needs to change if you’re going to achieve the results and outcomes spelled out in your strategic plan.

SUMMARY: Horizon/Question #2 is designed to verify whether your strategy and/business model is indeed producing the expected results.

 

 

Horizon/Question #3: Is this still the RIGHT strategy and/or business model for sustained business growth, success, and competitive advantage?

What this horizon is getting at:

While business horizon/question #2 is an internally focused question, business horizon/question #3 is EXTERNALLY focused. That is, business horizon/question #3 is asking business leaders to consider whether their strategy and/or business model still makes sense given what’s going on currently (and what’s expected in the future) with their customers and in the marketplace. It’s always important to consider question #3 even when you’ve concluded that your strategy and/business model is indeed producing the expected results. If your “expected results” no longer deliver value to your customers and/or stand up given market conditions, you’ll need to make a change for your company to remain successful.

SUMMARY: Horizon/Question #3 is designed to explore whether your strategy and/or business model still works given external conditions (now and in the future).

 

Many business leaders find it challenging to juggle the three business horizons successfully. In fact, most find themselves spending 95% (or more) of their time trying to tackle horizon/question #1 alone. In my experience, the difficulty revolves around the “RIGHT” component of each question. In horizon #1, “right” requires the alignment of key activities with strategy; in horizon #2, “right” depends on the a clear definition of successful results and outcomes for your strategy; and in horizon #3, “right” depends on your ability to assess the current and future fit of your strategy in the external environment.

That’s a lot to get “right”!

However, don’t feel overwhelmed - business leaders can begin by taking two high impact actions: (1) clarify your company’s strategy (including defining strategic objectives, priorities and desired business results and outcomes); and (2) close the strategy-activity alignment gap anywhere it exists.

These two actions, supported by executive commitment to this approach to business management, will go a long way towards positioning business leaders to successfully manage all three business “horizons” for their company.   

 

A Little Less Measurement, A Lot More Conversation

For someone who began their career in strategy management as a Balanced Scorecard practitioner, it might be a bit strange to say this but here goes:

 

In the upcoming year I’d like to see executive teams spend less effort collecting data points and more time talking about what their data is (or isn’t) telling them.

 

Now, don’t get me wrong – I’m not letting anyone off the measurement hook. Gathering performance data is an important activity but sometimes business leaders can take it too far. From obsessing about the “perfect” or best in industry metrics to looking at soup to nuts data sets, I see too many executive teams focusing their energy and resources on collecting results (including junk numbers) rather than investing time creating a collective understanding of the meaning behind the data.

 

In an age where no one has a minute to spare, it’s important that business leaders invest their business management time and effort in activities that have the greatest impact. And let’s be clear – collecting and looking at volumes of data that may or may not be crucial for informed business decision making is not the best use of executive, and organizational, energy.  

 

When it comes to successful business management, the smart place to invest time is in connecting the dots between data points, figuring out what the meaning is, and then deciding what (if anything) to do with that insight.

 

In my experience, the best way to do this is through discussion and conversations.

 

Here are a few steps that executive teams can take to add more meaning-making conversations to their business management activities:

 

1. Focus on a Clear Reason for Measurement

Executive teams often end up looking at huge amounts of results data simply because they haven’t decided on the questions they want the data to help them answer. Questions like “Are we doing the right things right?”, “Are we delivering an experience to our customers that they still value?”, and “Are we building the right employee capabilities for future business success?” all require specific metrics to help answer the question. Lack of clarity in your reason for measurement results in a scattershot approach to data collection and an explosion in the number of numbers you regularly have to look at.  

 

2. Focus on Data Quality Rather than Quantity 

Once you know what questions you want data to help you answer it’s easier to select a focused set of quality metrics and have confidence that they’ll give you the information you’ll need. Looking at a smaller, more manageable number of data points makes it easier to understand the story your results are telling you, connect the dots, and see the bigger picture (and its implications).  

 

3. Use Conversations to Transform Data into Insight

Data without context isn’t that useful and can be misleading. While data is evidence, without context, it’s still open to interpretation. Commentary, analysis, and discussions add context to data and, when many people participate in the conversation, they are able to develop a shared understanding of the meaning behind the data. The process of conversation is critical for transforming data into shared insight that everyone in the organization can then use to determine next steps and make informed decisions with context.

 

 

 

While we can agree that gathering results data is important for business success, I’ve learned that it’s only the beginning. What really enables sustainable business success is the creation of the shared insight that enables informed decision-making across your organization. In a world that seems to be biased towards valuing action over thinking, conversation is often dismissed as a luxury or an impediment to progress. However, nothing could be further from the truth because discussion is often the best route to making faster, higher quality business decisions.

 

This year, why not make a commitment to giving conversation a higher priority in your business management activities?

 

Your reward will be a more engaged team that’s focusing their energy on creating new (and shared) insights that enable the decisions necessary to manage your business more pro-actively moving forward.

Saving Strategy – How to Make “Doing Strategy” Meaningful in an Age of Disruption

Did you realize that the approach to strategy that most companies (and consultants) use today was formulated in the last century?

That’s right. Back in the days when people had to talk face to face and TV was the new kid on the block. A time when if someone called you while you were out at the store they left you a message and had to wait until you got to a land line to call them back. And an era where the typical computer was big enough to fill a room at your university.

Back in those days, life and business moved at a much slower and predictable pace - so a slow moving, mechanistic and linear approach to strategy was adopted. And it seemed to do the trick for a really long while.

