Senior management owes the organization overarching objectives. Not only that, they must be provided with sufficient time for managers and directors to develop credible plans to meet the objectives. Even though that sounds incredibly obvious, it is surprising how often a manager or director is asked to describe what they plan to accomplish in the coming year prior to having meaningful objectives identified. Of course, you can’t have a meaningful discussion about strategy without mentioning objectives.
Some organizations think of creating a strategy as an annual task that they have accomplish instead of doing “real work”. Nobody argues against creating a strategy because it’s an insupportable argument. However, once created, the organization can get back to the “real work” until strategy time next year. Only the most effective enterprises systematically monitor progress from top to bottom to ensure expected movement toward the objectives.
Left without a strategy that cascades a plan throughout the organization, managers and directors often plan ad hoc improvements or departmentally specific optimizations. The issue is that these ad hoc actions in different departments across an entire organization can work against each other as they are not components of a coordinated plan to achieve a common objective. So, rather than subordinate the metrics of a department to those of the organization you get un-choreographed actions in departments that result in some unpredicted, unplanned and, often, unwanted outcomes for the organization.
For the sake of discussing some typical pitfalls related to strategy creation and cascading, let’s assume objectives are in place.
Once the strategy that is designed to achieve objectives that are satisfactory to stakeholders is in place, it can, and should, be broken down into department specific objectives that will logically combine to meet the overarching organizational objectives. These objectives must be cascaded down through the organization to end up as very specific tasks or required outcomes for departments and the people in them. It is, after all, the most meaningful content for setting expectations related to future performance reviews: individual actions that combine to achieve the desired results for the enterprise. But that’s, often, not how it goes.
Arguably, worse than not having a strategy at all is thinking you have one but daily actions of peers and other team members are not linked to any strategic plan. Management is confident a strategy exists but team members have no earthly idea how their daily actions contribute to the goals of the enterprise. The thin veneer of what appears to be a strategy camouflages the absence of one.
Here are some examples of “strategy camouflage”:
The “Management Strategy”.
Management has been told that they must create a strategy. So, they gather to create something that appears to be a strategy. However, it isn’t shared with the team that would deliver it. Objectives that would support the strategy are not cascaded down through the organization. The objective is to fulfill the requirement with a check-the-box activity to develop a strategy as opposed to defining a plan to bring about a desired future.
The “File-Cabinet Strategy”
The effort is data driven and many different levels of the organization are engaged in the creation of this strategy. Growth objectives are proven to be real with credible targets and customers identified. Logical continuous improvement or profit enhancing vertical integration ideas are identified and high level plans are included. The bottom line is that reasonable goals are created and thought is put into what would need to happen to reach them. The results are presented to stakeholders and are met with a mood of acceptance. And that’s where it ends.
These come very close to becoming applied strategies. However, the process of developing the strategy is looked at as the objective of this project. Once completed, the strategy is placed in a file cabinet to serve as a starting point for next year’s strategy. It is not made a part of the daily “corporate conversation” and people return to the “real work” when it’s complete.
The “Public Display Strategy”
This is usually some blend of a Quality Policy creation and the development of an actual strategy. Some noble, concise statements are made about the kind of company yours either will or won’t be and boiled down to mission and vision statements. These are proudly displayed throughout the enterprise and each employee gets a laminated copy. Employees read them and don’t object to the high-level, logical ideas that are the equivalent of “don’t run with scissors”. However, they can’t bridge the high level statement to their daily activities.
The “Moon and the Stars Strategy”
This goes a step further than the concise statements made in mission and vision statements. It includes a list of ambitious, ambiguous and/or vague ideas that, in the best case, would be long-term goals. However, they lack any ties to the daily operations or management’s commitment to install the appropriate infrastructure to make them realistic. The rank and file ready these fluffy, idealistic ideas and can’t imagine what they are supposed to write on their task lists to help achieve them. Regardless, they are confidently in favor of solving world hunger - once someone tells them how they can contribute.
The better versions of the Moon and the Stars Strategy have very specific statements about financial goals or goals for growth, like “increase EBITDA by 2% next year”, but they stop there. To be effective, senior management would need to work with managers and directors to develop credible plans that define how the objective can be expected to be accomplished. Activities could be broken down into specific tasks, cascaded to team members at all levels in the organization, and tracked to completion. Leaving “increase EBITDA by 2% next year” as the “detailed strategy” does nothing but frustrate those expected to deliver.
Having a strategy is essential to meeting the objectives of any organization. Successful entrepreneurs understand this, intrinsically. The entrepreneurial spirit can be a casualty of the systems, processes, and procedures culture of corporate America. It is paramount that competent leaders implement strategy from top to bottom in the company. It’s one thing to trust that your team is effective, but if you really want to ensure results you’ll trust, but verify with regular evaluations. What is employee doing if not contributing to the execution of a strategy to achieve an objective? It’s the difference between activity and accomplishment.
As a competent leader, you need to protect against strategy camouflage. Strategies are not created to check a box or because “it was assigned to you”. You owe it to the stakeholders of the company to be able to commit to results and have a credible plan with reasonable confidence they can be achieved.