Strategy has three elements that only work together: a set of strategic goals, the development process that produces them, and the execution system that keeps them moving. The break is almost always between the second and the third. Goals get formulated, signed off, and never get an operating rhythm behind them.
We live in a VUCA world: volatile, uncertain, complex, and ambiguous. Securing innovation and competitiveness and shaping digitalisation sit at the top of decision-makers' agendas, and technology cycles keep shortening. Planning horizons get shorter with them, which means a strategy has to be revisited more often than an annual cycle allows.
Strategy and execution are closely intertwined
A 2018 study at the Massachusetts Institute of Technology (MIT) found that only one quarter of senior executives can correctly name their company's top three priorities. In a complex and dynamic market environment, that number is a significant problem. Decision-makers at every level of an organisation must be able to make the right calls quickly and coordinate with one another without waiting for central approval. Traditional, highly centralised decision-making processes are too slow and too rigid for that. For it to work, a company's strategic priorities must be clear and clearly communicated.
What decides the quality of a strategy process
- The team must be involved. The knowledge sits within the organisation. Strategy cannot be developed at the "small card table" alone; it must emerge in collaboration with the core team. Beyond the substantive benefit, this ensures that a strategy is absorbed and accepted by the organisation during the process of its creation.
- Clarity on the business model, today and in the future. Regardless of how the world evolves, every company will have a business model. Thinking in clear business model dimensions reduces complexity to the essential questions, points to the right analyses, and moves the discussion past improving the status quo.
- North Star and strategic goals. A strategy development process should end with a North Star and a coherent set of strategic goals. The North Star sets the direction: the why behind the work and a long-term, ambitious objective. The strategic goals break the complexity of the analysis down into a simple, measurable set of targets that every decision-maker in the organisation can orient around.
Which element to work on first
It depends on where the break sits.
- Goals unclear: agile strategy development works through the process itself, including the three factors above and how OKRs and quarterly reviews keep a strategy current.
- Goals clear, organisation not carrying them: developing corporate strategy covers the blind spots that appear when the organisation is brought in late.
- Goals clear and carried, nothing moving: strategy execution sets out the six dimensions that decide whether a strategy reaches performance, and the target operating model is usually where the fix has to be built.
Author
Stefan Benndorf, Founding Partner scaleon GmbH
stefan.benndorf@scaleon.de