How different does our world look today? People around the globe are connected to each other (socially and for business) 24/7, digital technology is a part of everyone’s lives, big data isn’t a new concept anymore and AI is lurking on our horizon, and no industry is immune to disruption. Things have changed so much in just a blink of an eye and there’s every indication that things will only accelerate.

So why would we think that the old way of doing strategy would still apply in this new world? It just doesn’t make sense but, surprisingly, the old-school approach to strategy is still taught in many universities and business schools today.

It’s kind of crazy but this is where we find ourselves at this moment in time.

Many business leaders have felt the sting of applying this dated approach to strategy to their company and business reality. They’ve invested time, effort, resources, and money on a long, drawn out planning process only to realize that the strategy that came out the other end was DOA. It took so damn long to craft the strategy that a critical change in the business environment required a strategy do-over right out of the gate.

The response? After an experience like this, most business leaders would rather “wing it” when it comes to strategy than waste time trekking down the tired strategy path again. Who could blame them? More importantly - where’s the alternative?

Some consultants and darling tech companies have adopted approaches to planning and business management that work on a shorter horizon. The thinking is that since things will change anyway, why even bother planning for, let alone think about, the long term? With these approaches, “strategy” equals a collection of vague and generic directions, and quarterly goals and to do lists that hopefully get your business to the next level.

Hey – if it works for <insert the name of the latest tech star here>, why not for us?

The problem is that these new approaches to “doing strategy” appear to have been created with the belief that the best (only?) way to solve the problems with old school strategy is to focus on speed, and the short-term, while sacrificing the fundamentals required for sustained business success.

And while these new approaches may produce short-terms gains, it often (and sadly) doesn’t take long before something blindsides these companies and their business leaders find themselves wondering what exactly happened and how they got here.

Unfortunately, in these situations, many folks conclude that there was no way to have seen the big change coming. However, the fact is that, with a better strategy process in place – one that’s designed for a time of disruption – they could have been positioned to surf, or even lead, the change themselves.

So – what needs to change when it comes to “doing strategy” in this age of disruption? How can we save strategy and re-make it so that it becomes a powerful tool for sustained business results and success in a time of significant, and often unexpected, change? Here’s how:

First of all, we need to get rid of the activities in the old strategy process that prevent businesses from being fast and adaptable. Things like customer/stakeholder engagement events, the annual planning retreat, and extended budgeting and operating plan synching cycles.

Essentially, we need to move away from treating strategy as an event to making “doing strategy” an ongoing process for our organizations.

Next, strategy needs to move beyond the old-school fixation on life and conditions within our organization to include much greater emphasis on (1) keeping our finger on the pulse of our external environment (including our customers) and then (2) incorporating this information quickly and intelligently into our strategy calculations.

However, most importantly, a new approach to strategy needs to focus on what was often hidden in the traditional strategy process: the key strategic choices and business model the company is betting on to deliver success.

In fact, to do a better job in an age of disruption, “doing strategy” needs be a no nonsense process that’s focused on capturing, implementing, testing, validating, and improving (or innovating) a company’s strategic choices and its business model.

That’s it.

Here’s a one pager that gives you a closer look at the essentials of this new approach to doing strategy.

Download Express Strategy in 1 page 

This new process (let’s call it Express Strategy) is lightning fast! The initial turn through it can be done in weeks rather than months and then your business can cycle through the steps quarterly, more frequently, or whenever the need for a change is detected. The key to success is that your organization moves through the sequence continually supported by a steady stream of data, knowledge, analysis, and insights that helps you and your team change exactly what needs to change when/if it needs to change.

The outcome is this a more dynamic approach to doing strategy that gives your business greater odds of sustainable success in a rapidly changing and disruptive business environment.

 

Are you interested in learning more and/or giving Express Strategy a try? I’ll spend time in my next blog posts going over each step in this new strategy process and giving you tips you can use to adopt the express approach to “doing strategy” in our organization.

 

Tips for Getting on Top of the Initiatives and Deliverables in Your Strategic Plan

If you are like most organizations, you have a strategic plan that’s filled to the brim with tasks, initiatives, and deliverables all slated to be completed over the planning period (usually three years). I recently saw a strategic plan with the usual 5 strategic directions supported by, on average, 9 actions, initiatives, or projects each. That amounts to 45 projects total to be completed in just three years!

While I’d like to say that this is unusual, sadly, it isn’t.

I’m sure that you know what happens next. Each of these activities/initiatives becomes a line item in a huge project tracking Gantt chart. I’ve seen these documents range from 20+ projects for a small enterprise to over 60 items for a larger organization. Quite often, the majority of these projects are up and running right out of the gate even though the organization is working with a three or five year planning window.

I often wonder how they manage to keep the work of the organization going with all of these projects diverting attention and capacity. Many do it by, frankly, running their staff ragged while most simply fail to see all of the projects on their list through to completion.

The sad fact is that leaders in these organizations think that the problem is that their organization just isn’t good at managing everything that’s going on. However, the truth is that it’s just not reasonable for an organization to be able to accomplish a high number of projects AND keep the lights on. A first critical problem is the volume of projects on the “to do” list.

Now, many consultants will tell business leaders that 20+ projects is unrealistic (true) and that they need to aggressively shorten their list down to 3 – 5 projects per year (how do we know whether this will be enough to move far enough down the field over the planning period?). And while this sounds like good advice, business leaders and organizations STILL continue to struggle with massive lists of projects with similar timelines. Why?

