Why is strategy so difficult?
Many companies struggle with establishing and implementing a strategy. The first hurdle is to understand the difference between strategy and operational effectiveness. Strategy is about decision-making and determining what not to do, while operational effectiveness is about performing optimally to meet strategic objectives. Operational effectiveness is obtained when a strategy is well-designed, resilient, easy to implement, and monitored.
Strategy is multi-faceted
An organization's strategy should include levels, elements, and tension.
LEVELS
Strategy has corporate, business, and operational levels. Decision-making is key at each level. Some example are as follows:
Corporate: What is our business? What industry are we in?
Business: Who are our customers? How do we compete? Where should be focus our energies?
Operational: How do we organize to implement our strategic goals? What resources are needed to meet our strategic goals?
ELEMENTS
A strategic plan comprises a company's mission, vision, values, strategic goals, and implementation plan. Each element should be reviewed and updated, as needed, during the annual planning process.
TENSION
There is a balance between what is the ideal plan and what is achievable. The be effective and gain traction in an organization, a strategic plan must be realistic and consider the available resources.
Strategy requires implementation and monitoring
A company cannot monitor what is cannot measure. In order to develop measurable performance targets, the strategic plan must be specific and clear in how the plan will be executed. Difficult decisions need to be made during the planning process
Companies take on too much
A strategic plan should be implemented gradually to ensure traction. An organization's focus should only include three or four primary goals at any one time. Once those goals are achieved, the next set of goals will naturally develop. The employees implementing the strategic plan need to modify their current operational activities to incorporate new processes. Supporting employees to ensure each set of strategic goals is accomplished is more important than taking on too much and being stretched too thin to deliver successfully.
Each set of strategic goals should include at least one outward-facing goal (customer related, competitive) and one inward-focused goal (employee training, systems improvements).
How to create a successful strategy
Strategic planning evolves over time and is not a one-time event. To improve strategic planning, start by having an open and honest discussion at the beginning of the annual planning process. Review and debrief process weaknesses from the prior year's implementation of strategic objectives and identify why the strategy didn't work as expected. Each year the strategy will need to be refocused and communicated to employees. Implementing a balanced scorecard that cascades from management to employees helps to align employee objectives with strategic goals.
Contact our office to discuss how we can help to improve your strategic capacity.
