If your organization is upping its commitment to strategy, and you’re wondering where to begin… congrats. This can be very exciting, because if you manage these moments well, it can change your future. Here are some good starting points to consider:
Corporate commitment: an essential first step
It’s worth having the conversation before you begin to describe what the impact on the individual CEO might be, and gain explicit commitment. Is the executive prepared to:
• Change their role if need be, to play a more active part in driving alignment?
• Get their hands dirty in building and leading the charge?
• Articulate a visionary future statement that you’re only 50% likely to achieve unless major change occurs (has some risk attached to it)?
• Hold the organization on course, making sure nothing distracts from the goal?
• Hold leaders accountable for progress, ask tougher questions?
• Take on more challenging metrics that are likely to show the holes in the operation?
• Push the board beyond incremental improvement and an operational focus?
• Educate leaders and the board on concepts they have never heard of before?
BHAG: a visionary idea, what are you really here for?
You can move past the BHAG into other levels of planning, and this is tempting, but it ultimately results in the organization acting without context in the form of compelling future direction. Many leaders don’t understand the value of a truly compelling BHAG. A BHAG should be both exciting and scary, anything less is below the potential of the organization. It generates engagement, and creates a real future for the organization. Leaders often don’t want to talk about this, because they feel like they should have the answer and they don’t. We need to make sure that we acknowledge this tendency up front, and choose to tackle it anyway. You can run all the best process in the world, but it ultimately has to fail if there is no substance behind it.
The BHAG is the crossover between what you’re passionate about, what you can be the best in the world at, and what drives your economics. People should think “hol-ey crap” when they hear it.
• “We will put a man on the moon and bring him home safely by the end of the decade” – John F. Kennedy
• “Democratize the automobile” – Henry Ford
• “Organize the world’s information” – Google
• “Turn the Starbucks brand into the most recognized and respected consumer brand in the world” – Starbucks
You know it when you hear it. It gets the juices flowing. We live in a world that has been formed by people with great vision, and the courage to state a visionary idea long before its time.
Value discipline: a competitive strategy
Every organization has to choose at the broadest level how they’re going to compete in their market. This isn’t a finely tuned marketing strategy, this is the broad strokes level. If you don’t make this choice, you’re going to spend time fighting each other on the highest level discussions like whether winning on price, cutting edge products or client intimacy is more important. Of course you need to be in the ballpark on 2 but you need to differentiate on one, or potential customers don’t know why they should choose you over someone else who does a better job of this. No one has the resources to dominate in all three. The point is that you shouldn’t be trying to appeal to the whole market, you should narrow your focus to offering deeper value to a narrower market. Doing 2 or 3 is a less efficient model, or will result in the organization failing or fooling itself with poor measures. BMW customers and Hyundai customers are quite frankly a different group of people.
Strategy map: figuring out what drives your economics
What are the top 5 or 10 things that drive your success? How are they interrelated? How many things drive your success? Is it 2 or 15? How can an organization be successful if they don’t know what drives their success? How can you choose corporate measures if you’re not sure what your value discipline is or what drives your economics? Having this picture is essential. Once you do, eliminating everything that doesn’t directly support where you’re trying to do is how you recapture the resources of your organization. Everyone complains about needing more resources, but the truth is that better alignment of existing resources would go a long way to solving these capacity gaps for many organizations.
Balanced scorecard: measuring the things that are most important
What gets measured gets done, especially when variable compensation is attached. Choosing measures should be an extension of the components above. You don’t choose measures based on how many things you want to measure, you choose them based on how many transformational drivers for corporate performance exist. If you have 3, great. If you have 10, so be it. Sometimes, when you get into it, you learn the transformational drivers… where a single measure results in most of the improvements you’re looking for.
Clearly defining a value gap: Being clear on what you’re changing
As it has been said, “you can’t do what you can’t describe.” The act of first acknowledging and then clearly defining what is holding the organization back from where it wants to be gives a great deal of clarity to what needs to be fixed and why it’s important. Once you have this, you know where to focus. It’s still a theory, but it’s something you can test by correlating perceived progress against the intended impact. It could be measured as the performance gap between client expectations and actual performance, it could be a key set of operational barriers that were identified as part of root cause analysis.
Solid processes and relentless alignment: the biggest challenge is actually doing it
All of the best intentions don’t go very far without a process to organize alignment. The process needs to create appropriate accountability, information flow, integration, and reward. All of this has to be done within direct context of the strategy. Effective strategy management isn’t a natural outcome of inaction, it’s a discipline.
Through these processes, alignment and integration is critical. Alignment of the complete resources of the organization to the corporate direction, and integration between the core functions and the strategy is essential. Examples:
• The HR strategy is focused on building a workforce that supports the specific needs of the value discipline
• The technology strategy enables the workforce in delivering the desired customer experience
Finally, while alignment is critical across the board, it is important for the organization to define and manage at the very least what it considers to be the teams that have the strongest link to strategy and maintain strong accountability measures in these areas. These core strategy areas should be close to the action in terms of demonstrating alignment, and hearing what is going on.
When an organization determines what the most critical risks and opportunities are, it can act with more focus. Of course, an eye for outliers and routinely challenging assumptions is essential, you can’t spend all your time on that. Research efforts can be focused on the things that matter, and distractions can be avoided. Executive planning can follow suit. Paying attention to the things that matter and identifying the things that don’t is the only way to maintain a tight focus.
Fine tuning the competitive differentiators:
It will also be useful to plot the differentiating capabilities of the organizations against that of their competitors so we can start to explore touch-point and value discipline differentiation. This defines the desired market position, who you’re primarily competing against, where competitive rivalry is strongest (and lightest), and the extent to which your organization can afford to push out its footprint in any direction. Either as a scientific process, or more conceptually as required.