Imagine the scene.
The hotel meeting room was filled with high-powered executives ready to conquer corporate strategy. They had carved two days out of their busy schedules and sequestered themselves offsite in the mountains.
The future direction of the company hung in the balance.
They secured a well-regarded strategy guru to lead them through the process.
With morning coffee in hand, phones and laptops away, the team was ready.
Our guru had them gitty with anticipation, and he opened with: "What is the best fruit?"
Say what?
What does fruit have to do with strategy?
Alan Oishi, a mentor of mine and someone I aspire to be like, opens strategy offsites with this strange question about fruit to make a point: there needs to be agreement on what strategy is for the organization before you can make meaningful headway on it.
When he asks this simple question, you can imagine the range of answers, informed primarily by personal preference.
He then asks, “How long could we argue about what the best fruit is?” and the answer is “forever” because the question lacks context.
As you refine the question, "What is the best fruit to prevent cramping during or after athletic events?" the room quickly agrees on “banana,” illustrating the value of context to faster, better and more aligned decision-making.
Strategy requires context to drive alignment, which is what this simple question about fruit demonstrates.
So, what is strategy?
There are many definitions:
allocation of finite resources, people, time, capital
plan of action to achieve a company's long-term goals and objectives
Or Michael Porter's set of actions or decisions that lead to sustained competitive advantage
These are good academic definitions but don’t help business leaders with context or alignment.
A practical way to think about strategy is as a deliberate set of decisions that focuses your company on achieving its objectives.
A crystal clear objective gives context for the critical decisions that must be made.
For example, Amazon wants to be the earth's most customer-centric company, and Lego intends to inspire and develop builders of tomorrow. These aspirational statements inform how those companies compete.
How do you know if you have the right objective?
The objective should be stateful, aspirational, and a statement of the ideal future state of the business. It should also have a specific benchmark to measure success.
You are on the right track if the objective serves as the guide for the next step, the heart strategy, deciding which markets to participate in and how to beat the competition in those markets.
Remember, there is a symbiotic relationship between what you are trying to achieve, where you will accomplish it and how you will win. The conversation is not linear, and the outcomes must be cohesive. It may be necessary to revisit a decision in the context of the other variables.
If the markets you think you should participate in can’t help you achieve your objective, one of them has to change.
Why is strategic planning just planning, not strategy?
Strategy has a degree of uncertainty, which is different from planning.
During strategy formulation, the company theorizes about the markets in which it will participate and how it will win. The sum of those coherent tasks will net the company the competitive outcome outlined in your objective.
However, the company does not control the market's decisions or potential customers. Your company would like this outcome, but it's not guaranteed.
Conversely, planning has a degree of certainty. Decisions are made about things that the company controls. Where to open an office, how many salespeople to hire or what new IT systems to implement. These may be important but lack context and coherence to your objective.
The need for certainty is why most organizations struggle with strategy. They resort to strategic planning, which is just annual planning with little or no strategy involved.
Planning is essential, but it is not strategy.
If we are clear about what, where and how, what's next?
If you are clear about your corporate objective or aspiration, where to play and how to win, the company must ensure it has supporting capabilities and infrastructure.
For example, one of the great companies I have worked with prides itself on servicing the smaller segments of its chosen markets. Long-term trust-based relationships are their priority.
These characteristics dictate the capabilities and systems required to be successful.
Their salespeople must be relationship builders. Verticals, territories and physical proximity of sales to customers must be structured to support a more intimate prospecting and sales process.
Quoting, ordering, delivery and financial systems must efficiently manage high volumes of small transactions.
Staff incentives must encourage long-term relationship-based decision-making, not near-term margin creation.
The responsibility of management is to ensure the organization has the right capabilities, management processes and systems to support the strategic direction. Without alignment of the systems and process, executing the strategy becomes difficult.
So your strategy is aligned with the executive team; now what?
Getting strategy right is a challenging task.
Once you have it right, it must filter through the organization efficiently. The strategy must be communicated in a few clear and simple themes with specific measures of success if it is to be actioned by the company.
A lengthy PowerPoint or thick strategy document will stifle action.
How to create and sustain the connective tissue between strategy and execution is a topic for a future newsletter. Business rhythms are critical to success.(see article here).
If you are struggling with strategy or execution in your organization, I can help.
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