The Good Bad & Ugly of Strategy
It’s about at this time of year that many businesses want to develop or review their strategy. It still surprises me, though, how businesses many don’t even have an aligned strategy, and the patterns are all the same: decisions get made and unmade, people are confused and frustrated, resources are spent on things that aren’t relevant, there is infighting, friction and underperformance that starts to erode the Company. So while some form of plan is better than none, and you certainly don’t want to wait for perfection, I thought I would share some observations from the not so good strategic plan department that we have seen for you to reflect on in a hope that it might lift the game:
Bullshit and Bluster. This typically looks like $25mn by 2025. It all sounds good but bears no resemblance to what the business is actually capable of in revenue or their business model. There are no ideas of how to do it and so no-one buys into it.
Scatter Gun - Fire and Hope. We should just do everything and anything – something will stick. This just means your messaging is unclear. The narrower the focus, the more powerful the brand. Have a clear target market and focus everything on them. Define the few to attract the many. It works.
Just a long list of things to do. We have seen a one hundred and twenty five page strategy plan, with 76 strategic actions. Typically none of it is strategic, and Zero is achieved as was the case here. The law of diminishing returns says if you want 2-3 things done to a level of excellence, choose 2-3 things, if you choose 4-5 you get 1, and anymore zero. Half the long list will become irrelevant as the market shifts – you spend more time re-making lists than doing what is important.
Strategic Goals with no ‘how’. We need goals but what is the market busting move or strategies to achieve them? Rita McGrath defines a market busting move as “is an action taken by your business that changes the game to deliver markedly superior performance” eg Where will you find new opportunities? How will you find and keep the interest of top quality people? How will you take advantage of changing markets and competitive conditions? A good example is "To have shifted our focus from wholesale to retail, leveraging e-commerce". The includes the what and the how (and is typically supported by some measures to track it too).
Corporate waffle or fluff. We have all seen this, full of the latest corporate buzz words, hollow statements than could be interpreted anyway someone wants, pages of waffle that don’t actually say anything. As Roger Martin says, “strategy is an integrated set of choices that uniquely positions the firm in its industry, so as to create sustainable advantage and superior value relative to the competition”. If it doesn’t simply say where you are going to play and how you are going to win, toss it out and start again.
Made in a Vacuum. The plan may as well have been made in the space station because it has been made oblivious to potential market or environment. No understanding of the current market, reviews of trend analysis, nor analysis of the potential future environment has been taken into account. None of the variables considered, no deductions drawn or nor planned for. Notably, it typically has had no facts or data and was just made as a result of the biggest opinion in the room. It has just been an exercise to create a plan because we need a ‘plan’ in name only.
Doing what we have always done. Many businesses either consciously or unconsciously reinforce the past. If your rate of internal change is not as fast or faster than the market you will fall behind, and won’t realise it until its too late. Many don’t understand that what got you here may not get you there. We worked with a design business who were frustrated that people didn’t build their designs to their specifications and tarnished their brand. They made their most money when they built them themselves, so we challenged them to become a design and build company.
Ask yourself the hard questions – and if you cant, get someone who can. Which brings me to my next point.No defined outline of the future business. If you don’t know what you are trying to build, you are building your business from today, thereby reinforcing yesterday’s commitments and solving yesterday’s problems. When you project forward and define the potential future, then work back, some of today’s issues may become irrelevant. We worked with a business that defined a new future for their business and then realised that they would need to change their operating model to achieve it. Had they started at today they would have been constrained in their thinking and never changed.
Not understanding your competitive advantage and operating model. How do you generally compete - ie what is your generic strategy? Is it low cost/high volume, customisation, or product innovation? Each of these has different overheads and approaches. We have seen businesses not realise which game they are in, and are spending money and resource in the wrong areas consuming themselves and ending up in what Frances Frei calls ‘exhausted mediocrity”.
Not Executable. Research by Kaplan and Norton shows 90% of strategies fail due to poor execution. It’s not the plan at fault but the lack of delivery. The key enabler is that the plan needs to be executable. Are there key strategic priority deliverables, that are timebound and with someone’s name against it to ensure accountability? Leverage the power of a deadline, clear objectives and accountability. That’s where strategic momentum starts and mediocrity finishes.
This article was contributed by Greg Allnutt, Partner and Strategic Advisor, Pivot & Pace.