So, What is a Strategy Anyway?

I was a guest lecturer at the capstone course in an MBA program. The title of the course was, "Strategic Planning." It was near the end of the semester and the students were on the verge of graduation. I began the class by asking, "So, what is a strategy anyway?" My query was greeted by approximately twenty blank stares. I repeated the question; again, silence.
Finally, one brave soul raised her hand and said, "Porter Five Forces Model." Not wanting to discourage the class, I said, "Good" and wrote the name of the model on the board. Encouraged, another student chimed in, "BCG Growth Share Matrix."

Again, I wrote this on the board. Over the next two or three minutes another half dozen analytic tools made their way onto the board. Then I asked, "If I completed all of these analyses for my company, would I have a strategy?" A gentleman sitting in the front row responded sheepishly, "I don't think so, because you still wouldn't have a plan." Right! At its core, a strategy is nothing more than a plan to achieve your business goals.

Of course this definition of a strategy assumes that a company has established its business goals. All too often, that's not the case. Companies go into business to sell widgets, and sell widgets they do. But, senior managers often get so busy working in the business that they don't get around to working on the business. It's been said that America is the land of opportunity, and in the land of opportunity people can have anything they want. The trouble is that most Americans don't know what they want; because they have never taken the time to thoughtfully write down their goals. So, the first key to an effective strategy is to make the time to think through your goals and write them down.
Once the goals are written down, an actionable plan must be put into place to achieve the goals. We worked with one company whose CEO turned around and removed something from his drawer. With reverence, he presented it as though it were the original of the Gettysburg Address. As he handed it to me he said, "Read this, it's our strategy!" That evening I studied the document carefully. It contained a plethora of insightful analysis regarding the market, competitors, products, etc. It even spelled out the company's goals. Unfortunately, it did not contain so much as one word about who was going to do what, by when to achieve the goals. While perhaps brilliant analysis, this was decidedly not a strategy. A strategy requires a detailed plan to achieve the goals. Further, the plan needs to indicate not only what is going to be done, but which senior manager is responsible for each major task and by when it will be completed.

Further, for optimal results, the responsibilities of each senior manager must be cascaded throughout their respective organizations so that the goals of everyone in the company are aligned both with the company strategy and with each other. Suppose the president of a company declared to his senior management team, "Our goal is to increase profits by 30 percent this year, and it is up to each of you to implement plans to achieve this goal!" With this direction the VP of Manufacturing surveyed his plant and decided that the old equipment they were using resulted in significant inefficiency. Therefore, he would replace all of the old equipment with state of the art machines. This would result in increased productivity, reduced costs and therefore increased profits. The VP of Human Resources observed that many employees didn't know how to properly use the old machines on which they worked. Therefore, he decided to hire an outside training firm to retrain every manufacturing employee on how to most effectively use the existing equipment. This, he reasoned, would increase productivity, reduce costs and therefore increase profits. The CFO decided that she would eliminate all non-essential spending to drive costs down and increase profits. Obviously, this company is doomed to fail. While the plans of the three senior managers are certainly aligned with the company goal of increasing profits, they are most certainly not aligned with each other.

Once the goals of every member of the organization are aligned with the company's goals and with each other it is important to ensure that the human systems (e.g., performance management system, compensation system, hiring system, etc.) reinforce the achievement of these goals. For example, let's assume that one of the company's goals is to increase quality. It turns out that quality can be increase dramatically, but doing so will reduce productivity by 10 percent. Economically, this is a very good trade-off for the company. However, if production workers are paid a bonus based on productivity without consideration for quality, it is unlikely that they will be willing to reduce their output in favor of reduced errors. It is decidedly unfair to expect an employee to do something that is in the company's best interest, but that will reduce their income. A company's human systems must be aligned with and reinforce its goals.
In summary, a successful strategy requires:

• A set of well thought out goals for the organization
• A clear plan to achieve those goals
• Each step in the plan must have a deadline for delivery and a single senior manager who is accountable
• The goals of each senior manager must be cascaded down throughout their respective organizations so the goals of every employee are aligned with the strategy and with each other.
• The company's human systems must work in concert with these goals

Successful execution of a coherent strategy requires achieving top to bottom alignment around a clear set of organizational goals. That takes a lot of work. But, experience shows that the results are well worth the effort and the cost of failure can be substantial.

 

Written by Whitestone Partners

Benjamin Franklin’s 13 virtues, and how he went about attaining them

1. TEMPERANCE. Eat not to dullness; drink not to elevation.

2. SILENCE. Speak not but what may benefit others or yourself; avoid trifling conversation.

3. ORDER. Let all your things have their places; let each part of your business have its time.

4. RESOLUTION. Resolve to perform what you ought; perform without fail what you resolve.

5. FRUGALITY. Make no expense but to do good to others or yourself; i.e., waste nothing.

6. INDUSTRY. Lose no time; be always employ’d in something useful; cut off all unnecessary actions.

7. SINCERITY. Use no hurtful deceit; think innocently and justly, and, if you speak, speak accordingly.

8. JUSTICE. Wrong none by doing injuries, or omitting the benefits that are your duty.

9. MODERATION. Avoid extreams; forbear resenting injuries so much as you think they deserve.

10. CLEANLINESS. Tolerate no uncleanliness in body, cloaths, or habitation.

11. TRANQUILLITY. Be not disturbed at trifles, or at accidents common or unavoidable.

12. CHASTITY. Rarely use venery but for health or offspring, never to dulness, weakness, or the injury of your own or another’s peace or reputation.

