Evolving strategy management

When you choose your strategy (value discipline) and market, you have already chosen your customers. Every value discipline appeals to a different segment.

The fallacy that some organizations buy into either through inaction or choice is that you can be relevant to many kinds of customers. What makes you relevant to one customer is what drives you away from another. Being really good at something simultaneously defines who you can please and who you can’t please. Clarifying what you’re going to be known for (and not known for) could be the best thing your organization could do. Some organizations are holding onto customers that would be happier elsewhere and missing the opportunity to deepen relationships with customers who would fully appreciate their value proposition if they were to be clearer about the value discipline they want to be known in the market for. Losing 20% of your barely satisfied customers to gain 50% more wallet share with another 20% who really identify with the form of value you’re positioned to deliver best isn’t really a loss at all.

There are three major dimensions to the system of planning every organization needs to implement in order to be successful in this increasingly tumultuous environment:

1. Creating Strategic Direction: Creating compelling direction that your people know and are motivated by
2. Strategy Culture: The entire organization can’t move in a single direction if the plan isn’t commonly known across the company, and accountability structures aren’t in place
3. Strategy mechanism: Systems have to be in place to manage the strategy, quality of implementation, create accountability and ensure effective communication

When your company is driven by a clear direction people can truly align to this compelling, single purpose.

Integrating strategy maps with environmental analytics

Conversations without context or reference points are generally the hardest to focus and facilitate. One of the concepts I have started to use is to be purposeful about connecting work previously done within a planning system to create context for next steps. It creates a sense of overall continuity and keeps you on track.

A well described strategy map is perfect context for identifying the factors in your environment that are supporting or resisting your ability to be successful. Consider using this as a reference point in your next executive discussion on the topic. By systemizing these discussions and creating overall continuity, you ensure the relevance of future elements of your approach but more importantly avert the risk of missing important risks that were previously identified.

Strategy review objectives

How important is a strategy review process? It’s as important as the relevance of your organization. It’s the system through which you stay relevant to your customers. Even in mid sized companies, people too often focus on only the financials, the operational challenges and “the business” while ignoring the future (the strategy). Building a plan without focusing on the business is daydreaming, but focusing on lagging indicators without managing intangible assets or a strategy is like putting on your hazards and pulling into the slow lane.

Make your strategy review process work by focusing on how to:

1. Increase the potential relevance of your enterprise by accurately identifying trends and implications in the current and emerging business environment
2. Focus your resources on change based on well thought out assumptions about the emerging environment, thereby positioning the organization for future relevance
3. Ensure that all core areas of business are well timed and positioned in their alignment to the desired future state of the organization
4. Build a stronger understanding of what our customers are telling us and determine how to correlate that back to required strategic and operational improvements
5. Identify areas where gaps exist, assigning accountability and closing them

It’s not a huge time commitment, and one well worth doing right.

You can’t measure what you can’t describe

Most executives of small to mid sized corporations have a pretty good idea of what their organization is trying to accomplish. Many even have a consistent view across the whole exec team. Others still have a good perspective on the value proposition their organization should use to make this happen. They have an intuitive sense of how this aligns with the business model.

Here’s where the problem comes in. Without explicitly describing these connections, you can’t maintain clarity on the interdependent relationships between various aspects of your operations. The problem is amplified when decision making is accelerated through time-sensitive change – reacting to new forces in your market, mergers or restructuring. The result is that people start making decisions without the context of your value discipline. Once this happens, your business model and operations don’t clearly align to any single value discipline thereby reducing your relevance to any particular customer group.

What to focus on:

1) Know what it is: If your executive team doesn’t know what your value discipline is, no one else will. Purposefully cause the organization to align, relentlessly, to this.

2) Describe what it is: Organizations need to strive and move ahead. Your organization won’t have clarity on how it intends to succeed unless you describe what you’re working toward. Build a strategy map because you can’t measure a strategy you can’t describe.

3) Communicate: Once your people understand the strategy, they will be able to align to it. People are smart and want to contribute to something meaningful. Help them help you.

Where to look: Making planning better

Once you have your planning system in place, there are several areas that need regular attention to ensure you’ll achieve the results you’re looking for. Here are several things to ensure you have optimized:

Ensure you have appropriate accountability in place across the organization: Think about incorporating some form of planning standards into management performance plans.

Clarify the value proposition of the organization: If you organization understands it’s value discipline, it will be able to create that experience consistently for your customers – and align the business model to support this.

Getting clarity on the value chain: Build a strategy map to ensure your organization is structured to create optimal value – you’ll probably find areas where linkages are unclear. This helps with line of sight for employees too.

Getting the right measures: Link your scorecard to the strategy map – if it’s on the map, you need to pay attention to it. If it’s not, it’s not that important.

Improving your information to guide decision making: Understanding the environmental forces that support and resist your ability to be successful and then the resulting implications and predictive implications goes a lot further than throwing reams of research at decision makers.

Corporate strategy reviews: Look for whether verbal reports are linked up to an accountability to create change that aligns with corporate direction.

Improving the planning of stakeholders – bring them along: Often, your success will depend on other organizations who are closely linked. Chances are, you need to bring them along, share best practices to support the evolution of their planning system and create cooperation points where shared strategy can be achieved.

The importance of your strategy management system

The strategy management framework within your organization is much, much more than just a system of complying with the need to have some form of plan. It’s also much more than an avenue to become a company that has a sophisticated strategy and understands how it wants to position itself in a specific market with a competitive strategy. It’s much more than a communication tool through which to align all of your resources to the plan and to get your entire company to know, understand and change to support the new direction.

Without an effective strategy management framework, no other management system within the organization can be truly effective. HR can’t effectively implement a competency based planning framework without the context for what the organization is working to achieve. Executive performance management systems won’t be relevant if they’re not tied directly to the business plan. Communications can’t write an effective CEO employee update if it’s not relevant to the strategy. Divisional planning is sketchy if the act of connecting to corporate direction isn’t ongoing, iterative and clear. The performance metrics within your organization aren’t certain to be relevant if they’re not linked directly to your strategy map. Hence, you might be focusing on the wrong things at your strategy review meetings. Research isn’t really even all that useful if it’s not made to be part of an ongoing environmental monitoring system if it’s not tied to the central strategy management system.

I make the assertion: No other function within the organization can truly confirm or actualize it’s potential relevance without a purposeful connection to the corporate strategy. This connection begins with a well structured and ongoing strategy management framework.