Many organizations struggle to translate their strategies into actual, concrete results.
I have spent the last decade implementing and managing Strategy Management processes at international and national companies, on 3 different continents. If I have learned anything from that, it is that most strategy failures are not attributable to a lack of processes. Most organizations “follow the book” on Strategy Management and utilize substantial resources on processes to communicate the strategy, translate the strategy into objectives, cascade the objectives down the hierarchy, develop action plans to achieve the objectives, measure progress through key performance indicators (KPIs), reward performance, et cetera.
What is often lacking, however, is appreciation of the fact that Strategy Management is not a pure science. Strategy is about changing organizations, after all. And organizations are made up of people who have a natural inclination to dislike and even resist change, meaning that Strategy Management must also cover changing peoples’ mindsets and attitudes. In fact, according to some, Strategy Management is 95% people management. Since people aren’t robots, and no two people are alike, the people management side of Strategy Management requires soft skills. This is the “Art” of Strategy Management.
The Root Cause of Strategy Execution Failure: Engagement
When it comes to the people management side of Strategy Management one of the key challenges is finding the right balance in engagement of the organization. Where exactly to engage the organization during Strategy Definition, Strategic Planning and Strategy Execution, who exactly to engage, and how exactly to engage them.
At most companies the C-suite develops the strategy, engaging the rest of the organization only very little (if at all). Thereafter, during Strategic Planning and Strategy Execution, organizations tend to be either over- or under-engaged.
The meaning of over-engagement is that after Strategy Definition, the responsibility for developing action plans is handed over to senior- and middle-managers -- i.e. Mid-Management (MM) -- such that the task disappears from the radar screen of the C-suite. By extension MM then also develops its own KPIs to monitor and report on its performance.
A consequence of such over-delegation in Strategy Management is misalignment.
This is attributable to a lack of cross-functional awareness. The cross-functional awareness that is necessary for strategic planning normally rests only with the C-suite. Managers in MM are responsible for functions in the organization. They know what their functions are responsible for. Most of them will also know who and what their functions are dependent on. But few fully appreciate the way their functions impact all the other functions that make up the organization. As a result, strategic plans developed by MM tend to lack in cross-functional alignment, i.e. not all the interdependencies that are key for the organization to successfully action the strategy are identified and addressed cross-functionally in a collaborative manner.
Under-engagement tends to develop when organizations have large and powerful “Strategic Planning Departments (SPDs)” that centrally develop detailed actions plans and KPIs. At such organizations the role of MM is limited to executing action plans given to them.
While such centrally developed action plans may better address the issue of cross-functional alignment, they often lack in comprehensiveness and can be unrealistic.
Essentially this is because an SPD, just as a C-suite, does not possess all of the insights and specialized knowledge of operations that are required for comprehensive and realistic planning. This information is scattered throughout an organization, with concentrations located at MM level and with Subject Matter Experts (SMEs). Usually, therefore, managers and SMEs are best informed as to what it takes to perform any particular task, the strengths and weaknesses of their functions, and challenges facing them. Consequently, not engaging them in the planning process will leave “holes” in the action plan, such as capability gaps, unreasonable assumptions, et cetera.
These holes will not be apparent to the SPD because of the limited information it possesses. The holes will, however, be apparent to MM and SMTs leading them to conclude that the action plans are out of touch with reality. This, in turn, will lead to cynicism in the organization regarding the plan and – by extension – the strategy it represents, as well as a lack of motivation to contribute and succeed.
Striking the right engagement balance
Effective Strategy Management requires engagement from both C-suite and MM, since neither can manage strategy comprehensively on their own. MM because, by design, its focus is on a function of the organization and not the entire organization. The C-suite because its focus is on the entire organization rather than the details of individual functions.
What is required, therefore, is a team that links the C-suite’s comprehensive but high level understanding of the organization’s activities, with the more narrow but detailed understanding of the organization’s activities that is found with MM, without getting in the way of either: a Strategy Management Team (SMT).
Unlike the SPD the SMT does not do strategic planning. And unlike the Office of Strategy Management (OSM) it does not decide on Strategy. Rather, it supports, guides, enables and facilitates, leaving decisions to the C-suite and planning and executing to MM. It is a coordinating body in between the C-suite and MM, smaller than the typical SPD and has no formal decision making authority in matters of strategy.
It supports the C-suite during development of the strategy and takes responsibility for communicating it to the organization in order to enable everyone in the organization to answer the question “What does the strategy mean for me?”, i.e. to achieve personalization of the strategy.
By addressing the aforementioned question, the SMT enables MM to undertake activity planning based on the strategy. However, during this phase of Strategy Management, the SMT focuses on identifying interdependencies and ensuring MM addresses them, such that in the final strategic plan there is cross-functional alignment of tasks as well as the timing of tasks. The SMT also elevates to the C-suite any conflicts in terms of timing or resource requirements that might emerge during the planning exercise at MM level.
The SMT work to personalize the strategy and to align the functions and their plans on the basis of the strategy is effective engagement of MM in Strategy Definition, as it enables MM to evaluate the sanity of the strategy early on and feedback its findings: “Can I do what the strategy demands from me?” and “What do I need in order to do what the strategy demands from me?”.
During Strategy Execution the SMT continues to manage communication between MM and C-suite, this time around actual performance and delivery against the overarching objectives. This builds commitment to the strategy in the organization. MM will know that it has to take its engagement in Strategy Definition and Strategic Planning seriously, because eventually it be held accountable.
The next article in the series, Part 2, will discuss in more detail the Strategy Formulation phase of Strategy Management.
The “Managing a Strategy into Reality”-series
Part 1 discussed the necessity of establishing a Strategy Management Team (SMT).
Part 2 reviewed the Strategy Formulation phase of Strategy Management.
Part 3 will review the Strategic Planning phase of Strategy Management.
Part 4 will review the Strategy Execution phase of Strategy Management, focusing in the Strategic Performance Management process.
Part 5 will continue the review of the Strategy Execution phase of Strategy Management, focusing on the Strategic Risk Management process.
Part 6 will discuss the key competencies required for effective Strategy Management.
Part 7 will review the relationship between Strategy and Corporate Culture and explain how Corporate Culture can be managed to supporting the Strategy.
Part 8 will review whether Strategy Management remains relevant in today’s volatile, uncertain, complex, and ambiguous world.
If you have any kind of feedback, feel free to leave a comment or connect with me on LinkedIn.