In his book Tough Calls, businessman Allan Leighton recalls the early stages of his tenure as chairman of the UK's Royal Mail, which at the time was losing £1 million (€1.13 million) a day.
On joining Royal Mail, he requested to see strategy documents that had been developed by the company.
This resulted in his office soon being filled with dozens of boxes containing some 1,000 internal documents related to strategy. Additionally, a look at the organisational chart revealed that about 700 employees had titles that contained the words “strategy” or “strategic”, possibly conferred as a testament to the prestige of the role and the importance of strategy to the company.
On the surface, there was an abundance rather than a dearth of strategy. However, business tools or templates were not going to make a difference to Royal Mail unless it addressed why it was losing £1 million a day.
The mere adoption of planning templates and tools does not make companies strategic or successful. Rather, being strategic requires companies to make an honest assessment of the problems they face and follow through with a clear and actionable game plan even though this may require them to make difficult decisions.
At the most basic level, a misalignment between a company’s circumstances and its strategy stems from conflating aspirations or goals with having a strategy.
Strive to win
This is exemplified in statements such as “our strategy is to double our growth”, or “our strategy is to be a top five company in our industry”, and “our strategy is to be an innovative company”.
While goals describe “what” needs to be achieved, strategy instead focuses on the “how” a company will strive to win in the marketplace. A strategy is best described as a method or coherent game plan developed to achieve goals or aspirations.
An example of a clear, well-executed, and internally consistent strategy is evidenced in Donald Trump’s campaign to win the United States presidential election.
His “Fifteen States Strategy” aimed to create a path to victory by focusing on a smaller set of “swing states”, particularly in the midwest, which were assumed to be more responsive to his “America First” message and to his style of campaigning that relied on frequent, incendiary rallies to stimulate turnout among his support base.
There is also a tendency to view strategy as a once-off activity, whose overarching purpose is to produce an annual planning document, often emerging from an isolated brainstorming event such as a corporate away day.
While high intensity events such as these enable executive attention to be channelled to the task at hand, by their very nature they do not allow for a full understanding of the competitive landscape and do not provide adequate time to build consensus around a course of action.
Companies would be better served by viewing strategy as a process that requires substantial executive time and attention, not only while a planning document is produced, but also beforehand and afterwards.
This process, which is embodied by the concept of strategic thinking, is facilitated by a commitment to engaging with influential stakeholders early on to listen, get feedback, and facilitate buy-in.
This process also requires being open to fine tuning a plan while its implementation is under way if needed. In light of a substantial increase in environmental complexity and turbulence, strategy must always be on the table and be a dynamic and ongoing process characterised by a combination of intended and emergent elements.
Additionally, executives often lament that plans can create more confusion than clarity and this can trigger disengagement among the rank and file. Clear and simple plans are guided by three fundamental questions – “where are we now” (assessment), “where do we want to go” (goals and objectives), and “how do we get there” (strategy) – that look straightforward but require a lot of thought.
Assessing the situation surrounding a company implies mapping its competitive landscape and taking stock of what is working well and what could work better considering emerging environmental trends.
This requires not only identifying and positioning a company with respect to the opportunities and threats emerging in the marketplace, but also considering the role of “softer” aspects related to organisational culture and employee engagement.
For example, on taking over as chief executive of Microsoft, Satya Nadella explained that a key problem faced by the company was that it had an optimisation mindset, as if it "had the formula figured out".
Discovery mindset
Instead, he promoted a shift towards a discovery mindset and a need to look for a new and better formula for success. For Microsoft this largely meant leveraging the potential of cloud services.
Setting a company’s future direction requires a willingness to make trade-offs, focusing on a limited number of key goals and objectives and putting others on the back burner.
This process of elimination can help executives shift attention and resources away from less important objectives towards more salient ones while also helping individuals in the company to visualise what success looks like.
Finally, strategy brings the plan together by highlighting the approach a company will use to achieve its goals and objectives. This requires not only identifying a big picture game plan but also paying attention to fine-grained details of execution at the tactical and operational level to make a strategy come to life.
Consider, for example, the successful approach to crime prevention introduced by commissioner William Bratton of the New York Police Department in the 1990s to improve the challenging law and order situation in the city.
This involved a series of inter-related actions such as aggressively prosecuting misdemeanours, increasing the frequency of patrols, and measuring and monitoring targets often to ensure progress.
Decoding the mystery of strategy would require companies to develop a simple, clear and internally-consistent roadmap that addresses core issues and exploits promising opportunities emerging in the marketplace.
It is best viewed as a process that requires being alert to market trends, listening to key stakeholders, making execution a part of the planning process as opposed to viewing it as an afterthought, and being agile in the face of changing conditions.
Karan Sonpar and Federica Pazzaglia are both full professors of management at the UCD College of Business.
