In the field of strategy, powerful business plans have a few common characteristics. Yes, the tools used to evaluate your environment, make decisions, communicate and organize into frameworks with a high degree of utility in driving execution are absolutely critical for effective planning. However, at the core, there’s one attribute that defines every incredible plan: a transformational theory.
The essence of strategy is strengthening competitive advantage and total value creation, so it’s inherently about driving change. But not all change is equal in the qualitative sense. Powerful strategy is always deeply rooted in bold, visionary ideas that form your reason for being, and is about relentlessly pushing to achieve a greater amount of raw potential. Potential is one of the most powerful conversation topics in strategy because it opens up dialogue on what is possible, and allows leaders to challenge each other, which is very important for evolution.
The gap between current state and the defined but unrealized future state in many ways defines the capability of leaders that stand at the helm of that journey. Leaders that lack the vision or capability to publicly commit to a more epic journey often instinctively steer their organizations to safer waters that match their personal effectiveness. The assumptions behind leaders capable of bringing huge ideas to life are optimistic and aspirational about what can be achieved, because they perceive less personal risk in making those commitments. Creating a wide gap between today’s performance and this large vision generates both anxiety AND energy, and that combination is essential for organizational performance to improve dramatically.
The characteristics of a powerful strategy have at their core a transformational theory that defines what the organization would need to achieve in order to realize a greater amount of their potential. Depending on the context of your operating motive, that question should relate to “what would it take to triple the amount of value/profit/etc we create?” Planning with the assumption of a 3% year-over-year improvement only hides the harder questions as people generally believe they can achieve those small improvements simply by doing the same things 3% faster, which costs you the opportunity to have a more strategic conversation. Hence, incrementalism in major strategy-setting discussion is a cop out. Instead, ask: “pulling out all the limitations (excuses) that relate to time and money, what would it take to triple our value creation?” The output of that discussion then forms a starting point for your transformational theory, and you move on to test both it and your execution capability in the real world.
Now to talk about the flip side of the coin, what we lovingly refer to as “bad strategy”. While it’s implied above, it tends to be a collection of activities that describe operational maintenance priorities, and are generally not connected to strong stretch targets. In many industries, these business plans are easily sold to boards with some commentary on enterprise risk management. Growth is a tough, complex business challenge, and while risk tolerances vary drastically, many of the limitations for growth can be overcome when leaders raise their expectations of the organization as a whole. Don’t let the group reflex of “it’s too hard” to limit the things you’d learn by mentally committing to the struggle.
So, what boards need to be thinking about is:
– How large of a gap exists between current-state performance and what the organization is targeting, and in what areas?
– Where might leaders be limiting the reach of the plan by their own perceived weaknesses?
– Specifically what resource limitations are holding back growth to much higher levels?
– How often do employees hear the leaders talk about the vision vs. operational projects? Where is their focus?
– Do we have a transformational theory?