In today’s highly-dynamic world, strategy-making needs to be more than just strategic planning, although planning is certainly involved. It’s not simply high-level strategic thinking because thought alone doesn’t drive business outcomes. It’s not even just strategic execution because plenty of strategic activity fails to produce strategic value.
Good strategy-making is the work of consistently and persistently evolving your business toward the future that it aspires to.
This includes evolving every aspect of your business. Not just your annual financial results and business KPIs but how you decide what services you offer your customers, how you improve those services, how you better serve those customers and how you shape the workplace that underpins your ability to implement those decisions.
This makes business strategy a future-focused activity and strategy-making a journey into your business’s future.
Every journey is clearer with a map
If you’re going to embark on a journey, you need to have a roadmap to help you find your way. But this journey isn’t a trip from Melbourne to Sydney on the Hume Highway, it’s more like a trip through the wilderness over uncertain terrain. So, the roadmap is more like a topographical map, with contours and key landmarks, than a Melway directory.
Importantly, it’s a roadmap that needs to be regularly updated because your ability to clearly see the near-term path is much better than your understanding of what’s just over the hill. So, this roadmap must set out both the initial steps you’ll take on your journey, as well as the approach you’ll use to refine and add detail to the roadmap as the journey unfolds.
Because the future is always in front of us, it’s a journey that never ends. It’s a journey with direction but no destination. The end of a strategic planning period doesn’t mark the end of your strategy, it merely marks a point to re-assess the course of that journey. If appropriate, it’s a chance to adjust the direction based on what you now know about the regulatory environment, the economy, your customers’ needs and wants and, if it’s been done well, the knowledge that you’ve gained from the journey thus far.
Why strategy has gotten lost
Unfortunately, business strategy has become a very static, analytical discipline that lacks action and forward momentum. Our strategy-making is often more concerned with developing a plan that creates the illusion of certainty, than with forging a successful path toward an uncertain future. It has become an annual cycle of ‘plan and measure’ rather than a continuous journey of ‘do and learn’. As a result, research shows that anywhere from 63% to 90% of strategic plans fail to deliver meaningful business value.
This is because one of the rarest elements in a strategic plan is a strategy for executing your business’s strategy. In fact, research undertaken by McKinsey showed that only 23% of companies use a formal process to operationalise important strategic decisions. Robert Kaplan, of The Balanced Scorecard strategic planning approach, reports that they have undertaken multiple studies that show 90% of strategic implementation failures are the result of ineffective execution.
An effective strategic journey is both deliberate and emergent
Henry Mintzberg, in his 1994 book The Rise and Fall of Strategic Planning, talks about the need to incorporate two elements in our strategy-making. He calls these ‘deliberate’ and ’emergent’ strategy.
Deliberate strategy includes those initiatives that are preconceived, require careful planning and have a very specific outcome in mind. This would include capital infrastructure investment or expanding into a new geographic market. The need to devote capital and organisational resources to these types of projects means that they need to target very specific long-term benefits and incorporate carefully considered predictions about where the market and the economy are headed.
Emergent strategy includes those activities that are the product of ongoing synthesis of the market and business environments. This means consistently translating what’s happening in the market, within your business and your assessment of potential business opportunities into strategic action. An effective emergent approach initiates strategic activities that will prepare the business for a future shift in approach or focus rather than creating an operational reaction to emerging data.
Mintzberg argued that any business that doesn’t include an emergent component in its strategy-making leaves itself dangerously exposed to the rapid pace of technological and competitive change. Twenty-five years on from this work, the pace of change has only increased and the potential impacts of this change have increased in both scope and magnitude. So, it’s even more important today to incorporate emergent thinking into your strategy – in certain industries and markets, it is the single most important part of an effective strategic approach.
Create a roadmap for journeying into the unknown
The deliberate strategic journey requires a roadmap with a clearly plotted course to keep the work that is to be undertaken on track. Yet even then the steps required to move from point to point are highly variable and filled with obstacles and false-starts. This is due to the fact that deliberate strategic activities are often complex, filled with cross business interdependencies, rely on predictions about market reactions that are outside of your control and unfold over an extended period. Each activity requires its own strategy – its own roadmap – that must be constantly re-visited.
