Though innovation is now the talk of the town, operational efficiencies continue to be treated of higher business priority than the desire to take the harder, visionary road.
The past three decades saw worker specialisation reign supreme. Planning initiatives at the C-level were generally reserved for an M&A deal, or to trumpet a new slogan around achieving higher growth. This is hardly the stuff of innovative, independent thinking.
When a business decides to hold an off-site strategy session, there’s a tendency to bring in industry specialists. The specialists describe what the competition is doing. Strategic thinking can be simply about how to stay a nose ahead of the competition to position the business for continued growth.
This form of strategic planning I refer to as ‘application of process efficient’ (APE). It revolves around fixing duplicate business functions and processes to achieve greater savings and efficiencies (in staying one step ahead of the competition).
An organisation’s leadership may have stated a bold version, for example to open a new market. However the APE view muddies the waters by ensuring priority is given to efficiency versus the strategic imperative itself. This APE view remains a carry-over from the Kaizen world of competition and unfortunately, this view very much remains a powerful force.
Let me illustrate a typical capital planning process (CPP) to demonstrate how the APE can negate strategic progress. Most CPPs are usually held once a year in line with budgetary planning. The aim is to better guide the organisation about how and where it spends new monies.
The approach to how this is done usually allows an opportunity for negotiation and compromise between the differing business units. They debate the rationale over how to prioritise the capital expenditure. Back room influencing and deal-making may even occur.
During the CPP each business unit finds itself in a difficult position. Each not only must consider what the new company vision means to them, but also consider operational process tweaks they will be also measured on. If the KPIs of a business unit have not been properly adjusted to the strategic execution plan, as most are not, the business unit ‘head of’ will likely choose their own KPI as a priority. In some organisations the CPP is completely hijacked by APE-like behaviour and outcomes.
This scenario paints a typical business silo environment where each business unit makes decisions largely independent of the greater organisational good. The larger the company size, more likely there is a higher number of silos.
Business silos add increased complexity within the governance process. The result is increased planning complexity, which generally waters down the value of strategy against the need to meet operational efficiencies. Left unchecked, these APE-influenced planning cycles have an unintended and adverse affect on organisation-wide transformation initiatives.
Have you personally worked for a medium to large organisation and can recall a story about how the left hand of the business did not understand or communicate with the right hand? In my own experience as a delivery consultant for a dozen years, I probably worked with some fifty organisations. I can recall countless examples of this—too many to name.
How can a company-wide strategic plan be executed well if many business units never speak to one another? This brings me to rule number two: the art of strategy is not a fragmented exercise. A strategic plan at some stage needs a well thought out execution path. Without one, fragmented activities and lack of cohesion will erode the leader’s vision.
Ideally the execution plan should include senior management input. After all they are the boots on the ground to deliver the vision. Too often leaders choose to put their faith into a select few to come up with the execution.
It’s right to believe strategy is about making tough choices and forcing people to move outside of their comfort zone. However, the creation of the execution plan needs to be inclusive, not secretive in nature. Without full buy-in from senior management, the strategy is doomed from the start.
Strategy as a practice cannot be seen as a siloed business exercise, planned and executed in isolation from the rest of the organisation. Michael Porter sums it up best in an essay he wrote stating, “Strategy is creating fit among a company’s activities. The success of a strategy depends on doing many things well—not just a few—and integrating among them (Porter, Kim and Mauborgne 2011, 28).” Ahem Michael.
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