Organisations can be so focused on the day-to-day issues, that strategy suffers. Here are the five key things that can trip organisations up.
This article was written for and published by Financial Director magazine on 17th October, 2017.
Commercial organisations, particularly large corporates, are often so focused on the day-to-day issues of performance, competition and share price, that they take their eye off the strategy ball. This failure to lift the eyes to the horizon and plan for the future can have serious consequences for reputation, market share and capital.
From development through to implementation, communication and measurement, there are some common mistakes that organisations make. So what are they and what can we do to stop falling in these traps? Here are the five key potholes that often trip organisations up:
1. Poor two-way communications
Business leaders tend to communicate about strategy in only one direction; messaging outwards and downwards without taking the time to allow the recipient to respond (or to listen to the response). We all receive a message in a different way, influenced by our backgrounds, experience and what may have happened to us that morning. This is just human nature but can lead to unintentional errors and leaders questioning why their ‘very clear’ instructions haven’t been followed.
One way of ensuring that recipients have the right understanding of what they’ve been told is ‘closed loop communication’. This is a technique used by the medical world and is also an integral part of military leadership. It gives the target audience an opportunity to give feedback on how they will conduct the required actions, which then allows leaders to check that the message has been correctly received.
2. Failure to think holistically
Everyone, even the very best leaders, have a finite attention span. In a busy organisation with a lot going on, it is inevitable that this leads to a focus on the most immediate strategic issues, rather than looking at the whole ecosystem. This is particularly noticeable in PLCs, where today’s share price is seen as more important than long-term growth, or in manufacturing where production rates are king.
By focusing on specific issues and not the whole picture, we miss the opportunity to build an enterprise-wide strategy, which might deliver far more powerful results than those achieved by focusing only on the sharks nearest the boat. Forcing ourselves to consider all aspects of our business environment, and not just the burning issues, keeps our organisations balanced and agile.
3. Failure to draw challenge from the internal stakeholders
There is a tendency to assume that strategy is, by its nature, the preserve of the senior leaders in an organisation. This means that leaders design and write the strategy in splendid isolation, without being fully aware of the day-to-day frictions that will cause the strategy to fail. They then have to spend considerable time attempting to convince skeptical employees that the strategy makes sense.
Giving team members a role in strategy development delivers all sorts of benefits. Firstly, the strategy is more accurate, having received a robust challenge from those who understand the daily frictions. Secondly, change appetite and desire for success is increased among employees as they feel they ‘own’ part of the plan. Thirdly, it prevents ‘group think’ among the senior team from creeping in, which tends to lead to ‘optimism bias’ – i.e. if we keep believing it will all be ok then it will be… Won’t it?
4. Lack of foresight
How many times have we heard the phrase ‘we should have seen this coming’? Whether it’s in business, politics, or at home, we rarely make the effort to look ahead and try to predict what might happen. There is an element of ‘wilful blindness’ that starts to creep in to here. We know that our strategies and plans will go wrong at some point, but we prefer not to engage with such negative thoughts. Instead, we simply press on with what we have designed and deal with crises as they happen, wasting valuable time and finances in the process of trying to recover from mistakes.
We need to get more comfortable with advance-testing our strategies and considering failure; exploring the areas in which our plans might fail and working out, pre-emptively, what we would do about it. This makes organisations more agile and higher tempo, with better decision-making at pace.
5. Lack of dynamic approach
A strategy is something that we use to help guide our actions and decisions. As such, if it remains static and unchanged for three or even five years, it quickly loses its accuracy. A strategy should be regularly updated, reflecting the outcomes of our actions. If our decisions have produced positive outcomes then the strategy should be updated to ensure that we repeat the success in the future. If the outcome is negative, the strategy should be amended, to ensure we don’t make the same mistake again. In this way, a strategy iteratively becomes a better and better framework for making the right decisions.
A strategy should, therefore, be seen as more of a guide than an absolute; something that helps get all of the organisation heading towards the same compass point. In order to do that, it needs to be a living breathing document, which is ‘self-aware’ and learning from what is happening around it; not cast in stone and gradually diverging from the reality of the changing situation.
The frequent response to the solutions offered above is that they are all ‘too difficult, too bureaucratic –they will slow us down’. Firstly, this doesn’t have to be the case; there are multiple ways in which feedback and challenge can become an inherent part of an efficient planning process. Secondly, we need to ask ourselves whether, if we are honest, slowing down and thinking about things might bring even bigger rewards than simply avoiding costly mistakes caused by hasty decisions. In the business world, as in the military, there is a definitive case for ‘more haste, less speed.’
Chris Paton is CEO of consultancy Quirk Solutions, which specialises in helping corporates through military wargaming. A former Lieutenant Colonel in the Royal Marines, Chris is a military expert who advised on Afghan strategy and was responsible for the design of the drawdown of the UK’s military presence in Afghanistan.