TagStrategy Development

The Basics of Strategic Planning and Strategy Execution

Effective strategic planning and strategy execution are key to driving business success and growth. Unfortunately, leaders tend to focus more on the planning process and less on doing or executing.

Strategic planning is the process of articulating the vision of what the organization wants to be, defining its strategy, setting strategic initiatives, making decisions on allocating its resources to pursue this strategy, and aligning the organization to ensure that employees and other stakeholders collaborate toward common objectives.

The focus is on the future direction and performance of the organization. Through strategic planning exercises, organizations tend to produce 3-5 year rigid strategic plans documenting the organization’s strategic goals as well as action plans to achieve those goals.

Rigid strategic plans work best in a stable environment. However, times have changed. Today’s business environment is awash with substantial volatility, uncertainty, complexity and ambiguity. The abnormal is now normal and uncertainty is now certain.

As a result, enormous doubt has been cast on the effectiveness of strategic planning in the current environment, leading some to claim that strategic planning is dead.

I don’t buy this view. Strategic planning is not dead.

Yes, the environment is constantly evolving, and the organization needs to be flexible, adaptive and responsive. But, how can you address and navigate the future without a well laid plan and strategy?

In their book Sun Tzu: The Art of War for Managers, Gerald A. Michaelson and Steven Michaelson cite that:

A common mistake is to consider planning as only a mental process, an idea in our head that simply looks at the past and adjusts for the future. If your plan is not in writing, you do not have a plan at all. Instead, you have only a dream, a vision, or perhaps even a nightmare.

This is not about producing long strategy documents that very few read. Rather, it is about a producing a simple written plan that is easy to understand, such as a strategy map.

Strategy maps helps leaders define and communicate the strategy of the organization by creating a visual representation of the key business objectives on a single page. Strategy maps also outline the strategic aims and priorities of the organization and help to ensure everyone is working towards common goals.

The organization’s plan must not be rigid in nature, but flexible enough to accommodate changes in the environment or business requirements.

As a football fanatic and an avid Arsenal FC fan, I have experienced a fair share of exciting and disappointing matches. But, over the past few years, I have come to appreciate the fact that rigidity does not win matches.

Within the same match, I have watched Arsenal quickly switch from a 4-3-3 formation to a 4-2-3-1 and make substitutions depending on the realities of the match. Even though the manager had a 90 minutes’ game plan before kick-off, he also had other plans that allowed for flexibility in formations to adapt to reality.

The same approach should be adopted in business. Rather than stick to rigid planning systems that convey a message that obedience to the plan is key to business success and growth, leaders need to implement plans that allow the assessment of business performance under different scenarios.

Defining strategy and tactics

Put simply, strategy is about doing the right thing. It is about how an organization will move forward and figuring out how to advance its interests. In war terms, it is seeking victory before the battle.

On the other hand, tactics is doing things right. It is the implementation. The battle or action of the war.

However, often times there is confusion on whether strategy determines tactics or it is tactics that determine strategy.

Seeing that strategy definition is part of the planning process, and tactics is about implementation, it is safe to conclude that strategy always comes before tactics.

It is therefore important for leaders to understand that for tactics to effectively support the strategy by doing things right, the strategy itself must be right first. You must be doing the right thing. A bad strategy underpinned by good tactics can be a fast route to failure.

To do the right thing, leaders need to primarily stop focusing more on or reacting to competitors. Great strategies do not arise from reacting to competitors.

Instead, they are a product of intense discussion and deliberation that take into consideration the organization’s internal strengths and weaknesses including external threats and opportunities.

The focus should be on identifying unfulfilled customer needs or Jobs to Be Done, then devising solutions to meet those needs and ultimately assessing competitive realities to determine the viability of your strategy.

Oftentimes, the decision sequence is wrong. Leaders initially focus on profit requirements, and the decision on the needs of the market is secondary. First, you must satisfy the needs of the market. Then, and only then, can you profit from your actions.

Separating planning from execution

Innovation, profitability, and growth all depend on having strategy and execution fit together seamlessly. However, spending too much time in planning can breed indecisiveness and error.

The important thing is to get started. Unfortunately, many of us are good at thinking and bad at doing. With the right strategy, the battle is only half won. The strategy succeeds only with informed and intelligent execution of tactics.

Issues arise when planning is separated from execution. Majority of good strategies fail due to poor execution. Well thought-out plans are not followed through properly because of limited resources, managerial talent or operational skills. In some cases, it is because people are focusing on the wrong things, products or services.

To avoid poor execution of good strategies, leaders must have the ability to clearly define and communicate the strategy to employees in a format that is easy to comprehend. This is necessary for ensuring that everyone has an idea of what the key priorities of the organization are and their role in accomplishing these.

It is also important to measure, track and report on the progress of the strategy against the critical success factors of the business. This is essential for determining what is working and what is not working and make immediate adjustments to prevent further deterioration.

I welcome your thoughts and comments.

The Four Major Characteristics of a Bad Strategy

As an avid reader and someone who is always striving to acquire and apply knowledge and principles on enterprise risk and performance management, I recently purchased a copy of the book Good Strategy Bad Strategy by Richard Rumelt.

He is one of the world’s most influential thinkers on strategy and management and has always challenged dominant thinking.

