It’s the time of the year when most organisations are finalising their business plans and strategies for 2016. This, as most of us can vouch for, can often be a challenging and somewhat fraught process at the best of times.
I want to suggest a couple of tips to ensure that CEOs and their management teams make the most of the experience.
1. Spend enough time.
I am surprised at how little time some teams plan to spend on their strategy process, thinking, for example, that half a day will be sufficient. To assess the strategic position of a business and to decide upon clear choices among different initiatives will take at least a day and usually two. What does make a difference is how recently a strategy review has taken place so if the organisation has undertaken one in the past six months, a day can usually be sufficient.
2. Make sure that you are focusing upon the right things.
Two challenges that I observe is either an immediate focus upon a single number such as a revenue target or a tendency to jump straight into operational and tactical challenges at the expense of the wider systemic issues. In terms of the number’s challenge, the CEO decides upon a revenue forecast for the following year and then the team has to retrofit the strategy and business plan to fit. This can then become an exercise in everyone trying to make the CEO feel good as different parts of the business jump in with their own forecasts that are based purely on meeting the overall number as opposed to the reality of their units or divisions. And the result is fun and games as teams look to game the system in terms of presenting their own projections.
A quick and immediate way to minimise these risks and to ensure that the discussion is strategy focused is to remind everyone of the GOST framework. This is not rocket science but explains the difference between a Goal, an Objective, Strategy and Tactics and clarifies the need to focus upon the strategy required to deliver the revenue forecast.
3. Make sure you spend enough time clarifying the different choices the business faces and deciding upon how they should be prioritised.
This, in my experience, is the most challenging part of any strategy process because of the risk of group think and because individual managers and leaders perceive the potential for a relative loss of status. Thankfully group think is today widely recognized as a potential strategic risk but dealing with it is still difficult. One approach that I find useful to minimize the risk of both challenges is to ensure that cross functional teams are involved in the crafting of the strategic initiatives. This means that the collective intelligence of the business is involved and the particular initiatives are less identified with specific individuals.
However, ultimately for a strategy to be effective, decisions must be made on what choices are to be pursued and equally importantly which are to be halted. Ensuring that these decisions are made and that everyone is clear about the result is the responsibility of either the CEO or the relevant senior leader. Once this happens, a meaningful and aligned business plan should be the result.
If this does not happen, the result is what Richard Rumelt, author of Good Strategy/Bad Strategy, describes as the “dog’s dinner approach to strategy” when there is “scrambled mess of things to accomplish” and no coherence and very little chance of delivery.
4. Make sure the business plan identifies the capabilities required to deliver the strategy and have owners and time lines to ensure accountability.
Managing a successful strategy process is not rocket science but needs time and structure to ensure success.
So make sure you plan and organize the process and remember the potential prize is big. An organization with a clearly defined strategy and business plan stands a much better chance of success.
Dr. Jonathan Westrup is a contributor on the IMI Mini MBA covering the theme of Strategy. His expertise is in the areas of business, organisational and regulatory strategy and corporate governance.