I think that it’s because we have fallen short and haven’t provided business leaders with a solid way of deciding which projects should go on a project “short list”. In other words, business leaders need an approach for assessing and then prioritizing the projects their organization COULD undertake over the planning period.

Let’s take a look at a four step, fact-based approach that I use to help the business leaders I work with do exactly this.

 

PHASE 1: Keeping the Project List in Your Strategic Plan Manageable

 Step1: Achieve consensus on what your strategy really is

Did you realize that most strategic plans I see actually fail to complete this important first step?

Before you have a hope of being able to assess and prioritize the projects, tasks, and action steps you are considering completing over the planning period, you need to have a clear idea of:

1. The ultimate outcome your company or organization is trying to produce;
2. The critical, high value objectives you must focus on and deliver against over the long-term to produce that ultimate outcome; and
3. Where you want to be, in measurable terms, by the end of the planning period.

Readers of this blog know that my preferred tool for capturing this information is the strategy map. It’s ideally positioned to document and display your thinking on the items above. Completing step 1 allows you to clearly identify the high-value essentials that must be present and working well in your organization to achieve your desired ultimate outcome. Most importantly, this information provides you with a focused framework and criteria for project assessment and prioritization.

 

Step 2: Identify strategy-critical strengths and gaps

How well is your organization positioned today to get to where you want to be by the end of the planning period? Do you have any gaps in your current business that will prevent you for performing any of those high value objectives that support delivery of your ultimate outcome? Do you have any strategy-critical strengths that must be preserved over the planning period (and could be put at risk by focusing on closing gaps only)? Where is performance on those high value objective areas today versus where they need to be by the end of the planning period?

Ideally, you’ll leverage performance results data and facts to answer these important questions about the current state of your organization. After you’ve completed this step in the process you should have a good idea of the gaps you need to close to get to the level of performance you’d like to achieve by the end of the planning period. Step 2 concludes with using this information to create a more focused and relevant list of strength maintaining and gap closing projects that you should consider implementing.

 

PHASE 2: Using Criteria to Prioritize the Project List

 Step 3: Develop, assess, and prioritize your project options

Now it’s time to critically evaluate your project options. How will you finalize your list of possible projects and what criteria will you use to create a prioritized list? Here’s how:

Using your project list from step 2, you’ll want to assess (1) the strategic value of each proposed project, as well as (2) the size of the gap each project is designed to close. The table below outlines the different questions you can pose to complete this assessment.

Express your answer to each question as a number rating (I’ve provided a guide to each rating scale below the table). Leverage the information gathered during steps 1 and 2 to develop your rating responses.

 

Use the combined ratings for each project to determine the relative priority of each project on your list. Now, re-organize your list of project options based on their ranking. Priority 1 projects are a high priority and go to the top of the list, followed by priority 2A, 2B, and 3 projects. Projects that are not a priority should be set aside for now – since they have been deemed to have low strategic value, you should think about taking them off your “to do” list permanently.

 

Step 4: Space out your project deployment plan over the entire planning period

Now that you have your project options sorted in priority order it’s time to decide how to stage these projects over the planning period. Though there’s no hard and fast rules about how to make your scheduling choices, the relative priority ranking of your projects should make this process fact-based and easier to do.

A word to the wise: Resist the temptation to front-end load your projects in year 1!

The smart alternative is to begin in year one with your priority 1 projects – these have high strategic value AND you have a big gap to close. Many organizations decide to get started sooner than later with these gap closing efforts. If you find that you have a long list of priority 1 projects, you can do a further ranking within the priority 1 project list. Simply place projects with a higher strategic value - gap rating closer to the top of the list and get started with those projects first. Priority 2 and 3 projects can be scheduled for later in the planning period since you’ll need less time (and probably less effort and fewer resources) to close the gap.

Some organizations choose to attack a few lower priority projects in year 1 because they offer the promise of “quick wins”. This is fine. How you choose to schedule your projects over the planning period should be driven by the combination of the priority ranking and the culture and capacity of your organization.

 

At the end of this thoughtful process you should have a short list of relevant projects that are timed for completion over the planning period on a schedule that’s do-able and is endorsed by the people tasked with completing the projects.

 

I see too many organizations with too many strategic projects struggling with unrealistic project completion timelines. The root causes of this difficult problem usually include (1) an unclear definition of the high-value, “must have” elements of their strategy, and (2) a lack of a strategy-focused, evidence-based method for project selection and prioritization. Organizations that implement the four step process I’ve outlined here still have to make difficult project choices but most report that it’s far easier to make these choices because they can bring an objective set of criteria to their discussion and decision-making process.

Does your strategic plan include a huge list of projects, activities, tasks, and deliverables? Is your organization struggling to successfully manage everything you’ve committed to in your strategic plan?

If so, take a step back and use this four step approach to critically evaluate, refine and re-prioritize your strategic project list.

 

Strategy Management Should Be a Core Competency for Every Organization

Is strategy management (i.e. strategy creation, implementation, measurement, and improvement) a core competency for your organization? If not, it’s time to think about bringing this critical capability in-house.

When I talk about strategy management I mean that every organization, from a start-up to a Fortune 500 enterprise to a non-profit organization, should have their business model mapped out, and a plan for implementing, testing, and improving that business model (i.e. a strategic plan) must be in place. Making strategy management a core organizational competency means that you’ve adopted a recognizable strategy management process and have a designated person, residing inside your organization, who’s responsible for overseeing, managing, and improving your strategy management process, and its outputs and outcomes.

