10 Elements of a Great Strategy
Part 2 of a series on Strategy Development
In the first part of our series on Strategy ("The Non-Strategy: how some ‘strategies’ are not strategies at all") John S. Hamalian introduced several categories to explain the characteristics of poorly developed and executed strategies. This leads to the question ‘what does a good strategy look like?’ In this second part, we examine the various design elements that can be considered when constructing an organizational strategy, whether in the private, public or non-profit sectors.
There are few more important things to any organisation than the presence of a clear, intelligent and well-structured strategic plan; it aligns the entire team on the long-term goals, provides purpose and clarity to the necessary outcomes to achieve them and engages employees in execution of the actions. From a Process Excellence perspective, a solid plan with concise objectives and actions can help to ensure that improvement initiatives are properly aligned to the goals, adding value in key priority areas and contributing to the essential long-term outcomes. Lack of a proper strategy may potentially result in ad hoc improvements that are not meeting the critical needs of the overall organisation.
So in terms of strategic planning, what does good look like? The following are 10 elements that represent sound principles to be taken into consideration when developing a strategic plan:
Element #1: Critical Reflection
Sometimes before you go forward, you have to look back. In Japanese this is known as ‘hansei’ or the ability to deeply and critically reflect, typically on several fronts: ‘where have you been?’, ‘where are you now?’, and 'where are you heading’? This includes an honest assessment of problem areas and changes taking place which need to be addressed, both internally and externally. If there was failure, success can come as long as learning takes place. Often times, a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis or similar tool can be helpful, but only if the output is applied in the actual formulation of the strategy and not used standalone.
Element #2: The Power of a Simple Message
A clear vision can provide succinct clarity to where an organisation intends to go, and it does not have to be fancy. I know a retired Vice President who had a very consistent and simple mantra that he repeated on almost a daily basis: ‘Low Cost’. This made the priority very clear and concise. Georges St-Pierre, Welterweight Champion of the UFC, often affixes a handwritten note to his dressing room wall, such as ‘On December 11thin Montreal, I will destroy Josh Koscheck and remain world champion’, providing himself with a simple, measurable and actionable message.
Element #3: Marathon Thinking
This may seem obvious, but the person who wants to win a marathon needs to possess a fine balance of long-term strategy and shorter-term tactics to overcome the challenge. Some people call this walking with one leg and running with the other. In any case, long-term thinking needs to be an essential ingredient of any solid strategy. Without a long horizon, an organisation is doomed to an endless cycle of short-term gyrations. There are several points to mention here:
- ‘Balance the Forest and the Trees’ - A good strategy will both zoom out to the big picture and zoom in to the specifics needed to achieve it. A strategy skewed too far to either side will be unbalanced.
- ‘Pace Yourself’ – the smart marathoner will sometimes slow down even when he or she has abundant energy. Not only do they not take their eye or mind off the end goal, but they are also very aware of all the evenly spaced, smaller milestones that are needed to reach so they can get to the end. This notion is epitomized in the ’20 Mile March’ concept by leadership guru Jim Collins, where he makes the argument that the most exceptional companies have an extraordinary amount of self-control, even in the good times.
Element #4: Sense of Reality
A strategy is not worth much if it does not accurately reflect the reality of the situation – the good, the bad and the ugly. It is also not going to help much if the strategy stretches the organization well beyond its means or outlines completely unrealistic and unattainable objectives. It is OK to develop stretch targets but they should still be realistic. There is an important concept related to this element:
- ‘Avoid Fluff’ – Vague and ‘wishy-washy’ language should always be avoided. The strategy is not a marketing campaign - it is a structured plan to move the organization forward. Language and actions identified should be crisp, concise, clear, direct and specific.
Element #5: Less is More
This has been said many times, but a strategic plan should focus on the Critical Few. A plan should outline what the organization should not do just as much as it articulates what it should do. There are many cases where successful organizations have seen improved results from paring down their strategic goals. When Jack Gerard, CEO of American Petroleum Institute, first took the job he immediately cut their number of priorities from two dozen down to just six, enabling them to focus their limited time and resources on the items that would bring them the most value. ‘Less is More’ contains a very important point that needs to be called out separately:
- ‘Focus on the Core’ - In the early 00’s, McDonalds was floundering during a period of wild expansion, opening more than three restaurants a day in 2001. The new executive leadership at the time put together a back-to-basics strategy to focus on increasing sales at existing stores rather than opening new ones, and their results since then have been extraordinary.
Element #6: Balanced Stakeholder Listening
A great strategy reflects the voices of all the key stakeholders of an organisation, in particular the Employees and the Customers, who often get forgotten. There is a famous quote that says ‘The greatest tool you have is to listen’, yet many strategies are developed in a relative vacuum. To properly consider all the various voices, both internal and external, a great deal of listening, balancing and prioritising is required. Sometimes it not clear who all the key stakeholders are, and in this case a Stakeholder Prioritisation tool can be used. For this element, there are a few important concepts to mention here:
- ‘Coherent Alignment’ – The strategy should align and bind the whole organization together. While each function or department will have to develop their own specific plans, these should receive inspiration, purpose and direction from the main strategy. There is no sense in having a plan that focuses on Product Development but completely misses the required Go-To-Market approach, for example. It must all tie together.
