Type the word strategy into google and the explanation is clear and simple. NOUN: A plan of action designed to achieve a long-term or overall aim.
For such a popular word, it would be easy to think that we’re on top of it… we understand it, and we practice it.
But like other ‘popular words’, such as diet, exercise and non-digital play-time for kids… the reality is different.
After 25 years working in business, companies without an effective strategy are easy to spot:
- Leaders act as managers
- There’s no clear competitive advantage
- Inefficient processes
- Plans change every few months
- Limited range of KPI’s
- Poor team working
- Employee retention issues
- Sales and marketing don’t work effectively
- Limited market intelligence
So how can you spot a company that undertakes strategy effectively?
- They have a clear vision for where they want to go, and their position in the market
- They know their brand and what it means to all stakeholders
- Business investment and processes are aligned behind the vision and values
- They have an effective team structure, with skilled people and the vision is shared
- They have a good understanding of their business, competitors, customers and market
- They have clear objectives and supporting KPIs that go beyond profit
- They have a marketing plan and objectives
What’s more, their performance is consistent.
So if strategy is so important, why don’t we utilise it more? Let’s look at some of the most popular reasons why:
Reason 1 - Time
A common issue with SMEs and MSB’s. You’re busy juggling sales, purchases, IT, complaints and finding new markets. You may also lack skilled people who can support your strategy process. Something frequently has to give. Cue Strategy.
Simply dealing with the task in front of you, seems to be more profitable and often easier than horizon scanning and being future focused.
However, ignoring strategy means you don’t know where you’re going, and more importantly, neither do your employees, customers or suppliers.
If you operate within a fast moving market, then prepare yourself for a turbulent ride.
If you would like to start, but are unsure where to begin, here are my simple steps to get around the strategy/time issue:
- Build your team.
- Who has the skills in your business to contribute towards strategy development? Can they be trained? If no-one exists, who do you know externally? They might be a fellow business person, supplier, trade association or even your accountant. Make sure the team has a broad range of skillsets.
- Plan your structure. When can you meet, and for how long? Who is going to chair?
- Ideally start with 2 * 1 days per year to keep you on track (assuming you have monthly management meetings already). Allocate extra time if you intend giving your team homework prior/post the strategy meeting.
- Allocate responsibilities. Bringing something to the strategy table is important, so you need to decide who’s going to be responsible for what.
- Your business… McKinsey 7S is great for this.
- Ask some big questions before you start… ‘how can we improve’ ‘what are our biggest competitive threats’, ‘how does our customer service compare with'… ‘what is our most profitable product?' ‘Which is the next growth market?’
- Ask your team to work in pairs, and write their answers before the strategy session, and discuss when they arrive.
- Create an agenda for the 1st session. Keep it simple.
- Answers to your big questions. Where are we now, Where do we want to go, What stops us from getting there, and What actions do we need to take and When?
4) Create an action plan follow up, and set a next review date.
This might be a ‘light’ version of strategy planning, and the first session or two will take more time… and potentially give you a few headaches. But, the more you do it, the easier it will get and you will start to get value from the process.
Reason 2 - Knowledge and skills
If it’s skills you’re lacking, then great. Over time these can be developed or recruited (paid or unpaid).
What is more difficult to tackle is a belief that effective strategy can be achieved with a marker pen, SWOT analysis and flip chart. Not that I don’t love flip charts… I do.
But, if a consultant walked into your hospital room and, upon a casual glance, gave you a complete health report… would you have faith in it?
Well, your strategy might not be as important as your health, but it is where your company is concerned.
A common complaint of strategy planning is that we can skip too many of the initial steps, going straight to the SWOT analysis and said marker pen, without considering many of the vital signs: customers, competitors, markets, margins, products, feedback, suppliers… and the list goes on.
Strategy is only as good as the people and skills involved, the information you bring to the table, and the process you adopt.
If you try to summarise the content of your brains onto a SWOT analysis at the start of your strategy session, you’re missing out the key steps, knowledge and therefore most of the opportunities. I’ve seen this happen in both medium sized companies and large corporates.
If this sounds like you, try adding additional steps into the process, prior to the SWOT analysis.
It’s worth benchmarking your current strategy process against those in Figure 1, and see which ones you might be missing.
Don’t forget though, a strategy plan is one thing, delivering it is another.
Failure to deliver an agreed strategy is both demoralising and frustrating for your business.
Reason 3 - Complacency
No business is immune from complacency. There’s countless examples on the high street right now, with plenty more to follow in all industry sectors from banking to clothes and music.
Some of the most common reasons for not undertaking strategy planning are as follows:
- ‘Nothing ever changes in our industry’
- ‘We’re too busy making money to plan strategy’
- ‘We don’t have any competitors’
- ‘We’re already better than the competition’
However, if there’s one immutable law in life or business - it’s that nothing stays the same.
It’s just a question of when and how the change arrives.
Now you might be lucky. The ‘when’ could be 5, 10 or 20 years away. The business might be so small that you don’t care, or you’re planning to exit in a year or two.
In the event that none of the above apply, here are some sobering facts:
In a study of over 3900 worldwide companies, Bain and Company highlighted 4 key criteria shared by winners from the last recession: early cost restructuring, financial discipline, aggressive commercial plays and proactive M&A (bain.com 2019).
There’s plenty of other research from companies such as McKinsey and Harvard Business Review to support this. Companies with an effective strategy typically enter a recession later, suffer less (and may even grow), and exit earlier than competitors that don’t.
So if this sounds like your business, then the chance’s are you’re not complacent, and your challenge is to convince others.
The good news is that change is possible. Most people in business want their company to be successful.
So how do you do this?
- Use questions to increase the level of strategic curiosity in your business
- If the questions are right, colleagues will start asking questions themselves… and you will start a ripple effect
- Find allies in the business
- Introduce questions in formal business meetings
- When you have momentum, ask for an initial strategy workshop
- Ask your colleagues to formulate what they think an effective strategy looks like and benchmark yourself against this
- Consider using an unbiased facilitator to support this initial workshop
- You can then use these results to introduce a revised strategy development plan
Whatever your reason for not engaging in effective strategy development, there’s no better time to review your process than now.
Harvard Business Review - https://hbr.org/2010/03/roaring-out-of-recession