Before going any further I want to dispel the myth that focusing on strategy management is only for companies and organizations of a certain type and size. It’s just not true. If you are working towards producing some sort of result, outcome, or impact you have to have (1) an idea of what needs to be in place, and what you must focus on, to produce your desired result (i.e. your business model) and (2) a roadmap that’s been thoughtfully designed to get you there (i.e. your strategic plan). These are the non-negotiable keys to success for every organization (regardless of size or maturity level).

Strategy management is the process that ensures that your organization is always doing the right things and producing the desired results. Essentially - strategy management guides your organization on a path to success!

Now – “strategy management” won’t look the same in a start-up versus a global company. The start-up will probably tackle strategy using a streamlined and lean approach that’s managed by the founder while a large mature enterprise could have a department of people managing a strategy process with far more moving parts. It only makes sense.

However, the point is that both organizations must have the internal capacity to manage strategy. That is, strategy management must be a core competency for all organizations.

However, this hasn’t always been the case.

Back when the business environment was more stable than it is these days, more organizations were able to get away with doing a big strategic planning event every three years with a simple review/status update occurring on an annual basis. Implementing the strategic plan was really focused on completing the projects or tasks listed in the strategic plan. And strategy improvement wasn’t really part of the picture. Since strategic planning was an intermittent activity, it made sense for many organizations to outsource the strategy formulation part of their strategy management process to consultants while strategic plan implementation was managed just like another set of projects. Some larger organizations did have in-house strategy management people but this was usually a product of enterprise size and complexity.

This overall approach seemed to work when strategy management was a periodic, slow moving, and predictable activity. However, I see many organizations still taking this approach to strategy management today and I often wonder whether they realize just how incompatible this old style of managing strategy is with current conditions ……

You see, in today’s dynamic and changeable business environment, the nature of strategy, and strategy management, has completely changed. Disruption is everywhere and strategy isn’t about implementing a task list any more. To ensure business success and organizational sustainability, strategy management absolutely must be focused on continually testing and refining your hypothesis about what your organization does, how it needs to work to produce results, and the nature of the results and outcomes you produce, and the impacts you enable.

Strategy has become a constant cycle of testing and refining your business model leveraging feedback from both inside and outside your organization. Today, strategy management is a more complex and dynamic activity that needs constant attention because it’s a fast-paced 24/7 world.

 

This is the new world of strategy that all organizations are facing - and facing it well requires an updated approach to strategy management.

Because organizations must continually test and revise their business model and strategy, it no longer makes sense for them to routinely outsource strategy activities to external consultants – it’s just not affordable and sustainable over the long term. What organizations do need to do is bring that expertise in-house.

However, external consultants still have a role to play in an organization’s strategy process – it’s just different.

For example, consultants have a valuable contribution to make in providing expert insights and facilitating an organization through non-routine strategy-focused issues and challenges and/or in helping them explore difficult strategic choices. In today’s new world, this is the better way of using external consulting resources.

However, when it comes to core strategy management activities, organizations of all sizes must make the shift now and transform strategy management into a key business process and in-house organizational capability.

Are you ready to make strategy management a core competency for your organization? If so, here are the high-level steps you need to take to make a successful transformation:

• Secure leadership commitment for embracing and using a more dynamic strategy management process
• Educate business leaders on the key elements of a modern approach to strategy management
• Select a scalable strategy management approach that suits the organization
• Decide who your strategy management process owner will be – formalize their accountabilities
• Enroll your strategy management process owner in a skills and capability building training program that aligns with your selected strategy management approach
• Implement scalable supports and necessary resources to enable your strategy management process
• Implement and begin using your new strategy management process across your organization – communicate and engage all employees with your business model, implementation roadmap, and strategy management process
• Implement and begin using your new strategy management process across your organization – build leader and employee strategy management skills and capabilities

In my experience, every organization takes a different amount of time to make the switch and turn strategy management into an internal core competency. The first step is to commit to making the transition and then embarking on the journey to get there.

Every organization, no matter the sector or industry, must make this shift if they are going to secure their success and sustainability moving forward. I hope that you and your team will make this important commitment today.

 

Do you have questions about any of the steps I’ve outlined above?

If so, please add your comment below or drop me a line at [email protected]

 

Time is Money and What It Means When It Comes to Strategy

An old saying states that “time is money” and it still applies today. Most people take this sage advice as a reminder to be efficient in their work – that is, the longer you take to do something, the greater the amount of money you spend/waste accomplishing it. However, in these days of rapid change, “time is money” takes on another meaning. In this case, the longer you take to make a change in your organization’s direction/business model when faced with a shift or disruption in the business or operating environment, the more it will probably “cost” you in the end. The penalty for being a risk adverse tortoise rather than an agile adaptive hare these days can range from lost opportunities to revenue loss and, in the worst cases, bankruptcy.

In addition to this, I’d also include another perspective on “time is money” - one that’s focused on value, investment, and return. So, for the sake of completeness, let’s also frame “time is money” as meaning that “time invested well (i.e. on the “right” things) delivers value”.

The implication of these different perspectives is that time is actually a shape shifter. In one case, devoting time to something can be an investment while in another situation it can be a costly waste. It also means that time spent doing something may have been an investment yesterday but now, in today’s context, it isn’t.

In my experience, business activities (and the time we spend on them) undergo a change in their value when business objectives change. And business objectives often change when the “rules” of the game change.  

