A critical role for any CEO is to set the future direction for the enterprise and to align the organization around a strategy. In developing a strategy, many organizations engage external consultants to bring experience, expertise, and bandwidth, while others choose to invest in internal strategy capabilities to formalize and drive a strategic planning process.
The process is predictable and can often looking something like this:
Step 1: Conduct a refresh of the strategic diagnosis by pulling together data, assessing industry trends, and evaluating the competitive dynamics and opportunities for growth
Step 2: Engage the senior leadership team to challenge critical assumptions, and the guiding principles of the strategy eventually come into focus
Step 3: Build the budget forecast and execution plan aligned with the strategy to coordinate the resources and actions of the organization
This approach has the benefit of drawing on experts in the field of strategic planning, is generally efficient, and provides year-over-year consistency. This often follows the standard annual strategic planning calendar: begin pulling data in July, review industry trends in August, begin developing budget in September, finalize budget in October, present plan to Board in November, finalize plan and sign off in December, just in time for the holiday break.
The downside of this approach is that it touches only a few members of the organization. The extended leadership and management teams often don’t get the exposure, or opportunity, to think strategically about their business and have limited experience for what it takes to make critical business decisions. Over time, the rising talent become overly operations focused, and the organization becomes critical, particularly when tough decisions are made, of the closely held strategic planning approach.
Consequently, with limited input into the crafting of the final product, company managers understandably tend to ignore, half-heartedly support, or actively undermine strategies from which they were not included, and those which they fail to understand or accept.
Recognizing that they have failed in drawing upon the talent and insights of the organization at large, many leaders have realized that treating strategy development as something done to the organization does not work, and increasing numbers of senior leaders support greater involvement in strategy formulation by those senior managers ultimately responsible for executing it.
Our perspective is that winning strategies often have the broader organization’s fingerprints all over them. As a result, they incorporate a level of organization- and industry-specific knowledge and experience that competitors can never replicate, and begin creating organizational buy-in and alignment from Day One.
In “real life” practice, due to timeline mandates and logistical challenges of involving many team members at all levels, leaders often choose to own the strategy. But when it’s time for strategy execution, they will then likely rely on a misaligned and sometimes disenfranchised workforce. However, leadership must understand that involving key stakeholders across the organization does not necessarily mean engaging the entire organization on all aspects of the strategy. For example, they should focus on areas where tools can be leveraged to scale the broader group’s inputs, critical to assessing strategic alignment.
Given the operational focus of the rest of the organization, one way to engage the extended team is on uncovering and aligning around what drives value for customers and for the business. A practical exercise is to develop a “value tree” (which may also be referred to as an “activity map” or “strategy map”). This will identify work that is being done across the business that truly drives value, sources of differentiation and competitive advantage.
Organizations can use various technologies to scale engagement, such as online tools and surveys, ranking Value Drivers across two dimensions: 1) Strategic Importance and 2) Capability to Execute.
Once the survey data is aggregated and analyzed, the value drivers can be plotted to visualize the degree of alignment across the organization, understand where there are sources of differentiation, and assess where to invest in order to sustain market competitiveness.
These insights can be used to engage the broader organization on the strategy or be used as a means to segment and probe on areas that require more in-depth discussions across the organization.
Since strategy development, like most other skills, is learned rather than innate, having team members intimately involved in the process is a form of “action learning” – the process by which active participation in a common or shared experience builds knowledge and capabilities. People engaged in the task of strategy development see both the inputs as well as their efforts in the end product. Not only does this build commitment to the strategy, it also increases the chances of successful execution, as the strategy development process assesses the organization’s capabilities to actually implement it.