Guest post by Jimmy Brown, Ph.D.
Business leaders have a lot on their plate. There areadministrative chores like budgeting and logistics. There are people development tasks like
encouraging, coaching, and what we’ll politely call correcting. Then there are
the big picture and forward thinking undertakings that help set the vision and
define the mission for the organization. The exact nomenclature for this last
set of responsibilities can vary from organization to organization, but what we
are talking about is finding the right strategy.
Finding the right strategy can be the difference between a leader’s
success and failure. Just look at Léo
Apotheker’s brief tenure as CEO of Hewlett-Packard. He made several strategic
missteps that not only led to his quick dismissal, but also drove value erosion
and a loss of market position that the company is still trying to recover from.
While the Apotheker example is one of the more recent, public, and dramatic, it
is far from the only one. You can’t open up the business pages of any newspaper
without reading about the negative impact of a leader’s poor strategic decision
making. So why is this so hard? Our research
suggests that one of the drivers is that leaders are approaching strategy the
wrong way.
use what we’ll respectfully call intuitive
synthesis. This is a fancy term for guess work and gut-feel. The second is
to use intuitive synthesis, often augmented by a couple days of management
meetings, to come up with three or four options. Then, the accounting
department will run a bunch of financial models to figure out which option is
the cheapest. The third approach is to use some established strategic planning
model to come up with the options, run the financial models, and then pick
whatever is cheapest.
This third approach is actually good progress towards better
strategies because using a standard model helps leaders structure their
thinking in a way that reduces the risk of overlooking important inputs. More
importantly, if we consistently apply a standard model over several cycles, we
can begin to see trends in the data. These trends can allow for even better decision
making. The challenge with this approach, however, is that most of the standard
models tend to only look at one domain (typically competitive data) and the
analysis is still focused on whichever option is the cheapest.
systemic and holistic approach to strategic decision making. In particular,
they incorporate data from three specific domains:
Capabilities – What we do well and how we can do
it better
Customers – Who we serve, or who has a need we
can meet
Competitive Environment – What inhibits our
success. This includes both direct competitors (i.e., other organizations), and
other indirect factors in the external environment
Armed with this full view of their ecosystem, leaders are
now better equipped to decide how to best position their organizations for
success.
that they do not make decisions based solely on which option is the cheapest.
They approach these decisions in terms of how much return they will get on the
investment, not just the cost. More importantly, that investment decision is
not purely financial. Top performing leaders also engage in a sense-making
process that considers their Organizational
Orientation, as well as their organization’s Process Preferences.
Organizational
Orientation is about the mental models that people in the organization use
to get their jobs done. Are they more longitudinally focused and stick to their
guns despite changes in the market, or do they actively react to every change? Do
they take their mission and vision into account for every decision, or are they
more concerned with day-to-day numbers? This orientation is closely related to
the culture, the brand, and the example set by the organization’s leaders. A
strategy that is aligned with the organization’s orientation is much more
likely to be embraced by the people who have to execute it.
is about how the people in the organization choose to execute their tasks. Do
they prefer a more centralized command and control structure, or allow each
unit to operate more independently? Do new ideas only come from the top, or do
they look for the field to come up with new solutions and bubble those up?
Regardless of which approach a particular organization prefers, good leaders stay
aware of those inclinations, incorporate them into their strategies, and then
leverage those to maximize the efficiency of the implementation and
execution.
To be honest, what was just described is an oversimplification
of a very robust methodology. Each of the three data domains has several
sub-levels of data that need to be collected to fully understand the
organization’s ecosystem. The Organizational
Orientation and Process Preference
considerations are subsets of a larger sense-making process. It includes sorting
through the mounds of data from the three domains to determine which particular
data points need to be considered in each strategic cycle, and what kinds of
analyses should be conducted. Starting at a high level like this is okay
because good leaders know how to begin with the big picture, work with their
teams to drill down to the details, and then make decisions based on complete
information. And that is what strategy is all about.
Thinking Strategy: The New Way to Understand Your Business and Drive
Performance. He is also the Strategy & Change Practice Area Lead at Beacon Associates where he is
responsible for change management, organizational performance, and business strategy
consulting engagements. In addition to his consulting work, he is a
professional speaker and adjunct professor in graduate psychology and
management programs. He can be reached at jbrown@beaconassociates.net.