However, sometimes I think that those of us in the business community don’t think that these facts apply to the activities associated with strategy. We seem to keep on doing what we’ve always done without critically evaluating whether the time we spend on them is still a good investment of time and resources in the current context. And we don’t ask ourselves whether there are new things we should be doing to get the most out of our strategy creation and implementation efforts.

Since context is everything when assessing value, let’s begin by examining some fundamental changes that have occurred in the business environment, the requirements for strategy management and business success, and the objectives of strategy activities. 

	Stable Operating Environment (yesterday)	Era of Disruption (today)
Nature of the Business Environment	Predictable (economy, competition, demand, etc.), steady and slow moving, low risk	Unpredictable (the old rules don’t apply), highly competitive and risky, shifting at multiple levels internally and externally simultaneously
Successful strategy is….	Deliberate	Deliberate + Emergent
Imperatives for Success	Complete a defined set of tasks and initiatives that have been proven to deliver results in the past	Pro-active, flexible, and agile – testing new paths and changing based on real time information
Strategy Creation – Objective(s)	Mapping out a proven roadmap with to produce a desired outcome	Continuously innovating, improving, and testing the business model (to enable or defend against disruption)
Strategy Implementation/ Management – Objective(s)	Top down management and decision making. Deliberate strategy. Management and employees are focused on completing the tasks defined in the plan.	Everyone’s involved providing multiple sources of relevant data, information, insights, and feedback. Management and employees are focused on learning and adjusting course and/or the business model together. Distributed decision-making.

With this new context, and its implications, in mind, we now have a more objective frame for assessing whether the strategic processes and tools, and the time spent on them, still represent time well spent. For example, let’s take scenario planning – a tool that has been used as part of the standard strategic planning toolkit for some time. Back in the day when the business environment was stable and predictable, scenario planning was a solid investment of time, effort, and resources. However, in an environment that's full of unpredictability and lurking black swans, putting time into scenario planning just doesn’t deliver the value it once had. In this context, it’s easy to see that scenario planning is just one case where spending the time on it has gone from being a good investment to a questionable one.

Completing a critical examination also provides us with an opportunity to see when adopting, and investing time and effort in, new strategy processes and tools makes sense in the current context. Let’s consider mapping out your company’s business model. While tools such as the business model canvas and strategy maps (two examples of business model frameworks) have been around for a while, they haven’t been routinely incorporated into the strategy processes of existing enterprises (the business model canvas is routinely used by startups). It just didn’t seem to be time well spent in yesterday’s business environment, however, when strategy management and business success demands that companies put their business model at the center of everything they do, spending time working with, and on, your company’s business model suddenly becomes an extremely high value activity that simply has to be a key part of your strategy/strategy activities.

I’m sure that I could go on and I hope that you’ll add your thoughts and comments to this post. What do you think we should take out of and add to a contemporary approach to strategy?

The bottom line is that we all need to take a closer look at everything we do in relation to strategy creation, implementation, and management because time is a precious resource. We need to remove the waste and we need to make sure that the strategy activities we do spend our time on represent “time invested well” in a business environment characterized by rapid change and breathtaking disruption.

 

Are you and your team ready to create or capture and test out your company's business model? If so, consider joining us for a four week live online training series where you'll learn "must have" business model essentials AND you'll be guided step by step to create your company's business model using the strategy mapping method. Participation includes a technical review of your company's strategy map. If you are interested in participating and/or learning more please fill in the form below - next training series begins soon!

   

Simplified Not Simplistic Strategy

Let’s agree on one thing. Business is complicated. It doesn’t matter what business or sector your organization is in – there are lots of things going on inside and out that have to come together in just the right way for your organization and people to produce great results.

However, business complexity shouldn’t cause organizations and leaders to opt for a simplistic approach to strategy. What it does call for is strategy simplification. Let’s look at the difference.

Many organizations respond to the complexity challenge by either summarizing the ultimate objectives of the organization into three or four key results areas or themes (and calling that their strategy) OR including the kitchen sink in their strategic plan. If you’ve been around organizations long enough I’m sure that you’ve seen both of these scenarios in action! And even though these appear to be different problems, they have something in common - they both display a simplistic approach to strategy. One does it by providing a slim list of high level strategic results areas that’s not actionable while the other does it by providing so much information that it completely obscures the business imperatives.

In my experience, the common belief underlying both of these approaches to strategy is that employees can’t make sense of detailed information and must be shielded from the complexity of the business in their daily work and decisions. The first tactic does this by effectively limiting strategy information (which doesn’t help employees prioritize their work and decisions – something employees are increasingly pleading for these days) while the other tries to provide a fully scripted set of activities for employees to implement (an approach that grossly underutilizes the talents of a workforce and frequently misdirects its work efforts).

The truth is that, as an approach to moving an organization, and strategy, forward, simplistic strategy is riskier than business leaders may have imagined – here’s a few of the reasons why:

• Without insight into the drivers of the desired business results, employees make their own calls about what their daily priorities should be (don’t forget – employees are smart people). It’s almost guaranteed that these decisions will result in well intentioned misalignments that cause inefficiencies, mis-spending, and conflict across the organization, all of which make results achievement much harder than it has to be.

• An over-orchestrated strategy that includes prescriptive employee action and task assignments, more management controls, and restricted decision authorities squelches employee engagement and morale, and hobbles an organization’s ability to respond pro-actively and organically to change.

However, the biggest downside of taking the simplistic approach to strategy is that leadership is perceived as not being in touch with the realities of the business and employee confidence in leadership is eroded.

