I just read stories from Harvard Business Review and got idea to write about strategy. It has been interesting to notice how so many companies have made same kind of mistakes in doing strategy and implementing that to real life. I have been involved in strategy work many times in slightly different positions and circumstances but I’m not willing to act as a strategy consultant. I try to write my learnings in unusual way. I would like to tell you how you could easily fail in strategy work.
In old days companies used to make new strategy for next 5 years and some of them is still doing that. I don’t understand how that could be possible nowadays when the speed of change and development is so quick? You should analyze longer trends and possible changes and make scenarios about the future. Those scenarios could be for next 10 – 20 years but you should realize that they are just scenarios which hopefully help you to notice how fast and to what direction the world is changing. The company should have view what it’s willing to reach and how that would happen in big picture – there should be mission and vision for the company. There are at least already two mistakes which you could make at this level. The first one is to make long term strategy and business plan instead of scenarios. The other mistake is to write unrealistic and not so inspiring mission & vision.
The next way to fail in strategy work is decide exact strategy for next x years. If management and Board have idea that now strategy is ready and company will follow that plan forever they won’t have so nice future ahead. It’s nowadays ”must” to have adaptive strategy which could/should be checked many times a year because the speed of change is so fast. You will fail even more if you don’t change annual planning and budgeting processes.
For some reason the top management quite (= too) often thinks that they have ”all wisdom” in the company. I don’t understand why so many companies are preparing their strategy in small group where are only directors as members. That kind of model would make the strategy process quicker and easier but will cause for sure big problems when the strategy will communicate to employees. I think that Board of Directors should be decision making body and of course Management Team has also important role, but it shouldn’t mean that they are doing that alone. That kind of process guarantee “nice” failure.
I guess that management might think that they are involved in experts to the strategy process when there have been some subgroups preparing special parts of the strategy. In practice that work normally concentrate on finding out support/explanation to already made decisions and it won’t create any commitment to new strategy. Board and management should describe ”the big picture” – main challenges and possibilities and then ask experts to find out solutions and new ideas to make it happen. It should be two-way process. It’s possible to involve in all employees to strategy process! Someone could participate in planning and preparations. The most of staff could give their ideas and opinions via surveys which should be organized during the strategy process. If you would like to fail in your strategy process forget your staff and let them just know what you have decided on behalf of them.
The next step is the content of strategy. Quite many companies seem to have full packed strategy where are everything what company is doing. That kind of companies haven’t been brave or/and wise enough to decide what are the most important elements in their business. In that kind of case all directors will be happy in short term because they could keep their roles but in long term they will face “some” problems when business won’t develop so well. Strategy should describe what are the most important assets and capabilities for company. You should know where you could get competitive edge compared to your competitors and put lots of efforts on those things. If you would like to fail put efforts on everything and keep it as it has always been! It would also help if you won’t analyze the competition in your market at all – great failure ahead!
The last stage is implementation. Strategy should give guidelines to annual planning and budgeting. Annual planning should describe how company is trying to reach goals described in the strategy. Separate units should understand what their role is in “big picture”. When units know what they should do also single employees would know what they should do to help the company to reach the goals. In the ideal world all employees would know what the main goals of their company are and how they should work to make it happen. If you would like fail won’t strategy to guide the practical work at all. It would also help if you don’t communicate the “big picture” to your staff at all.