Strategy for Breakfast: Transforming a Strategy into Action and Results
One of the biggest challenges executives face resides in making a new strategy permeate the company’s DNA –simply but efficiently incorporating it into everyday practices so that it guides all decision-making processes and leads to the desired results. This article provides some keys points to take it from concept to reality.
Even with business strategies that are challenging, inspiring, bold, stimulating, data-driven and analyzed with the most sophisticated methods, they will be rendered pointless unless they can translate into effective action by modifying the way things are being done.
Although the implementation capabilities play an important role in having a strategy impact on results, this is not the only factor –the process by which the strategy was defined in the first place also has a considerable effect on our ability to transform it into action.
Here are five key points for implementing a strategy and ensuring it leads to results.
1. Picking the low-hanging fruits or climbing the tree? Or looking for another tree? Or just picking a different fruit?
New opportunities can be very favorable for the business, but they can also take the focus away from the actual strategy. Low-hanging fruits can be a distraction if we were planning to eat something else. A good strategy needs to be based on our aspirations. And this is seldom related to opportunities, resources, strengths or weaknesses. Although a SWOT approach is key to developing a strategy, this should be defined by clearly stating the real end goal. A collection of opportunities is not the same as a strategic plan, or at least not necessarily so.
The same rule applies to plans. In many cases, strategic plans are nothing but a collection of smaller plans, result projections and detection of opportunities put together. But this cannot count as a proper starting point. A strategic plan needs to be developed with a top-down approach, based on the common goal that pervades the organization and behind which it is aligned. The sole existence of separate Marketing, Commercial and Production strategic plans, for example, proves that they do not have a common origin. The Strategic Plan needs to be only one. And for it to lead to the desired results, a strategic plan needs to originate at the top, emerging from the general definition of the business and then cascading down to implement the operational plans by area, and not the other way round.
For the strategy to serve as a guide for making decisions, it has to originate in a top-down definition of the desired results and how they translate into goals, not from a collection of projections and opportunities. Strategic thinking requires to first think about our ultimate goal, leaving the question of the necessary resources for a later stage.
2. Not a question of what or how much, but of how. Not just goals, but strategy.
While starting from our ultimate end goal is the first step, turning it into goals constitutes the second one. Establishing the ‘what’, this aspiration transformed into specific goals, will provide a better understanding of the challenge ahead, of how much effort it will imply and how deep the change will have to be. It should provide clarity as to the path to take and the ultimate objective. Nevertheless, it is the ‘how’, the path taken, what will guide everyday decisions.
A clear understanding of how to reach our objective is fundamental in successfully implementing the strategy. If we answer the question of what our strategy is with a number, there is a problem. Even more, if we believe that the way to achieve it is by ‘doing things right’, then the problem is really serious.
Being clear about the different way in which we will reach our end goal, the path we want to take, will be fundamental for guiding us in the process and understanding what we need to do differently in order to succeed.
3. Stop doing. Doing things differently is one part. Stop doing things is the other one.
A strategy needs to remain simple in order to be implemented successfully –it needs to transmit clearly which are the priorities and which tasks are no longer necessary. We will do this and stop doing this other thing. As simple as that.
Treating everything as a priority is the opposite of strategic thinking. In general, strategic plans crammed with pillars, priorities, dimensions and so forth reflect nothing but a lack of strategic decision. After all, deciding means stop doing and knowing what to stop doing.
A study carried out by MIT Sloan and published on MIT Sloan Management Review (‘Turning Strategy Into Results‘, Donald Sull, Stefano Turconi, Charles Sull, and James Yoder, September 2017) points that 78% of the companies in the S&P 500 that publish their goals summarize their plans in no more than three to five strategic priorities.
It can be tempting to believe that every aspect is critical for growing, but the question is which of these priorities will actually make a difference? The strategy needs to serve as a guide for the team, determining the dos and don’ts, in other words, helping them make decisions.
4. Not every year. An annual strategic planning process is a contradiction in itself.
If it was properly done and if priorities were established with the mind set on delivering results, the strategic plan should be valid for at least three to five years, depending on each specific industry, and assuming there was no disruptive change in the industry.
Goals and projections can be adjusted every twelve or so months, and minor changes can be made with regards to priorities and their relative weight on the overall plan, but this does not mean going over every point from scratch. Putting the priorities into question every year is unnecessary and time-consuming. A strategy that needs to be changed every year is not an actual strategy. A sound strategy providing guidance for the course of action will have to focus on the desire to create a different business. Once the strategic priorities have been established, the annual process should be related only to the operational aspect, that is, focused on revising what is working and what is not with regards to the implementation of the strategic plan.
5. Aligning resources, at the end. From short-term goals to overall structure.
Adjusting our goals to the new strategic priorities will ensure our objectives are aligned with the organization’s. However, successfully implementing a strategy usually requires more than that. If we want the strategy to permeate the company’s DNA we need to go deeper and further along the path. Adjusting the business processes, and modifying roles and responsibilities are all key aspects, but the real change will take place when we are able to reallocate our human resources to where they can truly offer added value –to our strategy priorities.
In order for both strategy and structure to be aligned, it is first necessary to determine the key organizational capacities that need to be developed and guaranteed in order to make the strategy come true. With this new strategy, it is important to establish what aspects need improvement –being more curious, a better response capacity, finding a different approach with customers, or even finding new customers, are all aspects worth putting into question. Challenging old habits is fundamental in this process, since it is quite easy to stay inside our comfort zone and to convince ourselves that our strengths are what we need to make the strategy come true. This is generally not the case. Challenging our capacities implies leaving the comfort zone and facing our weaknesses, re-learning things and embracing change. This means, for instance, questioning our portfolio, our channels strategy, our geographical reach, our production model and all the things that made us who we are.
Once these capacities are clear, the next step is to decide on the optimal organizational layout for properly implementing and managing these organizational capacities. First, it needs to be decided which areas will require agile, organic and dynamic work teams, and which will constitute the stable structure that will guarantee the company’s daily operation. Those capacities that require agility and dynamism will have to rely on likewise structures. Similarly, traditional capacities related to the core areas will rely on stable structures that can guarantee efficiency and maintain the company’s identity. Here too it is necessary to revise whether the balance of the organizational matrix is optimal for the new strategy. The way in which reporting lines are established and therefore how decisions are made should be put into question, as well as the extent to which current reporting lines, be it based on geographic area, function or business units, constitute the best way to establish responsibilities and making decisions in the new organizational model.
Lastly, and to finally align the whole organization to the new strategy, it is key to allocate financial and human resources to those areas with added value for this new strategy. The ‘stop doing’ motto should release resources (otherwise everything would have been in vain) so they can be allocated to where they can truly generate added value. This means measuring the economic contribution of each area in producing results.
Understanding how and to what extent each team contributes to actually implementing the desired strategy not only will motivate personnel but will also allow to move resources to where they can actually add value. That is the key to success. In sum, it is worth asking what percentage of resources, structure and people are actually doing what needs to be done and bringing added strategic value to the company.
Partner at Tandem.