In 1999, Ram Charan wrote about why CEOs fail and estimated that 70% of the time it was not an issue of strategy but rather an issue of execution.1 What was true then applies equally today. Most organizations do have strategy. The question is whether they understand their strategy and effectively act upon it.
Strategy is the road map. It’s the translation from high level goals to direct action. It is the “how” in achieving your vision. Like with any road map, you need to understand your starting point, where you are trying to go and the means to get there.
Clarifying your strategy is the essential first step toward making your company more effective at achieving strategic goals. The unfortunate truth is that far too often companies have a difficult time articulating their strategy. At its essence, strategy is nothing more (or less) than the cumulative set of decisions you have made about how to operate your organization. Clarifying this strategy requires significant leadership time and effort. In a recent article on strategy execution in the Harvard Business Review the authors state that “high performance teams spend nearly 20% more time defining strategy”.2
So how do you define your strategy? Peter Drucker offered his “Five Most Important Questions” as a way to better understand strategy. More recently, Patrick Lencioni has offered his 6 questions in his book, The Advantage. And Michael Porter has written extensively on how to frame strategy in terms of competitive dynamics and advantage. These are just a few of the plethora of authors who have offered answers to how to define strategy. Common to all of these, is being able to concisely define the strategic goal, the advantage you will leverage to reach your goal and a context for the strategy.3
When working with clients on strategy, we focus on six areas to make strategy as clear, concise and actionable as possible. Here is a framework for clarifying your strategy:
1.Articulate your core beliefs and values: Who are you and how do you behave as a company? Your values, beliefs and behaviors are critical filters for decision-making and action within your organization. Stating these clearly and making them meaningful in you company empowers everyone at every level to act in a common framework.
2.Crystalize your purpose as an organization: Why do you exist as an organization (other than to make money)? Simon Sinek contends that having a clear understanding of your “why” is that which sets apart the most effective leaders and organizations. Getting clear on the reason your organization exists (other than to make money) can help you tap into the passions and motivations of the organization.
3.Develop a shared vision: Where are you going as an organization? What are the tenets of your envisioned future in concrete terms? Using a “future past tense” thought process is a great way to get after this. Jim Collins also suggests defining your “hedgehog” – the intersection of your passion as an organization, what you are striving to be best at and what drives the economics of your organization. He sees this as a way to understand the core of your business strategy and another way to help clarify your vision. Translating your vision into clear overarching long-term goals helps to make the vision tangible as well. In his book Good to Great, Jim Collins calls this a Big Harry Audacious Goal or BHAG… a 10 to 20-year goal that everyone can understand and take actions to achieve.4
4.Clarify your current market position in the most honest way possible: Where are you positioned today? This involves being clear on what business you are in… and by exclusion what business you are not in. Who are your customers and what is it they value? What is the differentiating value you provide them? What core competencies do have that allow you to deliver that value to your customers? We call these your strategic drivers – those few things that you do to drive the core of your strategy. Jim Collins calls these your unique recipe for success. Similarly, in their book Playing to Win, Lafley and Martin speak about defining how you win in your market, as well as what competencies and systems are required to win. Getting clear on your current sandbox or playing field is also a part of your market position. What are the products and services you provide to what markets and geographies today? Collectively the answers to these questions define where you are today as an organization.
5.Define your advantages and vulnerabilities: What are your key advantages, issues and opportunities? A traditional Strengths, Weaknesses, Opportunities and Threats Analysis (SWOT) is a good way to gain clarity. It is important is start with a deep understanding of the trends and competitive dynamics impacting your market. Then be brutally honest as to what few things are real strengths or advantages and how you can best leverage those advantages strategically. On Weaknesses, which are the most critical today that can be barriers to your growth, and how can you fix them or turn them to your advantage? On Opportunities, which ones are the most attractive to you and what is required to fully exploit the opportunity? Finally, on Threats, which few are crucial to mitigate and what actions are required? Understanding your strengths, weaknesses, opportunities and threats in an actionable way helps you know where you are today, and also provides stimulus for action toward your future vision.
6.How will you succeed in getting to your vision? Finally, define your strategic priorities. These are the “how” of moving your organization toward your vision strategically. Set your strategic goals, define what advantages you will leverage to purse those goals and be clear on the context for the strategy. Also, be clear about the capabilities and systems you need execute on these strategies. My partners and I think in terms of 3-year strategies, 1-year key initiatives and 90-day priority actions. By using a 90-day cycle to review progress and determine the strategic actions for the next 90 days, you keep your strategy dynamic and actionable.
The more concise and compelling your understanding and decisions are in these six areas are, the more effective your organization will be in strategic thinking and execution. At the highest level these six areas can be summarized by six big questions:
1.Who are we and how do we behave?
2.Why do we exist as an organization?
3.Where are we going?
4.Where are we in the market today and how do we win?
5.What are our leverageable advantages, issues and opportunities?
6.What strategies and actions will be undertaken next? (Who will do what, by when?)
References
1.Ram Charan, “Why CEOs Fail”, Fortune Magazine, June 21, 1999
2.Nathan Wiita and Orla Leonard, “How the Most Successful Teams Bridge the Strategy-Execution Gap”, Harvard Business Review, November 2017
3.David Collis and Michael Rukstad, “Can you Say What Your Strategy Is?”, Harvard Business Review, April 2008
4.Jim Collins, Good to Great, 2001
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Ben Anderson-Ray
Partner and Advisor
Ben Anderson-Ray is a partner with Trinitas Advisors, an executive coaching firm that helps business leaders build the leadership alignment they need to win more, grow faster and succeed longer. Ben can be reached at ben@trinitasadvisors.com.