Effective Organisations & PeopleOperational ExcellenceProcess ExcellenceStrategy

The Seven Secrets of Successful
Strategy Development

The practical aspects
of Strategy Implementation

In my first blog post, I tackled the topic of Operational Excellence, laying out the four critical elements as I saw them, and promising to delve into greater detail in subsequent posts. This is #2 in the series and in this post I share my thinking on Strategy. At the outset, I must emphasise that I am taking a practical approach to this topic. You can go and Google any number of theories on strategy yourself. I will focus on strategy from the operating line leader’s point of view. I am going to do this by assuming we are on a journey together through a typical strategy development process in a company.

Strategy development should
be a structured and orderly process

My first word of advice. Develop the strategy by following a structured process. Too often strategy development happens in a fragmented way. There are essential components and they should happen in a particular order…analysis –> strategy development –> business plan –> implementation. I have seen risk assessments happening after the strategy and business plan have been completed…often because a Board sub-committee needed to tick a governance box!

Often it is good to have a small team manage the strategy development and planning process. They can provide templates, pre-reading etc and collate and package the final product. This is detailed work and is often run by Finance or a Strategy / Corporate Planning team in larger organisations. This is the craft part. Run it with people who love detail. You also want people there who can package the output in a way that tells a cohesive story for stakeholder buy-in later. This is the art part.

The right people need to be involved

Get the Board involved – often it is better that a small subset of the Executive does this. Really it is the Board’s strategy but mostly it is crafted by Executive management. I suspect it happens this way because Boards are often ill-equipped to get the job done because they do not know enough about the business. Directors could understand their businesses better through engagement outside of board meetings with people below executive level, but that is a topic for another day. At the very least, you need the Board’s guardrails ahead of time if they are not going to actually be involved in strategy development. Shareholder input is important here too. Don’t make assumptions about their intentions for the business. A growth strategy is not the same as growing the business to exit!

Executive management usually takes ownership of strategy development for approval by the Board. In my experience, the team developing strategy might need to extend beyond Executive management. Why? In small businesses the Executive is often lopsided with insufficient line leadership or operating support functions involved. HR in particular needs a seat there. There may be a need for specific specialists to be invited in for parts of the process. Be careful how you manage this as too wide an audience stifles the really honest interaction that is needed in the process. Invite the maverick specialist with a contribution to make. It avoids groupthink. I recall a time when one of my management teams asked me not to invite a particular individual ‘because he causes trouble’. My response was that this was the very reason for me inviting him. He kept the team on their toes and ensured a well considered strategy. The additional effort required to manage the individuals was more than compensated for by the improved quality of the output!

If you can afford an external facilitator, so much the better. Quite often this process needs a referee to keep the players focused on the task at hand and independence helps. Specialist facilitators also ensure that you follow the right process.

A good Vision aligns the organisation

The business goes nowhere without a strategic roadmap. Focus on where you want to take your business over time. This sets the direction for the business over the long term and clearly defines the mission (markets, customers, products, etc.) and Vision (what your business’ future could be). Often, the Vision is articulated via a BHAG: a Big, Hairy, Audacious Goal. Set stretch goals – better to fall short of stretch goals than to have easy targets that do not enthuse and engage the organisation and lead to under performance anyway. A BHAG energises the organisation…people just love proving that they can deliver the ‘impossible’.

A key aspect here is often what is excluded rather than what is included. Be clear about what the mission is, and is not. You cannot be everything to everybody. Segment your market and focus.

Distill the output of analysis
into critical insights

The next step is analysis – externally and internally. I find that the best output of this process is a simple SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis, the simpler the better. Even if an extensive body of work went into the analysis, to make a real difference you want it distilled into the few critical issues you need to deal with when you develop or update your strategy.

External analysis is often done using a PESTLE (or PEST) analysis. P for Political, E for Economic, S for Social, T for Technological, L for Legal and E for Environmental. Understanding your industry and your competitors is key here but think about the political and legal aspects in some detail if your business is a multi-country one. While running a downstream oil business spanning more than 15 countries in Sub-Saharan Africa, I often found this space generated more surprises of significant impact than the industry or our competitors did. Talk to people who know the local reality. Broad assumptions will not cut it.

Internal analysis is about your company’s resources and capabilities, working out where your competitive advantage lies. Be brutal here. It is easy to turn this into an exercise of self adulation with a long list of strengths and few weaknesses. That approach will not result in success. Be balanced, thinking about what you will need on the journey to your Vision.

