Resolution for the year 2010: we need to talk about strategy or never going back to business as usual

In my posts about resolutions for the year 2010 I did not address strategy.

This post gave me a context to act on. Moreover I realized that not only my department’s yearplan should be finalized and committed, but the context and act applies for me on my professional and personal level. Even more work to do!!

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By Stefan Stern

Published: July 20 2009 22:26 | Last updated: July 20 2009 22:26

We need to talk about strategy.

Now there’s a sentence guaranteed to crush the spirit of any senior management team. But business leaders ought to recognise, as they catch their breath after months of turbulence, that the strategy they were pursuing until recently is unlikely to be right for today.

It’s not just that markets have changed.

Your organisation has changed.

You may have all been through a near-death experience.

Even if you avoided calamity, it is unlikely that colleagues are the same carefree people you remember from a year or two ago. Most businesses have been making serious cutbacks. Co-workers may be doing their best to look calm and positive. But they can see unemployment rising and know that sustained recovery is a long way off.

So, before even attempting to work out a strategy for changed times, leaders first need to acknowledge that their people feel differently about the jobs they are doing.

This is not the same thing as bland reassurance, however. Virginia Merritt, managing partner of the London-based consultancy Stanton Marris, said last week: “One company chairman asked me: ‘How can I convince them that things will get back to the way they were before?’ I had to tell him that this was not the right way to come at the problem.”

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Stanton Marris interviewed 45 chief executives and other board directors to find out how they are wrestling with the question of strategic repositioning. It has published its findings in a smart paper called “Strategy Evolution: adapting to a new world”.

Four principal tasks emerged as vital for a successful reinvention of strategy:

  • uncovering hidden risks that undermine strategy;
  • using the power of organisational identity;
  • reviving the strategy process;
  • and adapting leadership styles.

Hidden risks can derail strategy. Do your people really believe in what you are advocating, or does their apparent tacit approval in fact conceal a determined (or subconscious) attempt to subvert it? Are managers throughout the organisation “taking ownership” of the strategy, or limply passing it off as something that has little to do with them?

For most employees, belief is much more important than simple understanding if they are going to execute a strategy successfully

These risks are not easily detectable. Leaders need to develop sensitivity to the mood of the organisation if they want to avoid the unpleasant surprise of being confronted by colleagues who refuse to follow the script.

Organisational identity offers “a point of stability when everything else is changing”, Stanton Marris says. (This echoes a theme I discussed last week on the question of brand-led innovation.) Tony George, group human resources director for Inchcape, the car distributor and retailer, is quoted in the report as saying: “At our strategy days we ask: ‘Does this resonate with who we are?’”

In a battle between culture and strategy, culture usually wins. So in drawing up new strategy, make sure it is not in conflict with an organisational identity that could otherwise engulf and overwhelm it.

Reviving the strategy process is no less important. Here the most interesting ideas put forward have come from Cognosis, another London-based consultancy. Its managing partner, Richard Brown, has spoken of the need to develop “emotionally intelligent strategy” – one that is meaningful and credible to employees. Such strategies are not developed, Mr Brown argues, when only senior management is involved in their creation. Factual analysis might convince the boardroom but can be seen as lifeless by everybody else. For most employees, belief is much more important than simple understanding if they are going to execute a strategy successfully.

Leadership styles also have to be adapted. Candour works; dissembling does not. The staff already knows, or thinks it knows, how bad things are. And it is hard to overdo the sharing of important information. “When you think you have communicated enough, start again,” Justin King, chief executive of Sainsbury’s, said at a press launch last week. But offer a message that is true and believable. And be seen to listen to the response.

Leadership is a team game. You need mutual support at the top. Alistair Cox, chief executive of Hays, the recruitment business, told Stanton Marris: “I explicitly insist on cabinet responsibility. However robust our debate, we get behind the decision at the end. That is non-negotiable and I make that clear to everyone.”

Strategy is a grand, heavy word that dazzles some business leaders and bamboozles others. It feels like something set in stone, when in fact it must be dynamic and constantly renewed. In case I was on danger of forgetting this, a lively chat last week with Richard D’Aveni, professor of strategic management at the Tuck School of Business at Dartmouth College, put me right.

In a world of “hypercompetition”, he has long argued, sustained competitive advantage is impossible.

Today, strategy has to be about constantly creating a series of “unsustainable advantages”. Fail to do this and you are heading straight for what he calls “the commodity trap”.

It was only a partial consolation that he was smiling as he explained all this to me.


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