A good strategy is usually quite simple, getting there is often complex. There are a myriad of constructs that need to be understood, analysed and factored into developing and maintaining a strategy. Understanding elements like sources of competitiveness and the sustainability thereof, performance driver subtleties across the various business models you operate, developing strategic options, the effects of morphing customer needs etc take time and analytical effort. What’s more core strategy inputs are dynamic in nature making its effectiveness a moving target. Sure, some of your macro elements like the markets and geographies you have decided to compete in are long running bets, but elements like solution packaging and positioning, pricing and sales methods are significantly more malleable. Building the management team’s ongoing strategy learning mechanisms thus requires some careful thought. I am thus always surprised by the strategy breakaway approach used by so many companies. Take your management team offsite for two days and bash out a strategy for the next year. I have absolutely no problem with the approach to the extent that the team in question are:
- Very well versed in strategy concepts – Competiveness, business models, option theory, market analysis, competencies…..
- Have an intimate understanding of all the strategy development inputs
- Have consensus on key strategy issues facing the business i.e. why is a tried and tested business model starting to deliver diminishing returns in a fast growth market
- Have done a significant amount of pre- strategy conversing on the subjects they wish to make decisions upon
If this is the case, the session becomes more about stress testing the key logic developed to date and getting final consensus on the results sought and how to execute thereon. In my experience, these conditions usually do not exist. As a result the strategy session delivers sub-standard outputs that not everyone fully understands and necessarily agrees with.
The majority of the management teams CIG works with have higher operational IQ’s than strategy IQ’s. The reasons seem twofold:
- Management spend significantly more time managing operational delivery issues and develop intuitive understandings of how to solve problems and deliver to budget
- Strategy thinking is more of an event than a perpetual process. Management teams simply have less practice in this form of thinking
It’s for this reason that a significant part of CIG’s work involves facilitating structured conversations around very explicit strategy topics over a period of time. Shorter on topic interventions allow for better quality conversations on three fronts:
- Fundamentals like thinking styles, hidden assumptions, political agenda’s and dominant logic can be teased out in smaller chunks providing improved insights as to how they affect the strategy derivation process
- Key topics can be given the necessary time be explored, argued and agreed upon
- The relationships between strategy variables can be better understood e.g. making business model changes can negatively affect competency pools, resources and profit formulas
Strategy should be a perpetual process built into the daily conversations of your management team engagement habits. I am not suggesting that you get caught up in “analysis paralysis” or attempt to change your strategy on a weekly or monthly basis. However, continuously upping the collective strategic insights your management team has on what your strategy is, why it’s still relevant, what needs to change and the impact thereof the better their planning and decision making effectiveness. This is best achieved through structured and potentially facilitated management conversations aimed at exploring a set of predetermined topics. The granularity of these topics is determined by what your current challenges are and how much managerial consensus exists around the strategic issues facing your business. At a minimum I would suggest the following “big” topics:
- Markets and associated profit pools
- Business models and offerings
- Competencies and capabilities
Examples of more granular content would be:
- How sustainable are your sources of perceived competitiveness
- Are your value propositions as relevant as they were a year ago
- Where are the earnings leakages within your core business
- How are your competency sets effecting your ability to compete
- What are your least risk organic growth options
Building strategic conversations into your management team’s repertoire is a competency in of itself. Upping the collective strategic IQ can take months but the benefits can last for years.