13. HUMILITY. Imitate Jesus and Socrates.

10 Calls to Action for Open Leadership

Don’t just strategize for change

All businesses need to change. This is as true of a small, fast-paced creative business as it is of a global corporate behemoth. The problem is, despite the considerable money thrown at them and the legions of paper theories written about them, most change programs fail.

Strategy is, in fact, the easy bit. Paying for it hurts, but the pain passes. Doing it gets very hard indeed. You need to be prepared for the long road ahead. Only a dramatic shift in culture can yield the best results.

Do it now

Let’s face it, the ideal moment to change your business--when you’ve got a clear diary, all your clients are happy and there are no major projects in the pipeline--will never present itself. So stop waiting for the right time, just get on with it.

Pick the right team

The operative word here is team. You need to put together a genuine and focused group at the top of the business to make change happen. A team who invests effort in collective success and effort in making the team itself work effectively.

Do as I do, not as I say

Fundamentally, culture is the behavior of management. Too often, people accept change needs to happen, but believe it’s someone else that needs to behave differently to make it a reality. What you do as a manager, not what you say, is what really counts. Only your actions and leading by example will bring about a change in the way your whole organization behaves.

Engage, don’t mandate

The biggest barrier to change is mobilizing and energizing your workforce, which is likely to be highly skeptical. Your people need to be invited to shape the future of the business, not manipulated to satisfy the needs of management.

At Grey London we invited everyone to a series of day-long workshops to engage staff in developing our new vision and values. The management team didn’t define Open, the talent did. In an Open culture, the role of management is to create a culture that allows every individual to be the best they can be and then focus on removing obstacles and barriers that obstruct this ambition (of which inevitably there are many).

Break habits and make change visible

Culture is like concrete, which over time sets into a certain mold. An effective change program therefore needs a degree of physicality. Too much so-called change stays on PowerPoint. To really shake things up, you’ve got to take a sledgehammer to that concrete, but be mindful that, in time, the new way of doing things will also become too entrenched. You need to keep smashing and resetting to keep your culture vibrant and your business energized.

Fundamental to the success of Open is the breaking of barriers, physical or otherwise. So the first big step is tearing down walls: no offices (for anybody) and nobody sitting in departments. Then change your processes to involve all stakeholders throughout a project so everyone not only understands the problem, but takes pride and ownership in delivering the best answer.

Not all change has to be this radical, however. You can achieve a large amount by seemingly symbolic acts. Seen by everyone and felt immediately, symbolic acts can have disproportionate influence.

Management as mentors

Open turns the traditional organizational hierarchy upside down, recasting management as mentors. Ultimately, its success lies in the emphasis on the power of the individual and their teams to do the right thing, their way. It allows ambitious entrepreneurs to thrive and be the best they can be.

If you sit in an organization where the seventh floor doesn’t know what the first floor thinks, you can’t change a company’s culture. To combat this kind of malaise, you need to change people’s emotional contract with the organization--we went as far as giving junior executives a place on the board through the creation of "Open Chairs."

You also need tangible demonstrations of trust and devolution of responsibility. For Grey London, the most totemic act was the removal of "sign-offs." For us, sign-offs became a short hand for everything that we believed was wrong about traditional agency ways of working. Sign-offs are about control, but unfortunately, also disempower and imply that only the creative director’s point of view matters. This leads to a slow, dependent culture, frustrated clients and, most importantly of all, less good work.

Open belongs to everyone. It involves everyone. Even clients. Ideas can come from anywhere and anyone, so allow people to adapt the approach as they see fit and launch their own initiatives to promote a culture of collaboration. You’ll find leaders emerge at all levels.

Recognize that change is lumpy

Set ambitious metrics for success and be transparent about what they are. Encourage open and honest feedback and share all the results with everyone. Open is about decisions, action and continuous change. Coupled with ambitious targets and full disclosure on progress, comes the very real possibility of failure. If you’ve fully embraced Open, you will make the wrong decisions from time to time, but as long as you continue to act and make more good decisions than bad ones, your business will move forward fast. Remember, change isn’t linear--it’s lumpy.

At Grey London, implementing a "70% right" approach has served us very well. As General Schwarzkopf once said, “If you’ve waited until you’re more than 70% certain, then you’ve waited too long.”

Don’t stop

Too often, change consists of one-off initiatives that are forgotten by employees and abandoned by management. You need to nurture continual change and ongoing collaboration through workshops, training, social events and company-wide challenges.

We lie awake at night worrying "what next?" rather than, "did that work?"

The stakeholder journey

Identify your stakeholders and make sure they see the result of your change program--not just being different, but being better. Not better in the abstract or in a corporate sense, but better for them as individuals.

This applies to all stakeholders and you need to be able to articulate exactly how. From the personal association with a winning team, the potential career development if you’re the client who commissions a breakthrough piece of creative, the rewards that come with working for a successful company, and yes, even just coming to a nice place to work.