Our thoughts on the future of business
Revenge of the Strategists
Jonathan | July 21, 2017
“Culture eats strategy for lunch”, the aphorism goes. But culture alone is not enough, top performing companies almost invariably have a highly differentiating strategy. To realize the value of a business strategy requires alignment with dozens of critical recurring decisions necessary to execute that strategy. Why should you care? Because 100’s of millions of dollars are at stake with each decision and without alignment that value is lost forever.
Strategic Enterprise Alignment
What is strategy? One simple explanation I like defines strategy as a set of guidelines the organization uses to make critical decisions. So, while a strategy might, for example, define target customer and product focus, the execution of that strategy requires managers to target the right customers with promotions and make ongoing investment decisions on products that align to the strategy.
So why do good strategies fail? Because the managers who make the decisions which will enable execution of the strategy often make those decisions without aligning back to the strategy itself. Strategic Enterprise Alignment is the practice required to ensure alignment of downstream decisions with the organization’s core business strategies.
Why is alignment so hard?
There are several reasons so many critical decisions fail to deliver the full potential of a company’s business strategy:
- Lack of cross-functional input – In contrast to front-line decisions that can be focused in a single organization, strategic decisions require input from different areas of the organization with different objectives.
- Subjective decision making with little data — Few would dispute that improving strategic decisions can unlock massive value, yet these decisions are frequently made in a meeting with minimal data analysis.
- Failure to adapt to changing business conditions – While many years ago a strategy could be “set it and forget it” today’s rapidly changing business environment demands that strategic execution be agile and adaptable as competitors, technology and customer demands change on an ongoing basis
- Lack of accountability or measurement – It is impossible to improve decision outcomes without holding decision makers accountable and ensuring that KPIs are identified and tracked.
3 steps to better strategic execution
How should an enterprise ensure that they realize their full potential in a rapidly changing environment? Enterprises should ensure that each recurring strategic decision incorporates three things:
- Align with strategy – Make sure all the key elements of your business strategy are included in your evaluation criteria – for example a marketing budget allocation decision should look at brand equity and target customer penetration, not just short-term sales lift. Involve all relevant stakeholders in the decision process to ensure that everyone understands the decision, why it was made and aligns behind the execution.
- Track outcomes — A good decision scorecard should have a very limited number of metrics to track, but enough to reflect on the diverse nature of the strategy. Don’t insist on perfect metrics, it is better to track a leading indicator where the perfect measurement is not available (e.g. NPS may be a proxy for likelihood to repurchase).
- Continually optimize – As you continue to execute recurring decisions two things will happen that require you to adjust your alignment: First, you will learn from the outcomes of previous decisions and you can use those outcomes to improve your analysis. Second, business context (new competitors, new products, different customers, etc.) will change and you will need to adjust your decision models to incorporate those changes.
Strategic Enterprise Alignment can have huge impact on the outcomes of your most important decisions. Building a structured, analytical decision process can help you realize that impact provided you put in place the organizational and cultural change required to make it stick.
Jonathan Stern, a long-time strategist, founded SnapStrat with the mission to provide analytical tools to help companies align their execution to their business strategy. You can find us on the web at snapstrat.com, on LinkedIn or Twitter