Sunday, March 9, 2014

What is Strategy, Really?

Strategy, like leadership, is one of those business terms that in recent years has been diluted by a sudden deluge of wannabe strategy experts who are giving those that really understand strategy a bad name. The Internet and social media help spread this misinformation, to the extent that business executives are beginning to forget what strategy is really all about.
It’s worth remembering that when done properly strategy development is a process, with inputs and outputs. It’s not something that can be done in a day or two as many of the wannabe’s would like you to believe. Done properly strategy is a continuous process with a regular review and feedback ‘mechanism’ that ensures today’s organisations are dynamically looking at their business environment from a ‘true’ strategic perspective.
The inputs include the information and data used to develop the future strategy and the outputs include the implementation plan for achieving the desired strategy and the actual implementation itself which turns the ‘plan’ into reality.
Without spending time ensuring the integrity of the inputs, the strategy process becomes so full of potential errors it is really meaningless – and without the successful implementation of the strategic ‘plan’ the process is nothing more than a group exercise in ‘visioning’.
When strategies fail, they fail for various reasons at each of the three stages - input, process and output. These reasons include;
At the input stage:
  • The  integrity  and  validity  of  the  inputs,  including information, data and assumptions used to analyse and formulate the strategy;
  • The scope and comprehensiveness of the inputs, including information and data gathering. Too narrow and  opportunities  and  threats  can  be  missed  and too wide and time and effort is wasted on irrelevant information;
  • Not involving the whole organisation.

At the process stage:
  • The honesty around the interpretation and analysis of the data gathered. If organisations don’t accurately identify their ‘real’ strengths and weaknesses their optimal strategy may be compromised;
  • The ability to accurately benchmark themselves in their business environment;
  • Allocating too little time to the task;
  • Not involving the whole organisation;
At the output stage:
  • That implementation is often considered a strategic afterthought;
  • Poor   post   strategy   communication,   poor   action/ implementation planning and not involving the whole organisation;
  • The strategy is implemented through a culture of compliance, rather than through a culture of ownership;
  • Not linking the strategy to the management control mechanisms;
  • Lack of follow-up and review, forgetting that a strategy is developed in a dynamic environment, where in some industry sectors ‘key factors’ are changing on a very short-term basis;
  • Failure to review the strategy and respond to changes in the market (where executives follow the original strategy regardless of changes in the market).
Strategic analysis, therefore, is a business skill in its own right as the organisation isn’t just trying to look at whether things look good or bad (attractive or unattractive), but are also developing a detailed picture of the industry sector in which they operate; and identifying and assessing the core drivers impacting the industry and their own potential in respect of short and medium-term profitability and/or growth.
An organisation that understands and embraces strategy in the true sense of the word usually has a very positive and exciting corporate culture where, as a visitor to their organisation, you can actually feel the positive energy that the workforce exude in their quest to implement the current strategy and optimise their business objectives. It’s hard to explain in words if you haven’t experienced it – but employees seem to have an ‘energy’ about them as they walk around the building, smiling and greeting ‘visitors’ and where the conversations you overhear at reception and elsewhere are of a positive nature – not similar to other less focused organisations, where you often hear employees moaning and groaning at reception, while ‘letting off steam’.
A strategic process done properly really does add tangible short and long-term value to any sized business within any industry sector – but it does have to be done properly. There will always be people trying to make a quick ‘buck’ selling ‘strategic solutions’ – but before you ‘buy’ these solutions just check the ‘offer’ against a logical check list;
  • You have to collect the right data, upfront, about your business environment before you can develop a strategic plan. Where that data will not just be internal relating to things like cash flow; product and/or service mix; talent; research and development; systems information; capital projects and pricing; but will also relate to existing and potential customer information (and specific target markets) and competitor information;
  • The data must have integrity – otherwise you’ll already have errors upfront, which means what comes out of the strategic process will be flawed;
  • The process itself takes time and should involve the whole organisation. You need to analyse the data with integrity and be ‘open’ about what are ‘facts’ and what are ‘assumptions’ in the process. Tools like a SWOT add real value and focus to the strategic planning process;
  • Identify different strategic options for the short, medium and long-term as defined by your business sector; then accurately assess these options against your strengths and weaknesses; the threats you face and other key information like cash-flow and liquidity if appropriate;
  • Develop a detailed implementation plan – as even at this late stage, the implementation plan forces the organisation to consider resource issues that can impact the timing of the implementation process in different area across the business;
  • Ensure the organisation, at all levels, fully ‘understands’ the chosen strategy and how, through what they do on a daily basis, they contribute to achieving the strategic objective. Implementation carried out from a position of compliance is at worst doomed to failure, and at best will never optimise the full potential from the strategy and will cause internal conflict;
  • And finally, strategy is actually fun – so besides being essential to ensure you optimise your organisations growth at any point in time – it’s a really exciting dynamic process that in an organisation with a positive culture will actually, quite naturally, become part of the day to day business operations throughout the annual cycle. 
Brownbill, N. (2009). Be the Best in Business. ACC: Cape Town.  

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