In contrast, a simplified strategy acknowledges that business is complicated while seeking to find the line of “best fit” through the complexity. It goes beyond defining the key results that must be delivered to be successful to also identify the SHORT LIST of objectives that must be in place (and executed well) to drive the desired business results. Rather than treating employees as unsophisticated thinkers, the simplified approach engages employees from all across the organization in identifying and continually refining the drivers of success (leveraging learning, knowledge sharing, and collaborative problem solving). And, most importantly, an effective simplified strategy provides employees with the information they need to make the work priorities, decisions, and trade-offs required every day much clearer.

Many business leaders shy away from the simplified approach to strategy due to the investment, work, and engagement effort it requires. However, that’s only part of the equation – it’s better to look at the total ROI (financial and non-financial/human impact) of any approach to strategy. In an era of complexity and flux, the ROI associated with the simplified approach to strategy continues to outperform the ROI of simplistic strategy.

I don’t expect it to change anytime soon…..

 

Strategy Cascading – What it is and How to Do It

You may have heard of this term before. In fact, you may even have seen some dialogue in BSC and strategy management forums debating whether we should shift from a “cascading” concept. So, as we usually must when it comes to strategy management concepts, let’s define what we mean by “strategy cascading”.

When I use the term, I use it to describe the process of creating organizational alignment with strategy. Basically, strategy cascading refers to ensuring that the strategy pervades the organization at all levels so that the organization, and its efforts, are fully and appropriately aligned with the strategy.

Now – you may be wondering what strategy any given part of an organization is meant to be aligned with. While the high level answer is the organization’s overall/corporate strategy, the reality is that what alignment looks like and how it works depends on where you/your team or department is located within your organization. Often it’s easier to focus your alignment activities on getting in sync with the strategic priorities and efforts of the organizational entity (department and/or manager) that sits above you on your organization’s org chart.

However, it’s worth noting that strategy cascading (and therefore organizational alignment with strategy) also refers to ensuring that resource and asset allocation, employee skills development activities, budgets, etc. appropriately support successful strategy execution. As a result, strategy cascading must involve all elements in the business or organization.

Essentially, strategy cascading is a necessary process for optimizing organizational alignment with strategy. And, as we know, strong organizational alignment with strategy is the nirvana state smart organizations work to achieve because the greater the degree of organizational alignment with strategy, the more efficient and reliable an organization can become in executing its strategy. The result of alignment is the faster achievement of desired strategic results – even when there’s a course correction in the strategy you started with.

I’ll admit that I actually don’t mind using the term strategy cascading but I completely understand why it bothers some people. The word cascading could imply a wholly one directional process when, in fact, strategy creation, when done correctly, is quite a bit more dynamic. Ideally, an organization sets the strategy for the overall organization/corporation through an interactive process that includes people and perspectives from all corners of the organization. The result is a well-informed strategy that everyone contributed to and can get behind.

However, it’s important to realize that strategy rarely gets executed at the corporate level alone. Strategy is usually put into action through the contributions of business units, departments, teams, regional offices, etc. For the groups in the org structure then, strategy cascading involves each area of the business (1) determining their part in/contribution to the realization of the company’s strategy, and (2) translating the corporate strategy, where required, into terms, objectives, and activities that reflect and enable the business area to make that contribution.

Depending on where a business area resides in the organization, the nature of their contribution to, and impact on, the realization of the corporate strategy can be different. That is, in some cases, the contribution can be very direct while in others, the contribution is more indirect in nature. Sometimes, the contribution is mixed (often the case for HR that has accountabilities for implementing corporate strategy AND supporting a business unit’s people objectives). As a general rule of thumb, the closer a business area is to the top in the org chart, the more direct the contribution. When the contribution to the overall corporate strategy is direct in nature, it makes sense for the supporting business unit to align with/determine their contribution to the corporate strategy. However, when a business unit sits several levels away from the top on the org structure, their contribution to the corporate strategy is often realized through their contribution to their parent business area. 

However, proximity to the corporate strategy is just one of many considerations when determining the way you actually “do” strategy cascading within your organization.

In my experience, there are essentially two mechanisms for strategy cascading available to an organization, however, both begin with the strategy map. One method for strategy cascading is through the strategy map (and associated Balanced Scorecard) while the other can be achieved predominately through the Balanced Scorecard alone.

Let’s take a look at each of these approaches.

 

Strategy Cascading via the Scorecard

Can your business unit essentially adopt the corporate (or top level) strategy map without making changes to the strategic objectives AND their definitions? When this is the case, it naturally follows that the Balanced Scorecard indicators associated with the corporate strategy will apply to the business unit as well (same strategic objectives = same indicators). In this scenario, the business unit wants to be able to see their performance results for these indicators in addition to the corporate results.

Often, in these cases, the corporate results for any given indicator are simply a roll up of the results achieved by each of the contributing business units. What you need to do is determine which business units can adopt the corporate strategic objectives “as is” and contribute to the results roll up (e.g. Revenue (overall company) = Revenue (BU1) + Revenue (BU2) + Revenue (BU3)) – these business units are members of a scorecard’s/ indicator’s “breakdown structure”.

In my experience, business units can usually adopt the corporate strategic objectives in “as is” form when they are mini-me’s (mirror images) of the corporation in their purpose and strategy to achieve it (Kaplan and Norton refer to this as a Franchise scenario). For example, when I was in the group insurance business we were organized into customer-based business units and each business unit simply executed the strategy (strategic objectives and strategic imperatives) depicted on the corporate strategy map with their target customer group. This meant that all of the indicators on the scorecard were relevant to the corporation AND each business unit – we just needed to be able to show each business unit their slice of performance on each BSC indicator (i.e. that business unit’s Balanced Scorecard).

