Business strategy traditionally has been created by senior executives and handed down like tablets of the law. The ubiquitous five-year plan worked fine, mostly, when the pace of change was slower, when it was easier for companies to spot competition coming, and when disruption wasn’t really a thing.
That doesn’t cut it today.
Not only is change a constant, but the buzz in business is continuous transformation. If strategy used to be a map where ‘X’ marked the spot, now it needs to be like Waze, recalculating along the way to route around problems. Markets change, competitors pop up, new technologies emerge almost daily, and strategy needs to account for it all. Quickly.
Lack of a well-defined and well-communicated strategy is among the most common reasons for failed digital or other business transformations. The upshot is inconsistent leadership, conflicting goals and initiatives, resistance to change, and lack of resources available to deliver on change and make it stick.
In an MIT Sloan School of Management survey of 11,000 senior managers, only about a third could correctly name the top three CEO-identified corporate priorities. And a Harvard Business School study found that 95% of a company’s employees don’t know or don’t understand its strategy.
It’s no wonder, then, that surveys consistently peg the rate of success for business transformations at less than 30%. A new Boston Consulting Group survey is just the latest to say that some 70% of digital transformations failed to deliver fully, and that clear goals and business outcomes are key drivers of success.
There are many frameworks for strategic planning, but they’re typically variations on a theme: a cycle of discovery, definition, action planning, and execution. It should be an iterative exercise, akin to agile software development, and revisited regularly to assess and course correct as needed.
So why is strategy MIA? The short-termism of quarter-to-quarter business reaction makes it hard to focus on long-term – even annual – goals. Some companies see strategy as a roadblock. Others think it’s only for big companies. Smaller companies think they know enough about their business and marketplace without planning.
It’s also common for companies to think they’ve got a strategy when what they really have is a goal (increase revenue by 50%) or a set of actions (implement a new CRM, or cut staff to improve the bottom line).
Simply put, strategy is a company’s formula for winning. It captures why we choose the customers we’ll serve, the products and services we offer, the value those provide, and why we’re a better choice than competitors. It also recognizes what we choose NOT to do, the things that could distract attention and resources.
As I mentioned, strategy starts with discovery – a deep dive into your business and environment. Since you can’t effectively change what you don’t understand, discovery is crucial.
Check in with your mission, vision, and values. Strategy must be grounded in why the organization exists and in what it believes, the stories it tells about itself. A mobile infrastructure company I worked with wanted to leverage industry experience to launch a mobile marketing service – but didn’t have the entrepreneurial culture or necessary skills to pull it off. Some people find mission and vision too “squishy,” but if strategy is the road map, they help make sure you’ve got it right-side-up.
Dig into data: sales, production, financial, etc. One of my clients with separate local and national sales teams, discovered how much effort was going toward thousands of low-value customers; a unified sales organization for better resource allocation company-wide, coupled with a self-service model for the low-value accounts, could free sales reps to focus on expanding high-potential customers.
Don’t limit it to “hard” data. It’s amazing what you can learn through conversations. In addition to senior executives, interview line managers, front-line employees, customers, and companies with which you do business. What about our company are you proudest of? What works well? What could be better? What do you see competitors doing? If the goal is to serve customers better (which of course it should be), learning more about their needs and how they work with you is invaluable.
Make it more than a top-down effort. Agility requires a free flow of information and empowerment of employees closest to the customers, products, and the marketplace. Along with senior execs, involve line managers and front-end employees. In some “whole system” approaches, customers and business partners were also involved, yielding an amazing amount of valuable insight. Including employees across the company also improves execution because they will be more invested in the success of plans they helped develop.
SWOT analysis can be a minefield. It’s easy to get hung up on weaknesses and threats. Weaknesses aren’t necessarily flaws; they can point out opportunities NOT to pursue. (I can’t slam dunk a basketball, so trying to play professionally would be a bad strategy for me.) Threats don’t mean you’re doomed; they’re obstacles to navigate. Strengths should be the positive foundation of a strategy.
Armed with all that information, start asking questions that will lead to strategy, including (but not limited to):
- Who are our ideal customers? What problem are we solving for them?
- Why are we uniquely qualified to earn their business vs. our competitors?
- What specific capabilities will we need to develop in order for the plan to succeed?
- What in the organization needs to change to support the strategy?
- What are the top two or three things that have to go right for this strategy to work?
- What could go wrong and how might we overcome it?
- If we pursue this strategy, what are we deciding not to do?
- What does success look like, and how will we know if we’re going in the right direction?
- How can we test our assumptions and pilot the concept?
Be as specific as possible and avoid jargon, corporate speak or other fuzzy language. “Leveraging our world-class operating capabilities” isn’t actionable; what specifically is it about those capabilities that make a difference and how do they translate into success?
Finally, communicate the strategy broadly to your organization. It will affect everyone, so it’s vital that they understand your new focus and direction, and how it will inform their own work. As you move from defining a strategy into planning and execution, if 95% of employees don’t know where you’re going, there’s a 100% chance you’ll end up someplace else.