Are your strategy reviews working?

What do you talk about in your strategy reviewws? Is it a series of presentations or are you solving real problems? Are you discussing what you did, or are you evaluating whether the intended impact was achieved. Are you talking about what is operationally important to your organization or how you’re solving what is important to your customers and strategy?

If you’re talking about the same challenges you had last year, it should be in the context of moving from identification of problems to how you’re going to solve them to whether it’s working.

If the conversation is evolving, the process is probably working. If you’re not closing the gaps that are most critical to your ability to achieve your strategy then probably not.

Value is subjective

The idea that value is subjective is a tough pill for many business leaders to swallow. In the moments where your performance with customers is challenged, this heavily impacts your response to this kind of information.

IF the assumption is that value isn’t subjective, then it’s easy to fault the customer or the effectiveness of advertising and communication for the lack of understanding of what you bring to the table. This usually results in seeking to prove your worth by reiterating how valuable what you offer is, and perhaps using data to essentially prove you’re right.

IF The assumption is that value is subjective, hence is impacted by the mind set, frame of mind, frame of reference of the buyer, then your job is more difficult because it means that you may have a real operational challenge in that what you’re doing may not be good enough. The idea that what you perceive to be very good and close to your best may not be good enough is too much for many leaders to process, hence they are more likely to reject the truth.

The problem with not being open to the truth is that you forfeit your ability to reposition yourself in a favourable way. The earlier this kind of information is accepted, the more time you have to change tack and approach the problem in a more effective way.

Value isn’t about intentions or your perceptions, it is ALWAYS measured on the customer side.

Setting and achieving corporate targets

The process used to set corporate targets is really essential for maintaining a focus on strategy within your organization. This is especially true if employee performance plans are tied to (team or individual results within) corporate measures. If employees are disconnected from your measurement and see this as a management responsibility, your ability to steer the customer experience is immediately hampered. What gets measured gets done, but only when appropriate accountability and engagement is in place. This isn’t simple to do, but the value is obvious; if everyone is contributing to the strategy, you have a lot more resources behind it.

Now before you set those targets, think about where progress is most critical. What shifts are most likely to correlate to tangible gains? What should be designated as a stretch target, and what can you maintain? This allows you to purposefully select areas where your targets are more risky, more difficult to achieve. In this way, you maintain a more holistic approach to setting targets and avoid an individual view only.

Here’s how I categorize targets:

Heavy stretch = Setting a target where current year-end performance qualifies as below threshold for the subsequent year
Stretch = Setting a target where current performance is near the bottom of the threshold range
Maintain = Setting a target where current performance is at the bottom end of the meet range
Coast = Setting a target where current performance would qualify as an exceed

Before you lock those in, you have to build awareness of what the real issues and gaps are that are holding you back. What is it going to take to get there?
You need a process that creates accountability, such as tying these shifts to the individuals and divisions that need to close the specific gaps.
Make strategy everyone’s job; Leverage the resources of the whole organization, not just the executive.

It’s a lot easier to accept a tough target when you understand the gap, have accountability assigned, and spread the work across all your available resources.

A sign that you set the right targets.

If when you sat down with management to define your balanced scorecard targets, and you ended up in a deep conversation about strategy… what level of performance the strategy required to succeed… what measures needed the greatest focus… what measures might be transformational… and perhaps where the difficulty of closing the performance gap didn’t matter, because it would force the necessary adaptation… you probably made some good decisions.

If you haven’t done the ground work to define the strategy in enough detail… if you looked at each measure individually… and if you didn’t set gaps that would force adaptation and put something at risk… you probably didn’t.

Growth as a sustainable strategy

At the global Palladium summit last week, the former MIT professor Dr. Michael Treacy spoke on growth as a dependable strategy, as well as how to make the case for change.

For far too many executives, cost cutting is the go-to position when financial performance tightens up. A lack of proactive business growth stratagems may compound this. It is believed that while growth is preferable, the strategy with the least risk is chopping costs. In fact, Dr. Treacy states that the primary reason for strategy is that your organization will have an abundance of pressure tested growth opportunities. Quite the opposite of what many leaders actually do.

In reality, cost cutting doesn’t create shareholder value. It is chosen because most executives don’t understand that growth can be managed through a process so that it doesn’t result in a lot of risk. Since Dr. Treacy’s departure from teaching, he has spent 12 years running his consulting company and starting businesses of his own. Something he says has results in him learning more than he did in the previous 20 years of academia. Now, 80% of the ventures his group launches succeed.

His process is very deliberate. You start small, avoid scope creep, test and retest the concepts without letting them scale out of control. Only once the concept has proven its ability to fly do you allow any kind of market and feature scaling. The idea is that if it’s going to fail, you fail fast and cheap.

