Get ideas to craft a winning strategy
A a leader, your maximum influence on any initiative is in the initial brief. This is where you lay out the specific results the initiative will deliver and provide guidance for the team so they can make the right trade-off decisions during execution. If the initial brief does not reflect your strategy it is unlikely to trickle in later.
Whenever you kick off a new action, whether it is a new project, a market entry, a product development effort or a process implementation, there is always a written or verbal brief to the team who will deliver it. Research on development projects has long established that the ability to impact cost and functional capabilities is highest at the start of a project, and then falls precipitously as decisions and mindsets are locked-in.
Taking the time to step back will become harder as progress reviews become more and more executional. Nobody wants to hear “Why didn’t you tell us this 6 months ago?” If the link to the strategy is not clearly established up-front in the brief, it is unlikely to be introduced later.
A good brief lays out the specific results expected and explains how they advance the strategy. How will success be “unquestionably” measured? What are the key underlying assumptions the team must confirm? What is the level of importance and urgency to guide the team when they make time, cost and quality trade-offs? Is there a next stage that builds upon this initiative?
Creating a good initial brief for a strategic initiative takes considerable thought, but is one of top management’s biggest contributions to successful execution.
Dedicate your next executive team meeting to creating an “inaction” list to prune your agenda to improve your strategic focus
Every meeting your organisation holds generates more and more action points to be piled on people’s heads. How about breaking the pattern, just once? The next time you get your management team together, use it to remove things from your plate. Watch the smiles break out around the table!
The starting point for this is to actually lay out everything that your organisation has committed to. You will be surprised how many initiatives, projects, actions, priorities, goals and objectives you have on the go. And if you add up the resources they require, you are attempting to eat two or three times more than you can digest.
You might argue that this is OK, that it is perfectly natural to have stretching ambitions even though it cannot all be done. Unfortunately, this overload will have negative consequences on strategic focus:
- Knowing they cannot get it all done, the team will focus on delivering something – usually a small unimportant initiative, leaving the key strategic initiatives stalled
- The organisation gets used to letting initiatives slide, reducing accountability
Organisations accumulate initiatives, projects and actions like ships collect barnacles, through a natural process of entropy. Like ships, this accumulation slows them down, and they need to be scrubbed clean regularly.
What meetings and reports can we manage without? If we lay out and prioritise the full list of projects we are attempting, can we drop the bottom 20%? What are the top 3 policies that contradict our values? What processes and reports can we scrap? What things are we pretending we will do, but secretly know that we won’t? What are we currently doing that, given a blank piece of paper, we would not start again? What are we spending time on that is not critical to our strategy? It may help to have this meeting facilitated to cut the deadwood systematically without pointing fingers or triggering defensiveness about pet projects.
The persistent reason that organisations make slow progress towards their strategy is that people are too busy on other things. Your people’s time is your organisation’s scarcest resource – it can’t be substituted for money.
Considering that every other meeting held adds to the agenda, surely it is worth some management time dedicated to prune back your strategic agenda occasionally? Every gardener knows their rosebushes grow stronger and more vigorously after a good pruning.
It is easy to let financial projections take on a magical power. “Lets wait and see the financials” – I’m guilty of that line myself. “The Numbers” that are conjured up are eagerly seized on as a lifeline promising precision in an uncertain world.
Awareness of this tendency is the first step in returning “The Numbers” to their rightful influence. At core, financial projections are a set of assumptions. The risk is that Excel spreadsheets make it very easy to create financial projections that show a very attractive financial opportunity. Every competent middle manager will shape a proposal before bringing it to the CEO to maximise the chance of a “yes”, with investment hurdle rates met and backup to defend every individual assumption.
Rather than get lost in individual assumptions, the CEO has to force strategic thinking by asking the question “why?” As nature abhors a vacuum, markets abhor attractive profits. This opportunity will only be different because of the competitive edge the company brings to the table. The CEO can constructively focus their probing here – What is the edge? How can we deploy it most effectively? How do we know it matters? What do we have to assume for this edge to overcome competitors? How do we prove this assumption quickly and cheaply?
If these questions can be answered clearly and credibly, it is time to bring out the financial model.
What matters to winning in business is increasingly not size or speed. It is momentum – the two combined. How can you move a big organisation at speed?
Any excuse to see the great Jonah Lomu again…..look at him going over the line after breaking three tackles. You feel that he could make it over the line even with the whole English team hanging on to his legs.
Jonah Lomu personified momentum. He weighed 120 kg and was 1.96 metres tall, but could run 100 metres in 10.8 seconds. Engineers know momentum equals speed times mass.
The same equation applies to business. Size used to matter more than speed, but digital economics have been decreasing the advantages of economies of scale, in media, in R&D, in IT, in product development and especially in distribution. The same digital economics have made speed more important, with customer needs, competitors, products, markets technology and channels changing more rapidly that ever.
The winning formula is now momentum – being able to change at scale and speed.
This is hard – historically size reduces speed as communication become harder and changes have to be rolled out and planned. Tomorrows winners, like Facebook, Amazon and Tencent are able to execute fast despite their huge size. What characterises organisations that create momentum?
Alignment of your people. If you have to negotiate everything and conduct “change management” every time you change course, you will never. Instead, your people are united behind common value and direction, enabling large numbers of people to move fast.
Digital organisation. Software can change instantly around the globe. Hardware/People changes take planning, time and cost to roll out. The more your organisation runs digitally, the more you too can break the trade-off between size and speed.
Rather than focusing on the products of tomorrow, far-seeing organisations will focus on building the organisation of tomorrow. How can you become Jonah Lomu?
Every strategy is built on assumptions about the future business environment the company will face. How will the market develop, how will competitors behave, what new technologies will appear?
These strategic assumptions represent management’s “best guess” at that moment in time. The CEO can’t expect perfect accuracy – crystal balls are in short supply. What the CEO can expect is to track the key assumptions and to be alerted when the market environment moves in an unexpected way.
Say the strategy was to reposition the company to dominate the emerging up-market segment that is prepared to pay a brand premium. The Executive team can identify the key future assumptions this strategy rests on – the size of this segment, the companies ability to create brand equity and the resulting segment share captured.
If the Executive team have estimated a quarterly trajectory for these assumptions up-front and are tracking reality against them, the CEO can know whether the strategy is on-track or needs corrective action, or even a complete rethink:
- The premium segment is growing slower than expected? Should we ramp back our brand investment? How can we make up the future profit shortfall?
- A competitor is building brand equity faster than us? Can we overtake them and establish dominance? If not, where else should we become market leader?
Without explicit metrics to guide the decision, mid-course strategy reviews will find it much harder to make the tough calls about changing strategy.