Taking this approach to strategy cascading allows you to work with one strategy map and scorecard to cascade strategy and provide meaningful performance feedback to participating business units. Having the luxury of this approach to strategy cascading can make strategy management much easier to administer.

 

Strategy Cascading via the Strategy Map (and Balanced Scorecard)

Does your business unit contribute to some but not all strategic objectives on the corporate strategy map? For the ones that you do contribute to, would it make the strategy more relatable and relevant to change them a bit (i.e. strategic objective names AND/OR their definitions) to better capture the uniqueness of your contribution? And, would your strategy map be incomplete if it didn’t include some additional, functionally specific strategic objectives?

When this is the case, it makes sense to leverage the strategy map of the closest organizational group to the business unit in question (i.e. its “parent”) and then edit it as necessary to create a new but related strategy map. The beauty of this approach is that modifying the parent strategy map helps ensure appropriate alignment while also capturing important unique strategic objective essentials on the business unit’s individual strategy map.  

New, “custom” strategic objectives on a strategy map usually require indicators that are different from the ones used by the parent business area on the business unit Balanced Scorecard. While some indicators may be common between the two scorecards, strategy cascading via the strategy map usually produces a unique indicator set that applies just to the business unit in question.

I don’t need to tell you that taking this approach to strategy cascading has the potential to produce numerous strategy maps, scorecards, and indicators. Organizations taking this approach to strategy cascading should consider using a strategy management application to help make administration easier and more efficient.    

 

In my experience, having these two approaches to strategy cascading available provides organizations with the means to walk the line between maximizing organizational alignment while minimizing the risk of unnecessary strategy map and scorecard proliferation. And while working towards this goal allows organizations to optimize strategy management outcomes without undue administrative burden, it’s important to focus on what’s most important – ensuring that the strategy cascading approach used by your organization produces a set of strategic objectives/strategy map that is relevant and meaningful to each individual business unit and their contribution to strategy and business success.

 

If you follow the guidelines and questions I have offered here, you should be able to make good strategy cascading choices. However, remember that there are always unique situations and exceptions to the rule. And don’t be surprised to discover that a mixed/hybrid approach to strategy cascading might offer the right balance for your organization.

 

My advice? When in doubt, use the strategy cascading approach that makes the most sense at the time – you can always change your approach if necessary as your organization learns and matures on its strategy management journey!

 

What Drives Strategy Mastery?

In my last blog post I introduced the most essential ingredient for strategy execution success: Strategy Mastery^TM.   Here’s a quick reminder of what Strategy Mastery^TM is and what it looks like in action:

Strategy Mastery^TM

Every employee in your organization must be a Strategy Master. That is, they need to know what your strategy story is and they must be confident in (1) that knowledge (i.e. that they have the strategy story right) and (2) their contribution to the strategy. Strategy Mastery^TM is important because it drives self-motivated engagement and confident employee action, decision-making, and contribution to strategy improvement, greater organizational alignment, and more integrated business performance. All of which are essential for strategy execution success.

 

Creating employees who are Strategy Masters requires significant organizational investment. Organizations that succeed create the right environment and culture and put the right supports in place to develop and nurture a cadre of Strategy Masters across their company.

Let’s take a closer look at how these elements work to enable Strategy Mastery^TM.  

 

 

Strategy Mastery^TM  is built on a foundation that successfully combines three critical components: (1) a Learning Culture, (2) a “Doing” Environment, and (3) Coaching and Mentorship.

1 A Learning Culture: Akey core value of every organization that is successful in creating Strategy Masters is learning. A focus on learning enables an organization and its employees to take necessary action and risks, and to use knowledge to navigate more dynamically and successfully through these turbulent times. Enabling the value of learning is a commitment to openness and transparency across the entire organization. These important co-requisites open the door for learning by setting the stage for the safe two-way exchange of knowledge, insights, and best practices. When leveraged in a “doing” environment, learning accelerates the pace of strategy execution and results achievement for an organization.   

2 A “Doing” Environment: Strategy Mastery^TM requires a work environment that displays a bias for deliberate action. However, this doesn’t mean that thinking goes out the window. What it does mean is that thinking progresses rapidly to decisions which are followed by action. A “doing” environment is also pro-active in nature, taking action on what it takes to move the strategy, and the organization, forward as planned.

However, setting an expectation for an action orientation across an organization isn’t enough – it’s got to be backed up by organizational commitment to providing customized and appropriate support to individual employees AND a dedication on the part of leadership to providing the learning opportunities and feedback employees need to fine-tune and/or re-focus their actions and efforts (individually and as part of the organization).  

3 Coaching and Mentorship: Developing employees into Strategy Masters must be tackled both at the organizational level and by Managers and Supervisors working one on one with employees. Set in a culture that values a collaborative leadership approach that’s focused on engaging employees in the co-development and execution of organizational strategy, Managers spend time sharing the vision for Strategy Mastery^TM with employees and providing them with opportunities to practice Strategy Mastery^TM every day. By acting as coaches and mentors to their employees, Managers and Supervisors help all employees develop into Strategy Masters through a “learn by doing” approach. Taking this approach also allows everyone to benefit from the insights employees generate and share as they practice the craft of Strategy Mastery^TM.     

