The Art of Managing series is dedicated to exploring the critical issues we face in guiding our firms and teams to success in today’s volatile world.
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Strategy is one of those difficult topics that dog most management teams and most firms.
The real work of strategy is challenging, time consuming and filled with hard-to-answer questions. It requires a simultaneous out-of-corporate body experience to objectively understand market, industry and competitive forces, along with an invasive and sometimes painful self-examination around internal capabilities.
Few managers come to strategy work with a common understanding or agreement on what strategy is, much less what an effective process looks and feels like. Selecting a strategy and building out the execution program includes the painful process of choosing what not to do, something that often dies on the field of political battles or lack of decision-making discipline.
Last and not least, the groups working on strategy often have little experience working together much less deciding together. In larger organizations participants are often handicapped by lack familiarity with their colleague’s businesses or offerings. Mix in political dynamics with the lack of familiarity and experience teaming, and you shoot any realistic near-term opportunity to cultivate high performance right in the corporate rear-end.
Given the challenges of managing an effective, on-going strategy process, it’s no surprise “Strategy in a Box” approaches are often adopted by management teams looking to add a check mark to the strategy task on their annual goals.
Recognizing “Strategy in a Box” Approaches:
While there are several variations, the process typically involves bringing a group of senior managers and functional or technical experts together with an outside facilitator for a multi-day offsite retreat.
The “process in a box” invariably starts at the top of the intellectual heap…setting vision to guide future direction. A painful (think root canal with no Novocain …but even more painful) round of group wordsmithing on a so-called vision invariably results in a gobbledygook of words that no one likes but everyone momentarily settles for just to end the pain.
After vision, there’s typically a S.W.O.T. (strengths, weaknesses, opportunities, threats) exercise…a discussion that is best described as a bias-filled cesspool of incremental and wild ass thinking on external opportunities and a superficial analysis of internal issues and capabilities. The internal assessment is often either a glossing over of capabilities or a political battle with functional or technical experts taking shots in an effort to distance themselves from criticism and gain leverage in the expected future resource battles. There’s often little preparation or external analysis, and objectivity for internal realities is horribly lacking.
Next out of the box is a round of goal setting, where the goals become the strategies. The goals are invariably around numbers and the bigger the numbers, the better. It’s not uncommon to hear the adult version of the playground “triple dog dare,” pushing numbers higher and higher:
“C’mon, if development hits the timing window at the right cost and feature set, we can do twice that with our hands tied behind our back.”
“I think you’re sandbagging. We can do your number and then some with the right execution and management.” (Note the thinly veiled jab.)
Big numeric goals become the perceived strategy: “100 million in three years,” or, 100,000 customers or number one or two in our market.
The last tool out of the box is the action plan, where some high-level actions and responsibilities are assigned, with the middle-layer of management in the room inevitably taking on the most critical work.
After a final shake of the box, the follow-up date is set and people adjourn with smiles and handshakes, all internally secure in the knowledge that little of any value was achieved and all wondering how the heck they can avoid any accountability here.
The Alternative…Deliberate Focus on the Right Issues and the Hard Questions:
I wish I were exaggerating on the above description, but I’m not. Some form or variation of this superficial approach is what too many management teams experience when it comes to strategy work.
The right alternative is to focus on and attack core issues. Rumelt advises us in Good Strategy/Bad Strategy to focus on the kernel of a strategy. Carefully diagnose the situation (an exercise not to be taken lightly) and then decide what to do about it at a high level. Back the diagnosis and guiding philosophy with a set of integrated actions and build from there. Much like a medical problem, the diagnosis frames and defines the follow-on regimen and measurement.
Geoffrey Moore’s framework of frameworks in Escape Velocity forces a view to the portfolio of opportunities and demands answers to the hard questions for today’s and tomorrow’s businesses from an investor’s perspective. He also appropriately segregates discussion into time horizons and cautions us to treat today’s businesses and tomorrow’s businesses very differently.
Others, including Welch’s famous 5 slides (approximately 20 questions) create a laser-like focus on the issues of strategy and opportunities and competitors and actions.
In my own experience leading strategy inside corporations and externally as a consultant, the hardest part of the process is building the discipline and teamwork to objectively tackle the right issues and hard questions. While the components included in the “Strategy in a Box” have merit…vision, assessment, goals and actions, it’s the poor process and then attempting to pass them off as the complete strategy work that I object to strenuously.
The Bottom-Line for Now:
In truth, the work of strategy is hard work, however, the actual key questions to be answered are finite and very visible. The focus must be on finding or creating strength to use against weakness or to exploit opportunities. The work is much about assessing your firm’s true situation in the context of change (tastes, industries, macro forces, competitors, substitutes, technologies) and selecting a set of intelligent experiments to test hypotheses. The work demands the development of a team committed to high performance, supported by the organization and accountable for objective assessment and selection of options.
Don’t be lulled into sacrificing the rigor of the work and the accountability to key questions to a simple sounding but canned approach that doesn’t get at the right issues at the right depth. There are no shortcuts to strategy.
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Art,
Nice post and a very important topic. I’ve gone through a few iterations of strategy and can’t find anything that I can use to challenge you. So I’ll just throw out a question: What if during the SWOT analysis, the consensus is that the biggest threat to the company is the company leadership itself? Have you ever seen this before?
At my previous company, as CTO, I took the bold step of introducing the concept of strategy to a small company, family-owned. I reported directly to the owner, but the owner’s wife was also a peer of mine. Talk about nerve-wracking! Anyway, I convened a SWOT session with the company leaders, minus the owners, because I felt that we needed to be objective and present this information to the owners along with an action plan. Interesting results – the team got totally locked up because nobody felt safe in telling the owners that they were one of the biggest barriers to the company growing, at least from our perspective. Needless to say, we failed and were also chastised by the owner for not including his wife in the SWOT sessions.
I would assume that this experience is not unique and that sometimes the result of strategy sessions might be that company leadership/ownership needs to be examined. Thoughts on this?
Dave
Dave, I can always count on you for the mind-bending questions! : )
Like so many issues, “it depends” is probably fitting here. I’ve worked with very thoughtful owners who had no idea they were inhibiting actions and when it was highlighted, they were shocked because they had not realized the impact of their approach. Good outcome. In other circumstances, I might suggest an engagement/environmental health survey where employees get to share their perceptions (anonymously). This helped in a situation similar to yours, although, the owners were highly motivated to improve the environment to improve results. If the owners are “my way or the highway” type characters, perhaps a board member or external advisor may help, however, it’s possible that nothing will. It depends! Thanks for asking. Great question. -Art
Art & Dave,
Hello to you both! I’ll offer an additional thought, one that I have experienced first hand. First, the article is spot on as usual Art, far too often leaders want to “get to done” rather than go through the truly arduous task of defining a strategy. When the SWOT starts to uncover sensitive topics it is far too easy to settle for the less painful elements that are getting in their way. Much easier to take the approach of “Let’s just get through this SWOT so we can nail the strategy and move on.” However, I have witnessed a team identify leaders/C-suite as a major weakness, but also take a hard look at their own issues with humility and vulnerability, in addition to their leader’s issues. When the guns have been emptied, everyone realizes that they are all contributing to the success and failure of the organization, which takes down the defenses and allows people to start working on a “guiding policy” to anchor off of and truly do something that matters. It’s much easier to take criticism when everyone else is exposing their own problems in a open and honest way.
Steve