All too often the CEO and their top team are consumed by the day-to-day. Such is the extent to which they’re drawn into the business, they lack the bandwidth to really evaluate strategic goals and assess the future direction of the company. In the worst case scenario, the senior executives actually confuse talking about daily operational issues with deeper discussions about strategy.
Given how rapidly business models continue to change, a lack of forward thinking on boards can prove fatal. Criticaleye spoke to a range of business leaders to find out why strategy must be discussed and how it can be implemented effectively:
1) Create the Time and Space
Every board needs to allocate the time to have robust discussions about strategy. Andy Dunkley, CEO of clothing company Lee Cooper Brands, comments: “It’s certainly not easy to get a good strategy session done properly and get the balance with the operational team and the board.
“You’ve got to go back to basics and define what the company is good at… It’s all about starting off with a sound assessment of where you think you are, reviewing what you’ve done in reality over a period of time, then seeing where you think the opportunities are and consequently what issues will come up as you execute your strategy.”
These should be difficult and, at certain points, uncomfortable conversations. Charlie Wagstaff, Managing Director of Executive Membership for Criticaleye, says: “It’s essential to create an environment where executives are really challenging both themselves and one another about the future direction of the business.
“Far too many senior teams fall into the trap of failing to adequately test assumptions about strategy because they are unable to undertake a robust and candid evaluation of the business model.”
Lupus Maltzahn, Managing Director for Strategy in the UK & Ireland at Accenture, comments: “You don’t want to have full buy-in all the time… Having a way of getting other views, other voices, into the discussion is incredibly important.
“What makes a strategic discussion productive is actively searching for your blind spots. Often, the reason you end up making bad decisions is that you weren’t aware of them.”
This point is echoed by Andy: “The worst thing in the world is when you try and define a vision and everybody just says ‘yes’ – that’s not healthy… It’s very important to have an open and honest session.”
Mark Scanlon, Group CEO of Personal Group Holdings, a provider of employee benefits and financial services, says certain topics will often divide opinion: “We look at potential acquisitions that we have targeted… we’re not an M&A business but it is part of our strategy [for growth]. The discussions we’ve had on acquisitions makes some people uncomfortable and others excited, [but] you have to go through all of the issues.”
2) Build a 360-Degree View
Senior executives need to be honest about what the business is currently achieving and take a long hard look at how their sector is evolving. Simon Oates, Director of Strategy and Communications at Southern Water, says: “Successful companies are agile and responsive… The senior executives are constantly scanning the market and looking for insights. They are not only looking at how their products and services are landing with stakeholders, but how competitors are perceived as well.
“Customer preferences change, so you need to keep refreshing your understanding and knowledge of what you’re trying to achieve with what’s happening externally.”
Dominic Emery, Vice President for Long-Term Planning and Policy at BP, comments: “We always start off with the two bookends of the company strategy, which is around the purpose of the company and our investor proposition… and then everything has to flex within that.
“Useful inputs to our strategic thinking come from our economic, geopolitical and competitive outlook, and government policy. Those are the four primary dimensions when thinking about the opportunities and risks to our overall strategy.”
A similar point is made by Simonetta Rigo, Vice President for Global Brand, Marketing Strategy and Planning at Western Union: “Strategy is ultimately about making decisions on where and how to win, leveraging a combination of analysis, facts and judgement.”
3) Think Ahead
“It’s important to ensure the demands of the short-term financial imperatives don’t overwhelm the long-term investment imperatives,” Dominic says. “For us, that’s particularly important at the moment, with the oil price the way it is.”
“For example we’ve chosen to reduce our capital expenditure, certainly for 2015, as a result of the reduced oil price. We haven’t decreased it so far that it’s going to compromise the future but enough to enable [us to manage] our cash prudently.”
Charlie comments: “If you simply focus on the short term you may be making decisions and encouraging behaviours which lead to quick wins, but actually harm the business over time.
“Discussing the short, medium and long term will enable you to have a meaningful dialogue and set a clear direction for the future. Then, when internal or external changes occur, you can adapt accordingly.”
4) Execute and Empower
The execution of strategy is where discussions become reality. Mark Astley, CEO of Millennium Global Investments, an institutional asset manager, comments: “Strategy is meaningless unless you can execute and deliver on it. It’s crucial that you have people who can implement strategy… It’s only real if you go and do something.”
No matter how great the strategy is, it will be tested so there needs to be room for adjustment. Andy says: “The key issue is balancing your day-to-day decision making with the strategy you’ve set… We don’t need to re-analyse it, we need to think about the execution and follow that through… You shouldn’t be reinventing your strategy with every decision.”
Lupus comments: “You have a direction of travel, an objective and [then] take the steps to get there. After a number of steps… you might change direction a little bit, calibrate and adjust. You need to mould your course that way.
“The reality is that if you made a successful strategy permanent in the way it is successful today, it would die the day after tomorrow because existing or new competitors have moved on. With that in mind, the question is: how do you keep the good parts of an existing strategy while at the same time ensuring it evolves?”
In order for the strategy to adapt leaders need to delegate effectively. “You have to make a concerted effort to push some of the power downwards in an organisation,” Lupus continues. “Those you devolve power to will sometimes make different choices to the ones you would have made or thought you wanted them to make. Getting comfortable with that, and recognising the strength that lies in that, is important.”
Simonetta says: “Being able to link the deliberate strategy to examples of successful emerging strategies builds champions for change in the organisation and provides a real-life source of learning and insight that would otherwise take longer to validate through research and analysis alone.”
5) Keep Communicating
Clarity is integral when it comes to strategy. Sandy Stash, Group Vice President for Safety, Sustainability and External Affairs at Tullow Oil, says: “It needs to be written in such a way that it’s clear who’s accountable… You need the right people to understand what their accountabilities are, with the right tools.”
Andy from Lee Cooper Brands says: “It’s good to celebrate achievements as you go but you can’t over celebrate. It’s all about day-to-day decision making to… get it going rather than looking for a perfect strategy.
“Strategy is a step towards a goal but it always moves on. You never get there…. There’s always a journey that you have to motivate people with and move on.”
Evidently, there is no magic wand when it comes to developing good strategy. It’s hard work and it’s up to the non-executive directors and executives to ask the hard-edged questions so they are able to have frank exchanges about the future of the business.
As Sandy says: “The strategy is not the Ten Commandments: it should be something that’s evergreen and lives and breathes, influenced by both internal and external changes.”
I hope to see you soon.