Focus on the critical few initiatives

So how will you get to that BHAG? The best advice I can give is…break up the journeyinto bite-sized chunks. The first steps towards the BHAG are the easy ones so take that into account when you set intermediate targets. Be careful of promises you cannot keep. Trust and credibility are linked to delivery. Resist targets that are designed to woo investors. They lead to tears.

Focus on those issues so significant to the overall well-being of the business that they require the full focus of the entire management team. The whole management team, not a part of it. The strategic plan should focus on these issues. Make sure you devise the critical initiatives needed to get to to that BHAG. Only the critical initiatives, no more. You should target a maximum of five in your deliberations and you may end up with seven. That is what happens! Whatever you do, make sure you do not add initiatives so that everybody in the strategy development discussion has at least one initiative. It is quite acceptable for some of your executives have none. They can focus on doing today’s job with excellence.

Execution depends on ownership
and peer accountability

Work out who owns each of the critical initiatives and have them devise the next level of intervention along with the plan for implementation…then stress test the plan and think about whether the organisation has the capability to execute it. You might not have the right skills or experience or simply not enough horsepower to make it happen. Don’t forget the systemic and technological capability needed to deliver the vision. You need to build them too…not unlike building the bus that will transport everybody to the winning line. Make sure it is fit for purpose with no expensive optional extras.

Once you have this pack you can then develop your business plan (1 year detailed, 3-5 years indicative) with its key deliverables (today’s business and tomorrow’s) along with KPIs, resources (organisation, systems, technology people) etc. It is important at this stage that you involve those who will be accountable for managing delivery. Too often, executives do not spend enough time bringing their senior and middle managers into the plan development process. They understand the reality of implementation on the ground…they can help you ensure that the plan is achievable. You need their buy-inand this is how you do it. You can have guardrails and set the base assumptions and supply templates that simplify the process and then have line leaders develop their own sub-set of the business plan. I have learned that this is a painstaking and iterative process, but very necessary. Of course, there are times when the lower levels of management just do not have the understanding to develop their own plan. In that case, a facilitated engagement around the plan you have developed can also work.

Execution takes focus and application of skills. You need a cadence-based execution system that makes sure that today’s business goals are delivered as well as the strategic initiatives preparing the business for tomorrow. Too often the second set gets ignored because it does not get its fair share of attention and reward. I will have more to say about this in later posts but the essence of it is that you need a structured way to focus on both aspects on a weekly, monthly and quarterly basis to make sure of progress. Breaking delivery down into small chunks and then making sure each has an owner who is committed to delivering each day is the key. You do this by making delivery promises public and reviewing progress weekly, monthly and quarterly. I would rather miss my bonus than disappoint my peers when I have promised them I will do something and then do not deliver!

Communication and recognition maximises energy levels

Not everybody has to understand everything, but everybody has to understand the parts relevant to them and everybody should understand the Vision. Being part of something great energises people, makes them push that much harder to reach those stretch goals, so make sure they know what they should be getting excited about. Sometimes there is sensitive material there that you really do not want in the public domain. You can find ways to communicate enough without giving away the sensitive aspects. My sense is more should be shared, rather than less. Your team can usually be trusted with more than you think. After all, you are trusting them to deliver the plan, right? Your destiny is in their hands, anyway.

If execution is well managed and your team delivers on the strategy, don’t be shy when it comes to recognition. Find ways to share good news stories on an ongoing basis and reward those who excel with special treatment. Just knowing that your efforts might get you an award at the annual awards banquet spurs you onward!

H2-Business-Consulting-Recognition-pic

Conclusion

There is more to strategy development than meets the eye. The best results come from:

  • Structured processes
  • Involving the right people
  • Choosing an inspiring Vision
  • Distilling analysis outputs into a simple collection of insights
  • Developing a small number of critical initiatives
  • Harnessing ownership and peer accountability in a cadence-based system of delivery
  • Communicating with and recognising people to keep energy levels high

So there you have it! My views on what is important when it comes to strategy and its implementation. What do you think? Does this gel with your experience? Have I missed something critical? Maybe you disagree? Please share your thoughts by clicking on that little ‘Leave a Reply’ button below!

About the author: Wayne Hartmann, founder of H2 Business Consulting, has been in business for over thirty years, all but three of them in operational leadership roles. He has led organisations in the downstream oil industry, in the logistics arena and more recently in the renewables space. He has worked in large corporations and also in small organisations, in growth and turnaround environments. Known as a strong, values-driven leader, he has developed a reputation for working out how to make organisations successful, growing them and the people in them through hands-on engagement.

Leave a Reply

Your email address will not be published. Required fields are marked *