Setting strategy is a mixed bag of success
Many organisations today have outgrown their roots and are looking for a focussed way to achieve deep and effective change. They want to operate from an explicit strategy. However the statistics are not promising. The Balanced Scorecard Collaborative quote the following statistics:
- 95% of staff in a typical organisation do not understand the organisation strategy.
- 86% of executives teams spend less than an hour a month discussing strategy.
- 60% of organisations don’t link budgeting to strategy.
Most strategies fail.
Under even the most advantageous circumstances only 12% of companies achieve any realistic growth against their set strategy. Only 10% of companies setting stretch targets achieve them.
Bain and Company carried out research on large companies, in seven developed countries, operating during the ten best years ever in economic history, 1988 to 1998. Only about 12% of these companies achieved a growth rate greater than 5.5% with shareholder returns greater than the cost of capital. Two out of three of the companies studied set growth targets for at least 9% growth but fewer than 10% of these companies achieved it.
It is possible to galvanise your organisation around a core strategy
In spite of these rather bleak statistics, many organisations are able to align all their activities around an agreed approach. These organisations have reached agreement on where (and who) they are right now, where they want to get to and how they are going to get there. And they have based their business model and their plans around this understanding. They are working these plans and growing.
But it is not as easy as all that
There is more to this strategy business than is immediately obvious. Therefore, even when you enter the endeavour with your eyes wide open the process becomes murky and it is easy for a team to lose their way.
How can you address the strategy conundrum?
At the same time, it is not as difficult as all that. For a start you need a proven approach. Then it is useful to have a guide in the process, who can navigate the inevitable obstacles and who can allow you and your team the space to explore your own thinking. The approach we use in StrategyWorks covers the three main areas described above.
Where are you now?
This discussion may include the concept governing your strategic intent and your purpose, a description of a positive future state, your values and a description of the environment in which you find yourselves. And what about a SWOT? I love the iconoclastic writing of Henry Mintzberg and in ‘Strategy Safari’, he and his co-authors offer a critique of the design school of strategy that highlights the risk of relying on a list of strengths and weaknesses.
Where do you want to get to?
The core of your strategy should also include your description of a positive future for your organisation. Perhaps the best you can do is to say, “we are going to get in there and learn as we go”. But at least you will be able to say “The future looks a lot better than the present”.
How you intend to get there
The core of your strategy should include a statement of strategy. What is the overarching approach you intend to take to the journey from here to there?
Mintzberg, Ahlstrand and Lampel suggest four categories of approach:
Planning is conducted within fairly structured conversations and built around analysis tools for highlighting opportunities and threats and planning tools for finalising a clear deliverable from the conversation. Though not always. The authors also refer to ‘left-handed’ planners who eschew formal tools and dive into the messy business of strategy formulation from an unstructured point of view.
The organisation works towards clear plans arising from a culture built around a vision for the future. Conversation in the organisation secures rich inputs and high commitment from those involved.
The organisation selects a desirable position in the market and sets out with brains engaged and receivers full-on to collect feedback. They act, reflect, learn and test.
The organisation develops a view on what they want to be then draw on diverse, dynamic and interactive creativity to get there. Organisations who do this well typically design their buildings, work-spaces and processes to encourage as much conversation as possible
These models of strategy are described in this note on strategy.
The conversations leading up to the understanding of your purpose, your desired future (OK call it your vision), your values and your strategy will set the stage for agreeing structure of the organisation that will make them happen.
At StrategyWorks we use a range of tools to stimulate the strategic conversation including Scenario thinking, Five Forces of Competition, Remote Environment Analysis (PESTEL), Stakeholder Analysis, Dreaming and Discovering (from Appreciative Inquiry). We offer these tools in a Solutions Focussed context. And yes, if you must we will do a SWOT though we will talk first about the relevance of the output in a world of turbulent change.
Whether you work from a hunch or rich research at StrategyWorks we provide a forum in which you can safely multiply concepts, challenge thinking and let ideas percolate. You and your team can consider opinions, dismantle concepts and appreciate the components. You can assemble these components in new, innovative ways. You can extract a core approach. You can set it in concrete. You can shake it loose, change it, throw it away and redefine it.
As the process unfolds, the way ahead emerges in the team. .
Stephen has been coaching individuals and teams as they crystallise their strategic core since the mid-1990s. He has read extensively on the topic and has a solid process for leading teams through these conversations. Send him a note if you are interested in hearing more.