The emergent strategic journey, on the other hand, requires a roadmap for identifying, selecting and undertaking the emergent activities that represent the best strategic investment. They rely on constant assessment of the market, the economy and the response to your previous strategic steps to determine the path ahead.
Both types of strategy-making benefit from an intentional approach to strategic roadmap development. I’ve identified five phases for effectively developing a strategic roadmap:
This is not an analytical model for assessing return on investment. It is a ‘mental model’ of the business you aspire to become. What value do you want to deliver to the marketplace? How do you want to be seen by your customers? What sort of workplace do you want to create?
Then determine the strategic foundation, goals and objectives that will allow you to manifest that model. On our metaphorical journey, strategic modelling establishes the direction for all your strategic execution activities and sets out some of the initial waypoints along the journey.
The most challenging part of strategic modelling is the suspension of disbelief. Although it is the foundation on which all your strategy-making is based, you need to accept that it’s probably wrong. But clarity will come from the act of moving toward it.
Map out the Development Opportunities that will lead you to your near-term strategic goals and objectives. These are the organisational qualities you want to create, improve or amplify – whether operational, product or customer service focused. This allows you to link the business’s strategic objectives to improvement opportunities by responding to the statement ‘We could achieve that if we did this’.
If strategic modelling creates a beacon for directing your strategic journey, then strategic mapping is the survey work to establish the terrain that your strategy must traverse to reach its initial objectives.
The best ‘vehicle’ for exploring the business terrain is by identifying ‘projects’ that will allow you to realise your development opportunities. These strategic projects are not big transformational undertakings. They’re short-duration, hard-hitting activities that target a single, specific strategic outcome – either on their own or as part of a longer program.
This exploration should be undertaken with the people that know the most about the opportunity being pursued. The staff with the knowledge and experience that will allow you to get the most out of the terrain ahead.
Importantly, the projects you identify should be prioritised based on their strategic value. This provides you with a basis for determining how best toinvest the limited time, energy and resources that you have for strategy-making.
Strategic preparation is where you begin to set your strategic journey in motion – it is where you establish your strategic execution framework.
With the strategic projects identified and prioritised, you want to make an effective strategic investment by focusing on the endeavours that best serve your future and the business outcomes that future will enable. You do this by selecting a strategic project portfolio made up of the highest-priority strategic projects that your organisation has the capacity to successfully complete.
For the selected projects, your project teams need to ensure their projects are effectively linked to your strategic intent from four key perspectives: 1) strategic context, 2) the change you hope to make, 3) the people required to maximise the outcome and 4) the business value the project will deliver.
In our metaphorical journey, this is where we select and provision the teams that will lead the business on this leg of the strategic journey.
With the initial leg of your strategic journey laid out and the strategic travellers identified and provisioned, it is time to launch. You want to ensure that your strategic journey commences with fanfare – not in quiet stealth – to garner organisational support and enable your strategy-making efforts. You want it to be clear that an intentional focus on the future is crucial for the business’s long-term health and vitality.
This means preparing your organisation for the strategic journey. You want to ensure that leadership behaviours are congruent with your strategic intent. You want to know that your project teams are supported and enabled by the business, as well as prepared and committed at an individual level.
A roadmap creates clarity and meaning for your strategy-making
When done well, this strategic roadmap creates a clear linkage between your strategic objectives, the opportunities that will lead you to those objectives and the projects that will allow you to manifest those objectives. It allows your people to see the business value in the strategic work they’re being asked to do. It also imbues your strategy-making with action and purpose that delivers consistent progress and allows you to adapt at the pace of change in your business environment.
Is your business’ strategy-making an annual cycle of ‘plan and measure’ or a continuous journey of ‘do and learn’? Do your strategic plans deliver meaningful business value? Does your business have a strategy for executing your business strategy – a formal process to operationalise important strategic decisions?
I’d love to hear your thoughts and experiences in the comments below.