Who Really Cares if I Have a Strategy?
The Trouble with Strategy
Many conversations about business strategy start in the wrong direction. As soon as the word strategy is uttered, eyes roll and shoulders droop. Like a voice came over the loudspeaker announcing an indefinite flight delay or that the coffee machine will take another few hours to repair. We’re sorry for any inconvenience caused…
To my surprise, I see similar reactions from many business leaders, not just their staff. Why, they ask, should we spend precious time debating something as banal as strategy? (expressing distaste by emphasizing the ‘rat’ in the middle). Am I not aware that they have a growing business to run? The growth of which, they are quick to point out, must be the product of a successful strategy, must it not?
Perhaps so, but how can we be sure? Why does it matter that we're sure?
The company strategy might be an elegant, meticulously researched thing residing in the founder’s head or a dusty, spiral-bound report wedged between two-year-old trade journals on a corner shelf. In either case it’s failing to serve its purpose and, frankly, being sadly mistreated.
Strategy should be a living, integral part of daily operations. It should provide an anchor for decision making and the basis for prioritizing actions.
More importantly, it should be something that everyone associated with the company cares about – and to which they are eager to contribute.
“Trust me - I Know What I’m Doing”
Smaller, private companies are generally run by a handful of people. This usually includes the founder(s) and a few hand-picked individuals they have added to manage critical functions. The founder(s) had an idea in mind when they started the business and they have diligently built and led the team in the pursuit of that vision.
In many cases, the rationale for starting and running the business has never been documented. Investors and employees have been recruited on the basis of a well-told story, made credible by the founder’s experience, reputation, and domain expertise. In short, they have been told: “Trust me, I know what I’m doing.”
Having a knowledgeable, insightful person at the helm is obviously a critical ingredient to success. Their passion for the business and belief in where it’s headed can carry the team through tough times. They can persuade otherwise skeptical investors and customers to provide critical funding.
But, sooner or later it becomes essential to translate their ideas into something the whole group can embrace, challenge, adapt, and improve. As the African proverb says, “It takes a village to raise a child”.
This begs the question: who cares whether the company has a strategy? Or, more precisely: whether the company has a documented strategy that has been shared with the team and is used in day-to-day operations.
In the Eyes of a Leader
Leadership team members should recognize strategy as an essential ingredient in the recipe of good business.
Capturing company purpose and mission, as well as developing a shared vision, are critical steps in transitioning from a founder-centric startup to a properly managed business.
In conjunction with those elements, strategy provides a plan of action for achieving significant objectives that contribute to the company’s mission and help it progress towards its vision.
Leaders need to internalize corporate strategies and translate them into discipline- and team-specific strategies that are meaningful to their staff.
As the organization becomes larger, so will the number of layers of strategy. Unless each leader feels responsible for – and takes ownership of – corporate-level strategy, it will be very difficult for them to set and champion strategic direction within their area of accountability.
Top-level leaders should also contribute to regular strategic reviews and updates. How frequently those reviews take place will depend on the pace at which the business is growing and the degree to which its operating environment is changing.
No strategy should last forever, but constantly changing strategy is also a bad thing. Quarterly checkups and a more in-depth annual review are typical for many organizations.
As Seen from the Front Lines
Another misconception that I’ve seen far too often is that strategy is just for the bigwigs.
Whether it’s a leader who doesn’t see the point in sharing strategy with her staff or a team member expressing disdain at having to participate in a strategy-sharing session, employees at every level in the organization should appreciate the importance and usefulness of strategy.
I recently worked with an organization that had undergone significant changes in the face of a serious market recession. Upper management was naturally focused on keeping the business alive. They developed strategies for repairing the balance sheet, prioritizing product development in spite of resource constraints, and even for entering new markets to help replace lost business.
However, they failed to communicate any of this with their staff. As a result, morale remained low and anti-management sentiment ran high because it appeared as though they “didn’t have a clue what to do”.
Leaders need to clearly communicate strategies to their staff so that everyone understands where the business is going and how to make decisions, assign resources, and prioritize work.
Staff should take an active role in understanding and constructively challenging strategies affecting their area of the business. They should welcome the opportunity to participate in strategic reviews and to contribute to strategy development.
What Will you do with my Money?
A well thought-through strategy can also come in handy when talking to the money men. Whether you’re trying to sell equity to an investor or persuade the bank to extend a line of credit, being able to clearly articulate how the money will be used is a major advantage.
Sure, investors are looking for a competent team with a winning idea and a compelling vision - but it’s the strategy that convinces them it’s doable; that the team has a plan for getting from here to there.
Bank analysts are likely to be even more concerned about the game plan. While investors may bite on a compelling idea and worry about making it work afterwards, banks have a much lower risk tolerance. They want to hear a cogent explanation of why the business is pursuing a particular path and how that translates into cash flow.
From Customer to Partner
Strong customer relationships are built upon more than just selling the right product at the right price. To beat the competition requires anticipating your customers’ needs to come up with solutions to problems they haven’t even voiced yet.
As Thomas Ripsam and Louis Bouquet wrote, this requires “a deliberate, well-designed, and perceptive customer strategy.”
To achieve this, they say, requires answering such questions as: Who are our customers? Which of their needs can we address? What capabilities do we need in order to deliver that experience?
The customer strategy should not - I would go so far as to say cannot - be developed in isolation. Customer feedback will provide critical input to your technology strategy. Capability needs will drive staffing, learning, and development. Ultimately, the customer strategy must be tied back to the company’s overall purpose and identity.
And when designed and implemented effectively, a winning customer strategy will transform your company from vendor to trusted partner.
The Bottom Line
A solid strategy is interwoven with and critical to every aspect of the business. So, to answer the business leader’s question posed in the introduction to this post: Everyone in the organization should want to “spend precious time debating something as banal as strategy.”
While it will remain the leader’s task to concisely capture and share their organization’s strategy, everyone involved with the business should care that it exists, that it makes sense, that they agree with it (at least in principle), and that it receives regular revision and consideration.
Things to Remember
Strategy should be a living, integral part of daily operations
It should provide an anchor for decision making and the basis for prioritizing actions
Employees at every level should appreciate the importance and usefulness of strategy, and take an active role in understanding and constructively challenging strategies affecting their area of the business
Having a coherent strategy is also important when talking to investors, banks, customers, and other stakeholders
This blog post was originally published on February 4, 2020.
Photo Credits
Photo by Form on Unsplash
Photo by Lysander Yuen on Unsplash
Photo by Alice Pasqual on Unsplash