 

With this foundation in place, an organization has the positive environment in place that’s required to enable employees to translate knowledge of the organization’s strategy into action. However, this transformation doesn’t happen by magic – it requires two critical elements: (1) accurate and useable strategic knowledge, and (2) the development of the individual skills and capabilities required to take that knowledge and put it into action.

1 Knowledge Transfer and Translation: Once an organization’s high level strategy has been transformed into Functional Strategy, it’s time to take the next step: doing whatever it takes to make sure that the organization’s strategy is alive and active in the hearts and minds of every employee. This is often done through strategy communication town halls and other communication venues that usually share strategy from the organizational perspective. While this is a necessary first step, organizations seeking to create Strategy Masters must go further. Managers and Supervisors must repeat the strategy story and then engage employees in discovering and understanding the following:

● What our strategy is, what it looks like in action, and my part in it.

● How our team, and me as an individual, contribute to it every day.

● How I think I can contribute (expressed in my own words) and, as I understand our strategy better and practice working with it, how I KNOW I can contribute.

As employees talk about and develop a clear line of sight on these important topics, knowledge transfer and translation is taking place across the organization. Progress is made when employees understand organizational strategy AND can see themselves putting it into action in a meaningful way.

2 Individual Skills and Capabilities Building: While seeing oneself putting strategy into action is a necessary step in the journey to Strategy Mastery^TM, there’s often an execution gap. While employees are willing they may not be able. It’s not that they don’t want to take action, it’s that they may need new or more highly developed skills to do it. As a result, an important part of successfully translating knowledge of the organization’s strategy into action involves helping individual employees build the skills, capabilities, and confidence they need to make their contribution AND achieve their personal potential. It turns out that having many opportunities to apply and practice putting knowledge into action goes a long way to building employees’ confidence in their knowledge and abilities. Knowledge confidence stokes more confident action and decision-making – a key attribute of Strategy Mastery^TM that ultimately accelerates strategy execution success.

The good news is that traditional training programs aren’t the only way to achieve this goal. Coaching, mentoring, job shadowing, special project assignments, and job rotations are all excellent ways to help employees acquire the skills and capabilities they want and need.

 

When individual employees are able to effectively translate knowledge of their organization’s strategy into action they are well on the road to becoming Strategy Masters. However, there’s one additional ingredient that’s required to make the leap to Strategy Mastery^TM status: Individualization and Internalization. Composed of two elements (1) individual motivation – organizational motivation alignment and (2) strategy ownership and intrinsic accountability, individualization and internalization deepens an employee’s understanding of, and impact on, the organization’s strategy execution efforts, and the strategy itself.

1 Individual Motivation – Organizational Motivation Alignment: Quite simply, the greater the alignment between an individual’s beliefs, values, purpose, goals, and motivations and those of the organization, the greater the degree of synergy. Why this focus on synergy? Synergy is the key to creating employee investment in an organization. And employee investment that’s deep and personal is the critical ingredient in achieving Strategy Mastery^TM (and its benefits). 

To maximize synergy, organizations should pay attention to the employee-organization fit during the hiring process. “Hiring for fit” involves assessing the resonance between an individual’s beliefs, etc. and those of the organization. Hiring people who fit makes synergy a more natural outcome. However, the opportunities don’t stop there. The investments organizations make in the ongoing development of employees is important and the greater the degree of alignment between the development of the job skills and capabilities required to serve company needs and objectives, and the personal goals and objectives of individual employees, the deeper the synergy that’s created.

2 Strategy Ownership and Intrinsic Accountability: This is the final link between putting knowledge of the strategy into action and achieving Strategy Mastery^TM. Strategy ownership, and the development of intrinsic motivation and accountability for successful strategy execution, occurs when employees see themselves as co-owners of the organization’s strategy, experiencing a state of personal ownership for, and investment in, the achievement of the organization’s mission. When strategy ownership is truly felt, employees take personal, internally driven accountability for doing their part in, and discovering new ways of, putting organizational strategy into action.

When employees are invested this deeply, the organization’s success and their personal success are virtually one in the same, making every employee’s commitment to ensuring successful strategy execution personal and driven genuinely from the inside.

While it’s true that employees can be motivated extrinsically with rewards to translate knowledge of the organization’s strategy into action, the level of strategy execution success an organization achieves will be sub-optimal (AND it will take a lot of effort to achieve this result). In contrast, by just stretching a little further to nurture Strategy Mastery^TM  in every employee, organizations can harness the creativity and drive of everyone to achieve greater levels of strategy execution success than they ever could have envisioned.

 

Going back to thinking about the strategy execution model presented in my last blog post, here’s a picture that shows how the other elements in the model enable Strategy Mastery^TM to drive strategy execution success:

 

While much of what goes into producing Strategy Mastery^TM  isn’t “rocket science” it’s important to lay out all of the contributing drivers in one view and discuss how they work together to produce the organizational element that is most critical to ensuring strategy execution success - Strategy Mastery^TM. Until you put all the drivers together on one page, it’s easy to forget that (1) they must all be in place, and (2) must work together cohesively if you hope to create an organization full of Strategy Masters.

The biggest barriers in the journey to Strategy Mastery^TM success include the fact that it takes: a cross-functional view of organizational activities, a commitment to work together in all corners of the organization, and an investment in supporting the elements that produce Strategy Mastery^TM results.

There’s a lot to do and most organizations struggle to get all of the required drivers in place working just right.

 

So where should you and your organization start on this journey to strategy execution success through Strategy Mastery^TM? In my next blog post I’ll offer you a prioritized roadmap for putting this plan for strategy execution success to work in your organization.