“Why a strategy is so important – especially in tough times!”
Quick – write down three key things you and your team want to accomplish this year. Now ask some team members to do the same. Can’t do it? Goals don’t line up? You’re not alone!
When Agilent Technologies decided to create a single global company from a fragmented group of business units in Asia, Europe and the USA they didn’t know what they were in for. The newly appointed management team quickly organized themselves by function and decided to exit many of the marginal regional businesses and instead focus on opportunities that had more promise from a global point of view. Sounds OK so far… but that’s where the strategy ended. There were no business unit strategies or geographical strategies; everything would be controlled by the functions. As one can predict tensions soon festered. The sales and regional teams felt the new management group had no strategy – (they were right). They were concerned that their leaders didn’t know the businesses well enough to even ask the right questions and felt management was too slow to respond to the market changes. Additionally, since everyone reported to a function no one was accountable for taking care of the customer.
Sound familiar? Research shows that the employees of Agilent aren’t alone. In numerous organizations executives, middle managers, all the way to the frontline frustration abounds because they feel no clear strategy exists for the company or its business lines. Authors Collins and Rukstad, in an HBR article state, “It’s a dirty little secret: Most executives cannot articulate [the business strategy] in a simple statement. If they can’t, neither can anyone else.” 1 So how do we develop a strategy and what are the elements of a good one?
First, don’t ever develop a strategy by yourself. Certainly think about it, but part of the strategic planning process is to engage the larger team, soliciting their ideas and thus also ensuring their buy-in. Here are the steps in order:
- Situational Analysis – the SWOT analysis: the goal of creating this laundry list of Internal Strengths & Weakness and External Opportunities and Threats is to come to one conclusion – What market opportunities exist that we can match with our competitive advantages to capture a significant percentage of the market, make a huge profit, or accomplish a humanitarian goal? This leads to….
- Vision and Objectives: Vision states clearly what will be accomplished and what resources will be needed. Objectives are shorter term and need to be Specific, Measurable, Actionable, Realistic and Timely. How all this will be accomplished is the….
- Strategy: Portfolio, Segmentation and Positioning: A strategy that tells us on which products and services the focus will be – that’s portfolio; which customers will be targeted and why – that’s segmentation; what messages will be deployed to make those chosen products or services stand out as the best solution – that’s positioning. This all leads to an…
- Implementation strategy: which tells how the strategy will be communicated, what skills are needed, how incentives will be aligned, what systems will be built to measure the progress, what resources need to be secured and a detailed execution plan of who is to do what to ensure the strategy executed.
Don’t have time to do this? Don’t think this is important? Aligent turned their business unit around in six weeks once they built a business strategy at various business unit levels. An HP division improved profits nine fold in seven years using this process. Mattel Canada moved from last to first among international subsidiaries using this process and one of our clients transformed an 80 million dollar business into a 600 million dollar business in three years.
If you don’t know where you’re going – any road will get you there. Stop managing activity and start leading your team. Get together and build your strategy. Now is the time!
1. David Collins and Michael Rukstad, “Can You Say What Your Strategy Is?” HBR pp83 April 2008
2. Michael Beer and Russell Eisenstat, “How to Have and Honest Conversation about Your Business Strategy” PP82 – 89 HBR Feb 2004