- ‘Institutionalised Social Responsibility’ – Whether you call it CSR, Sustainability or Social Development, the point here is that this should be part and parcel of the strategy, not ‘that other thing’ that is done on an ad hoc basis or whenever an organisation feels guilty or needs PR points. One of the key reasons that many organisations have not made the transition from philanthropy to a true, well-rounded Social Responsibility approach is because they have not incorporated the subject into their overall strategic plan. The Body Shop and Banyan Tree are good examples of CSR being institutionalized into their overarching business approach. Ideally, the strategy will encompass all three pillars of the Triple Bottom Line: People, Planet and Profit.
Element #7: Actionable Content
This is the critical link to Process Excellence. The strategic plan should be detailed enough to either specifically outline actions required to meet the goals, or be able to lead directly to such actions. The action plans identified will likely be high-level and not necessarily answer the ‘hows’ but certainly describe the ‘whats’ that are needed to move the organization ahead. These actions often turn into projects or key initiatives which can often times utilise Lean and/or Six Sigma methodologies to be properly executed. Without actionable content, a strategy will be too stratospheric to be of much use.
Element #8: Energetic Deployment
A great strategy does not just remain stuck in a powerpoint slide, but gets effectively and passionately deployed to every level of the organisation. If there is a function or team that is disengaged from the planning activity, or not involved in its execution, then the strategy is a failure. Every single part of the organization should be informed of and engaged in the strategic direction, and formulate their own specific plans in line with the greater goals. One critical aspect is the following concept:
- ‘Avoid the Ivory Tower Syndrome’ – a good friend of mine reminded me of the disastrous but not uncommon phenomenon of organisations keeping their strategic planning activity entirely within their executive ranks, ignoring the power of the their own people to help shape, validate and implement the initiatives that are required for them to reach the next level of achievement. The best plans are made with broad participation, contain feedback loops to incorporate the inputs of employees and other key stakeholders and are communicated thoroughly and frequently to all parts of the organisation.
Element #9: Fanatic Follow-through
Strategies are intended to be used, not mounted on a gilded frame to be admired from time to time. Some of the best plans I have ever seen were written on simple paper and were dirty and wrinkled from their constant use. This is great proof of a well-utilised plan. Here are the key points related to the subject of Follow-Through:
- ‘Built-in Flexibility’ – Some strategies are not followed-through on because they were designed to be too rigid and/or complex. A clear sign of this is an overly automated planning system where it becomes extremely painful to make any adjustments to the plan. Contrary to some popular beliefs, plans should be written in soft clay rather than etched in hard stone. It is perfectly OK to adjust the strategy during the year based on changes in organisational dynamics or the external environment, as long as the revisions are in support of the overall vision and purpose and are agreed to by the relevant team.
- ‘Strong Governance & Discipline’ – Who will review the strategy, how frequently and by which means? These are basic questions to ask when designing a proper governance process. Here are two of the common mistakes made in this regard. One is to lump together Strategic Reviews with Operational Reviews. Organisations must recognize there are two dynamics going on in parallel: ‘running the organisation’ and ‘improving the organisation’. They are related but each needs its own time slot or the operational issues could easily smother the strategic reviews. The other is a failure to assign an Owner to the governance process. While it is undoubtedly the top leader’s role to ultimately own the strategy, somebody needs to organise the reviews, take charge of the planning document, and help to ensure follow-up items are managed properly.
Element #10: Living & Breathing the Strategy
Solid follow-through is more than governance reviews and scorecard updates. It needs the leadership to be absolutely committed to and thoroughly passionate about the strategy. Leaders should be talking the ‘language’ of the strategy on a daily basis. When even the employees are talking about it frequently, this is when the plan has become institutionalised and permeates every level of the organisation. The strategy should be thoroughly baked into the product/service plan, the communications plan, the marketing plan, the people plan, the process improvement plan, the budget plan and the operational plan.
This list of Elements of a Great Strategy is by no means exhaustive, but the intention was to provide a basic outline of the key ingredients needed to formulate an effective and useful strategic plan for any kind of organisation. As was mentioned, a successful strategy is not only one that is intelligently designed and well-constructed, but also inclusive of all stakeholders, effectively deployed and governed with a nearly fanatical level of discipline and passion.
Of course, no strategy is worthwhile without execution and results – as Donald Trump said, ‘in the end, you’re measured not by how much you undertake but by what you finally accomplish’. The strategic plan is intended to be an enabler for predictably achieving these accomplishments.
I am sure there were elements that I missed or could have emphasized more. Let us know your thoughts by leaving a comment.