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“Business strategy” is a term a lot of executives love to breathlessly discuss, call off-sites about, and analyze on various conference calls. Despite all the conversations we center around our business strategy, many people who run companies don’t really understand exactly what the term means.
In the most common situations, here’s what happens:
- “Business strategy” is confused with “operational logistics”
- “Business strategy” is created with no sense of priority relative to the last strategy
- There’s no alignment between the business strategy and the execution-level, where the work itself gets done
All these are fairly common problems for organizations: we know most companies are a priority vacuum, for example, and we know many have a hard time aligning strategy and execution. Oftentimes, a “strategic plan” is really just a list of bullet points held together by tears, internal politics, lies, and the threat of reduced bonuses. Sad, but unfortunately often true.
Business strategy ain’t walking through that door. But maybe we can go find it.
Business strategy: Where it goes awry
I outlined some of the places business strategy collapses above. If you want to hear it from people smarter than me, here’s a good new article on Wharton’s website. It’s a deep dive with a lot of company examples, so give it a read. There are a lot of money quotes in the article, but here’s a top one:
I think the important point there, if we look at the dialogue that has taken place in the world of published books on strategy and leadership, they are very segmented. You have books on strategy that are very kind of analytic and conceptual, and there are beautiful strategies that you can get from them. Books on leadership are very much on inspiration and engagement, being part of something larger than yourself. I think the actual integration of the two is extremely important. We discovered in our teaching that we had an audience that wanted to know about both.
Yep. This is where the problems always begin on business strategy. See, business strategy cannot be separate from these two concepts:
… and yet, it almost invariably is. Let’s tackle each of those quickly, then get to some solutions.
Business strategy: The chasm with leadership
You absolutely have to remember one thing about work. We spend a lot of time there. As a result, it’s very connected to our self-worth. And as a result of that, work is a majorly emotional place — even though we constantly try to make it a logical one. (Think reams of process to do anything.)
When “strategy” is separate from “execution,” it’s a total whiff.
You combine that with general human need to be seen as relevant, and then you mix that in with a fear of incompetence. Where do you land? Well, typically, you encounter some highly-functional, strategic people in different jobs you have. They really “get” it, understand where the business is evolving to, and know how to navigate internal and external considerations. That’s about 10-15 percent of people you ever meet or work with, and they are great.
The rest of the bucket is mostly chest-pounders and box-checkers. These people think they’re chasing business strategy and showing “forward-thinking leadership,” and in reality they’re just creating spreadsheets for underlings to update. Basically, they’re doing operations work and calling it strategy. A lot of people run in circles on this deal.
Once a business strategy is set, leadership has to be active. A lot of times, the belief is “Well, leadership just set the strategy — so now others execute on it.” OK. I see the logic there. But here’s the problem: those execution-level people, they have other commitments they were working on. Is this new strategy stuff now a priority? Unless someone tells them that or models it, they’re just going to come in on Thursday and work on the same shit they were working on. We’ve all seen this at every job we’ve had. Some exec calls an all-hands and says “We’re a digital company now! We’re driving growth through online lead gen!”
The next day, what happens? 79 percent of employees are doing the same rubbish they were doing last week. But wait, aren’t you a digital company now? Isn’t that the business strategy? It came down from on-high!
Hierarchy is powerful and people don’t want to annoy their boss. This is true. But unless a new strategy is set and modelled through leadership, the work remains the same.
Business strategy: The execution problem
Here’s a quote from the Wharton article:
Execution was the rage 10 years ago, and particularly with the financial crisis, even more so. Let’s squeeze out costs, let’s become more efficient and so on. It’s clearly very important, but what we’re arguing is that you need inspirational vision from the leader. You also need a very clear value proposition for the customer. And then execution is the way you can deliver value, create value.
I’d personally argue execution is still the rage. Most bosses love process, and most executives love cutting costs. That’s all “execution” stuff.
Here’s the problem that I’ve seen everywhere I’ve worked (and heard from others too). Business strategy is usually set at the top levels, which is logical. But like I said above, what happens when you come in two Wednesdays from now? What are you working on? Do you know? It’s quite possibly not even a priority to anyone except your direct manager, who may have invented the deliverable. There’s research out there showing that 21.4 million managers — 17 percent of the U.S. workforce — contribute no economic value back to their company. 21.4 million people is a lot of people. How the hell does that happen?
I try to think about work in different ways, and I also try to call out some managerial nonsense we’ve all experienced. If that kinda sorta interests you, I do a newsletter every Thursday. Feel free to join up.
Simple: vacuums around strategy, communication, and priority. You’ve got people running in circles on supposedly “urgent” tasks that the COO has never heard of.
Riddle me this: if business strategy comes from the top, and people at the top have no idea what tasks most of the company is working on daily, then … is business strategy really filtering down?
That’s a problem.
So how do we improve business strategy?
Few steps here.
1. Know what it is: It’s not operations. Strategy is about long-term vision and “skating to where the puck is.”
2. Understand where the challenges will lie: 94% of business development challenges are now internal, per Bain. What’s stopping you from hitting targets?
3. Set the strategy: I’d say “have everyone own strategy,” but that’s a complex process for most orgs. Have the execs own it — but make sure they have customer data.
4. Communicate the strategy: This happens in a tiered process. Execs to their lieutenants, lieutenants to middle managers, etc. Yes, it might become a game of telephone and re-prioritization. But business strategy cannot just be communicated in an all-hands meeting.
5. Set the priorities: OK, so does this strategy replace what we were doing? What’s the focus now?
6. Align with execution: When I come in next Wednesday, I work on _____. Do I have that right?
7. Keep talking: “Hey, is this new business strategy working?”
8. Iterate: Tweak. Adjust.
9. Look at available information and data: I mean customer feedback. I also mean internal reviews and how employees are feeling about this new business strategy.
10. Stop withholding information down the chain: This hurts the development of strategy, and it’s mostly done to make higher-ups feel more relevant.
Stop making business strategy about the spreadsheets
Final thought. Many companies these days do operate on a “Spreadsheet Mentality,” whereby a bunch of people sit in meetings, then track things, then report on those things in meetings. Somehow, we’ve turned business strategy into this. It’s all checkboxes and spreadsheets and assets and due dates. That is a part of strategy, but … strategy is a living, breathing, evolving thing. It’s a response to market conditions, customer needs, and internal feedback. It cannot be some thing that gets “managed” by “Tom’s team.” That’s just silo-by-silo garbage. It doesn’t really drive the company, or the bottom line, forward. When you turn work into a series of KPIs to check and pound your chest about, you create depression, turnover, and unclear goals.
Phrased another way: what in the hell is a Chief Strategy Officer?
Got anything else on business strategy?
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