Business strategy and corporate strategy is a major platform for the growth and development of any business. As business has evolved over the last 100 years, it is only since the late 70’s that it has emerged as a major tool in the management arsenal. Even then in the Small and Medium size enterprises (SME’s) sector there is limited uptake as many are so busy working in the business there is little time to reflect and plan.
The challenges in SME’s are many and having a well-defined and structured planning process is a serious help. It is one of the first roles of a leader to engage his/her followers.
Building a shared understanding of the context and the direction is a leadership imperative. It appears not all leaders see the value in this.
Planning is the platform, which allows leaders to engage their followers in a journey of discovery. In the planning process, there are a number of “tacit” steps which often are not discussed. I will briefly outline them in this Blog. They include
- Strategic Thinking
- Strategic Conversation
- Strategic Planning
- Strategic Decisions
- Strategic Actions
Strategy development in business is a multi-faceted process. Over many years I have struggled and worked with and participated in a variety of processes and workshops. All have had as their focus, the development of plans for the future
There is an archaic set of thinking which says strategy is developed by the Board or the CEO and /or both and is then passed down to the rest of the business to be implemented. I suspect that in some businesses this still happens. Can I suggest in the 21st century it is an anachronism? Strategy requires the best people, the best thinking, and the best conversations to be happening on a regular basis so that businesses can adapt to the market easily and quickly.
The primary focus in all the planning literature is Strategic Planning and the whole process is assumed. My hypothesis is it is the most important stage in the strategy development process. It is the time when a leader/manager just takes the time to reflect on the whole system and how it works. It is a failure of our existing system that thinking time is not valued at work or at home.
During the time driving to and from work, walking between appointments, even relaxing, strategic thinking is occurring and it is not recognized. It is when the ideas can flow, the dreams emerge and the imagination can run riot. Possibly, it is the most valuable exercise we do.
In recent years the following language has emerged. It is important to work on the business not in the business.
In the early days of strategic planning, the major tool was SWOT – strength weaknesses opportunities threats. It was ubiquitous. An interesting facet of the strategic thinking process is that everyone does it differently and not everyone does it well. Some are more disposed to it than others.
There are now so many tools and techniques available to encourage the development of strategic skills It is bewildering and fascinating. The important and pragmatic issue is that it is a skill and to become competent requires serious practice. The notion of a random event to plan strategy is fatuous.
It is at this stage that the planning process starts – one on one conversations, breakfast lunch, dinner chats, drinks after work, plane flights –all with colleagues. These all contribute to the formation of strategy. Conversations with people who are not business literate can also contribute. The process is dialectical and formative. It emerges over time. Customers, suppliers shareholders, and employees are all a part of this ongoing conversation. In the formative stages, it is a critical part of the journey. Bringing it all together is the challenge.
In the early phases of strategic planning, there was a very clear hierarchy in the planning process. The CEO did it. In my early career (1978), we pioneered workshops with management in small groups. The event was preferably away from the business, so the management team could address the strategic issues without distraction.
Over time more has been published and more thinking tools have been developed. Michael Porter established strategy in an industry framework (5 Forces). Gary Hamel introduced a number tools and concepts – strategic intent, core competencies and a range of environmental scanning tools to complement Porter. He was also the first to leverage strategy across Industry boundaries. Subsequently, there are as many theories and tools as there are academics and writers.
These all have subtle differences providing a lens through which to view the big questions.
Strategy is often defined as a pattern of decisions, which enables a business to move in a particular direction. In my experience, there are very few businesses that do not have a strategy. There are however many businesses who are either unable or unwilling to articulate their strategy. They say things like: ‘Everyone knows the strategy. We have a budget, don’t we? All that airy fairy crap isn’t necessary. We can’t predict the future. We are an opportunistic business. We don’t want to be tied down with plans, we just make decisions.’
Every day they are writing the strategy as they go – a spontaneous strategy. For some it works and they are the lucky ones.
To discover the strategy, a quick look at the Sales figures (product/service) and the profit and loss figures will provide and an early clue to the strategy.
Ultimately, the strategy is about the allocation of resources (capital). Decisions made every day are an opportunity to move the business in a particular direction.
Closely linked to the strategic decision is strategic action (execution). It is always the Achilles heel in the planning process. Execution has many elements:
- Commitment to act
Without these four elements, execution will not happen. Over many years I have worked with businesses that have convened a strategy-planning event, done some great work and failed to follow up. Come to the next event, they blame the planning process when the real issue is one of the four named earlier. Ultimately everything is doable if the four critical elements are in place. An absence of any one of them makes it almost impossible.
Business Learning – building shared understanding and commitment.
This is the platform for it all and is profoundly misunderstood in most organizations. I have been committed my whole working life to the concept of building learning organizations/businesses. I first discovered it in the organization development literature in some work by Chris Argyris and Donald Schon. They defined a learning organization as “one which detected and corrected its own errors thus embedding the learning within the organization” (adapted)
This work was pioneering in its focus then and has guided much of my work over 40 years.
In 1990 I published a paper in the context of the debate on award restructuring in Australia entitled, Creating a Learning Organization, It is a concept which is even more important in this year when innovation and disruption are the flavour of the month. In that period, Peter Senge published the popular book, The Fifth Discipline (1990), which became a management “silver bullet” for a few years.
Arie De Geus also published his work at this time, The Living Company (1997). Both are classics in the world of Organisational learning. It is an idea still powerful and relevant today but has faded in terms of its currency. The capacity of organizations and businesses to learn is a platform and a competence which is urgent in terms of the debate on Innovation in business. Have you heard it mentioned?
If we don’t make it a priority, Innovation in Australia will go the way of all the other ‘silver bullets’?