Culturally, you need lots of ideas flowing. Those ideas need to compete with each other, so that only the best go forward. This innovation engine is critical for a growth strategy because without this, you may choose poor ideas because that’s all you see available.

Between the choices of waiting until you have to scale down or learning how to do this well, the preferential choice is to build an organizational competency for growth.

Bad news and real leadership

The quality of leadership cannot be easily self assessed. It can only be determined by those who are being led. So if you’re looking to determine how you’re doing, look for evidence below you (hierarchically). The evidence of leadership:

– They maintain a palpable presence, and generate focus on the right things
– They’re trusted
– They have a history of getting results
– They’re great communicators
– They understand their role as a servant and coach
– They are all about the customer and focus others similarly
– They lead through inspiration, not by throwing their weight around
– They’re brave and are willing to go outside their comfort zone
– Those being led understand the vision and it resonates at both an intellectual and emotional level

Additionally, real leadership is demonstrated most in the moments when challenging circumstances are present. Having a willingness to acknowledge where things are broken and then create visible accountability for leading change is where leaders shine. This is a big part of strategy management, as a strategy cycle is about constantly dealing with what can be stronger and determining how to improve it.

Potential and mobility

One of my philosophies on strategy is that every organization is capable of more than it has the vision to achieve. This speaks directly to the concept of potential, and also of the moments where we limit ourselves by accepting less than we have to. So why does that happen, why do people utter small visions? Given the same set of circumstances, why will one organization change the world while the next will plug along, as though the current state will always be good enough… as if relevance isn’t fleeting.

What defines what is good enough, or what you can’t do? Do we even recognize the moments when these concessions are made?

Every achievement related decision you make is colored by a collection of paradigm lenses. They’re based on your experience, your self-view, your view of others, risk tolerance, and your sense of personal efficacy. Hence, asking yourself to think differently than you do can be difficult without help. An interesting and practical illustration of this concept is current research ongoing in the area of economic mobility. (What is the likelihood that one generation will be able to rise to a higher economic position than their parents did?)

Not surprisingly, the economic standing you grow up in has a big impact! Opportunity is obviously more easily facilitated by those who have an excess of resources. But it’s no guarantee either. Your vision, and sense of what is “good enough” plays a huge role in the kind of things you pursue, and how you go about it. Do you enter your career wanting to clean an accounting firm’s office, to be an accountant, or to own a firm of your own? Your trajectory often determines where you land.

So how does this affect your organization? Of course you need a big vision… but even more than that, you need a culture that is gritty about achieving it. A culture that is engaged, and constructively challenges the status quo… where “good” is never good enough.

As the strategist:
Cyclically challenge your assumptions that define how far you can go.
Ask others to challenge you.
Challenge why you can’t change your market or create a new one.
Are the barriers to entry in a new market as real as you thought?
Do you have the intangible assets you think you do, or are you being cocky?

Just like the baby elephant that learned he couldn’t break a small rope, and never bothered to re-challenge as an adult… don’t pull on all the ropes all the time, but give every one of them a tug now and then.

Don’t kid yourself, you can’t have both

You can’t be faster, cheaper, have cooler features and be more customized than your competition. Organizations that try to compete on all fronts are kidding themselves. One of the reasons they do this is that they’re uncomfortable with narrowing their target market. However, narrowing your focus also allows you to increase relevance, wallet share and develop deeper customer relationships.

Faster, cheaper, cooler, better fit is by default a comparison to a competitor. So unless you have some insane competitive advantage or your competition are fools, it’s time to pick a value discipline.

In order to be cheaper, you usually have to give up customization and being the most cutting edge on features.
In order to be the most cutting edge, you usually have to be more expensive and less customized.
In order to deliver the best total fit, you usually need to charge more and give up some focus on product innovation.

Here’s why:
– The business models compete: The processes required to deliver each are opposed
– The required culture and workforce attributes compete: Process oriented employees are different than innovation oriented
– It takes resources to pull each model off: Most organizations fight to maintain margin with a single focus

If you want integration, you shop at Apple.
If you want quality, you shop at BMW.
If you want best price, you shop at Walmart.

Is it this clear why your customers choose you?

Discretionary Effort

I want to take a minute to acknowledge this concept. A lot of leaders underestimate this point and assume that if employees do their assigned task, that all will be well. Perhaps also that employee engagement is about how people “get into” a project regardless of whether they are engaged in your overall BHAG. There is a whole pile of opportunity left on the table if this is the view.

Here’s the point: People are creative. They have some form of artistry in them. If you hired correctly, you have employees who are capable of becoming the best in their industry at what they do. Engaged employees give you more; their discretionary effort. This is beyond the given tasks. This is what takes your organization to the next level. Engaged employees act on the insights that they have. When the majority of your organization is doing their assigned tasks AND giving you their creativity, artistry and ideas, that’s a lot more than 110%.