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Strategy: why bother? (and what is it?)

Strategy: why bother? (and what is it?)

In the good old days, organisational direction could largely be set and managed by budgets and forecasts, as the competitive environment was relatively stable. However, today’s environment is significantly more complex

In the good old days, organisational direction could largely be set and managed by budgets and forecasts, as the competitive environment was relatively stable. However, today’s environment is significantly more complex — increased globalisation, intense competition, shorter and shorter product life cycles, greater customer expectations, and to cap it all … employees are no longer allowed to be flogged! Given this complexity, it’s worth considering how your organisation defines strategy, and in particular what environment you perceive your organisation operates in. Are you still viewing strategy as it was in the good old days? Let’s find out … Quick — grab a scrap of paper. Write down your definition of strategy. Now find five people in your organisation and ask them for their definition. Does your definition match theirs? (Note: if you actually do this quick exercise rather than just reading it, you may surprise yourself with the results). You probably have a whole host of ideas that include words and phrases like “long-term”, “future goals”, “use of resources”, “achieving outcomes”. And we’re willing to bet our entire collection of rare Tibetan three-humped camels that you have at least three distinct definitions (probably four or five). Which isn’t surprising; given that every individual in your organisation has a unique history that has shaped how they perceive where your organisation has come from and where they think it’s going. Welcome to problem No. 1

There is no agreed definition of what strategy actually is. Put bluntly, we have found that strategy terminology in most organisations is as fluid as drinks on a Friday, but nowhere near as transparent or collectively understood. Our experience tells us that there are two basic views of strategy:1. The prescriptive view.2. The holistic view.The prescriptive view is characterised by MOST: Mission Objectives Strategy Tactics. It is largely authoritarian and top-down in its delivery. It is usually a once-a-year activity that attempts to set the direction of the organisation. In the main, not a lot of effort is given to “how” issues. In organisations that adopt this view, strategy is (usually) firmly in the domain of the senior executive team. Strategy is usually seen as the utilisation of resources for the attainment of long-term goals. Note the lack of connection to the business environment and any reactive capability.The holistic view looks upon strategy as a continuous process. By its very nature it is dynamic and can be characterised by the accountability for decision-making, clear terminology and a strong integrated framework (financial, customer, process management and development and people). It is a simultaneous top-down and bottom-up process that includes employee input and addresses both strategy development (what is to be achieved) and strategy implementation (how it will be achieved). We identify most with the holistic view, and a definition we use to describe strategy that supports this view is: “Strategy is an ongoing process (dynamic) that defines what you want, and how you’re going to get it.” It is the ongoing nature of the strategy process that keeps successful organisations permanently in touch with what’s happening in their environments. Employee input at all levels is the secret ingredient in this approach, through cascading strategy to every level in the organisation and ensuring all managers have a framework for strategic communication and action. And just to clarify what we mean, we are not talking about staff suggestion boxes here. Okay, so that’s a quick description of what strategy is. But is it worth it? We recently posed this question to a few academic friends, and a number of them quoted articles that indicated that organisations that employ strategy outperform those that don’t. In addition to the academic view, we sincerely believe that strategy is hugely important to organisations. After all the impressive EVA calculations, detailed customer value propositions and cutting-edge e-commerce initiatives, we boil the benefits of strategy down to three simple points … 1. Staff alignment and motivation. In today’s business environment the key source of competitive differentiation in most organisations walks out of the door every evening. Good people are difficult to find, and even harder to keep hold of. Engaging key staff in your organisation’s strategic dialogue, irrespective of their role, is a major source of job satisfaction. 2. Stakeholder intimacy. Your stakeholders (customers, partners, suppliers, regulatory bodies and even competitors) are the link between your organisation and its environment. Understanding and responding to the concerns and actions of these groups is critical to long-term success. 3. Smarter profits. With good strategic analysis, organisations can regularly identify and quickly act upon the best business opportunities. A good strategic framework also ensures that assets are efficiently deployed and projects and initiatives are managed effectively. In a nutshell, more revenue and less cost. David Linstrom is a strategy consultant and head of Practical Strategy. More about his business can be found at www.practicalstrategy.net. You can reach Linstrom at david.linstrom@practicalstrategy.net or Ph: 0-9-443 3520, 021 675 755.

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