How to Deal with Strategic Ambiguity and Ensure Strategic Clarity

Recently I read a paper by Deloitte & Touche LLP, the global consulting firm, on how finance chiefs can turn strategic ambiguity into strategic clarity. Not only was the paper an interesting read, but also informative and enlightening.

Many finance chiefs worldwide are still grappling with strategic planning, implementation and review problems. They are worrying much about the clarity, quality and adaptability of their business strategies in a volatile business environment. This economic upheaval and change continue to drive companies to revisit and revise their core strategies to ensure they strategically manage risks and deliver better performance.

In the paper, strategic ambiguity is defined as the:

Uncertainty arising from the organization’s inability to:

• Define strategy in the face of economic volatility,

• Clearly communicate the strategy internally to employees and externally to investors and other stakeholders,

• Align resources to implement that strategy, and

• Execute effectively.

Although volatility has increased over the past years, all hope is not lost. Because of the analytical central role finance plays and the visibility advantage the function possesses, finance chiefs and their employees are best positioned to steer their organizations through strategic ambiguity to strategic clarity. Best performing organizations, have managed to make use of their finance capabilities, for example, by using insights drawn from data analysis to successfully set direction for their organizations and improve decision making.

For organizations that are still lagging behind in their quest to navigate through strategic ambiguity to strategic clarity, Deloittes recommends using a four-step approach as outlined in the Strategy Execution Framework below.

Strategy Execution Framework

Strategy Execution Framework

1. Define: Today, most companies are faced with a great array of opportunities which they can take advantage of and invest into to spearhead growth. However, given the limited resources that are at the disposal of the company, sometimes it is not possible or feasible to invest in all these opportunities. As a result, there is need to clearly define a focused set of strategic objectives, identify and prioritize the right opportunities.

2. Communicate: If resources are to be internally allocated and aligned correctly, strategic objectives should be communicated clearly. At the same time, external stakeholders must have a clear understanding of the organization’s objectives to avoid any disagreements capable of negatively affecting the business as a whole.

3. Implement: A good strategy is only good as its execution. In order to effectively and efficiently implement their strategies, organizations need to regularly review their practices, investments and incentives for continuous improvement.

4. Adapt: Organizations need to be flexible and responsive to changes in the business environment. Corporate objectives and the strategies to achieve these objectives are rarely static.

Furthermore, finance chiefs should have answers to the following questions in order to successfully cut through the fog of ambiguity to achieve strategic clarity:

1. What is the core vision of the organization?

2. Do employees and investors understand and agree with the strategic direction?

3. What is the preferred way to implement the strategic direction into concrete action?

4. Does the strategy demand a different skill set across the organization? Or is there a gap between the desired and available skills and capabilities?

In conclusion, finance chiefs should not focus on their steward and operational roles only but also on their strategist and catalyst roles. As the business environment continues to evolve and uncertainty increases, ambiguity is also expected to increase. Finance chiefs should therefore always be on the guard and ensure they possess the strategies and capabilities necessary to combat strategic ambiguity rather than reduce it.

To read the full paper, on turning strategic ambiguity into strategic clarity, click here

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