A lot has been written and published around the topic of business strategy and management but have found Rumelt’s book as thought provoking , engaging and a must-read for every business leader out there seeking a solid understanding of the power of good strategy.

According to Rumelt, the core of strategy work is discovering the critical factors in a situation and designing a way of coordinating and focusing actions to deal with those factors. It is the leader’s responsibility to identify the biggest challenges being faced by the organization and frame a coherent approach to overcome them.

A good strategy honestly acknowledges the challenges being faced and provides an approach to overcome them. The greater the challenge, the more a good strategy focuses and coordinates efforts to achieve a powerful competitive force or problem-solving effect.

Unfortunately, the majority of managers still cannot differentiate a good strategy from a bad one. What most organizational leaders refer to as strategy is in fact not. They tend to equate strategy with financial goals, buzz-words, ambition and success.

According to Rumelt, executives who complain about “execution” problems do so because they are confusing strategy with goal setting. This approach continues to increase the gap between good strategy and the hodgepodge of things people label strategy.

Strategy is about how an organization will move forward and figuring out how to advance its interests.

So how do leaders end up with bad strategy and derailing the rest of organization? Bad strategy is not simply the absence of good strategy. Rather, bad strategy is a product of specific delusions and leadership dysfunctions, and this the area where most leaders need to improve.

In order to improve their effectiveness at judging, influencing and creating strategy, they must learn to spot bad strategy.

A bad strategy is characterized by the following four characteristics:

Fluff: Rumelt defines fluff as a form of gibberish concealed as strategic concepts or opinions. Instead of stating the obvious using simple and clear to understand words, leaders tend to use over-inflated and obscure words, statements and complex drawings to appear knowledgeable and analytic. These difficult-to-understand words aid nothing to what the organization is trying to achieve. They fail to address the real challenges being faced by the business. A symbol of true expertise and insight is having the ability to make a complex subject simple to understand. A symbol of mediocrity and bad strategy is unnecessary complexity.

Failure to face the challenge: A good strategy shows a way through a difficulty, overcomes an obstacle and positively responds to a challenge. On the contrary, a bad strategy fails to recognize or define the challenge. When a leader fails to define or recognize the challenge, this makes it difficult to evaluate the quality of the strategy to be implemented and differentiate a bad strategy from a good one.Many at times, leaders are faced with the obvious challenges but they tend to ignore the big elephant in the room.

They come up with various strategic plans that are mere stretch goals. In most organizations, it is common practice to come across typical statements such as, increase the company’s market share in each market; cut costs in each business or increase revenue and profit. Inefficiencies within the organization cannot be merely sorted by investing in new equipment or pushing managers to grow market share.

Failing to identify and analyze the obstacles in the face of the organization results in leaders having either stretch goals, a budget or a list of things they wish to see happen.

A good strategy comes to grip with the fundamental issues and problems threatening the existence of the organization or achievement of its strategic objectives. It follows from a careful definition of the problem, anticipates the real-world difficulties to be dealt with and creates policies that focus resources and actions on overcoming those difficulties.

Mistaking goals for strategy: Unfortunately, it is common practice to see a list of organizational goals mistaken as key strategies to pave the way forward for the business. The majority of these goals have got nothing to do with strategy. They are simply performance goals and 3-5 year rolling budgets put together with market share projections.

Strategic objectives should address a specific process or accomplishment such as halving the customer response time. Many leaders fall in the trap of believing that by motivating their subordinates, they will achieve their goals. This wishful thinking is misleading and has far-reaching consequences.

It is therefore imperative for leaders to be aware that tbusiness growth is not attainable simply through motivation alone. Business competition is not just a battle of strength and drive but also a competition over insights and competencies.

There is nothing amiss with planning and setting goals. In fact, planning ensures resources are available when they are needed and helps management detect surprises, both good and bad, and devise coherent strategies to contain the foe and exploit the opportunities.

To achieve sustainable higher performance, leaders need to identify the critical stumbling blocks to move ahead and then develop a coherent approach or strategy to overcome them. For example, this may require product innovation, new approaches to distribution or change in organizational structure.

Bad strategic objectives: Strategic objectives are bad when they fail to address critical issues or when they are unrealistic. It is the leader’s responsibility to constantly adjust the strategic gap between goals and objectives. A good strategy focuses efforts and resources on one or a select few important objectives whose achievement will lead to a host of positive outcomes. In Good Strategy Bad Strategy, Rumelt identifies two types of bad strategic objectives that need dealing with – Dog’s Dinner Objectives and Blue-Sky Objectives.

Organizations that have a dog’s dinner set of strategic objectives are in a complete mess of issues. Their leaders are constantly coming up with a long list of “to do things” mistakenly labelled as strategies or objectives. And these long lists of things to do are a product of long boring meetings where leaders push issues forward and label them medium-term or long-term because they realize they cannot deal with them immediately.

On the other hand, blue-sky objectives are simple repetition of the desired state of affairs or of the challenge. Leaders successfully identify the key challenges and propose approaches to overcome them but achieving the strategic objectives is immensely difficult.

No one has a clue of how the strategic objectives can be achieved. If the leader’s strategic objectives are just as difficult to achieve as the original test, then little value has been added by the strategy.

© 2019 ERPM Insights

Theme by Anders NorénUp ↑