6 Key Characteristics found in effective Corporate Strategies
Organizational leaders often find themselves wondering why their team seems to not be on the same page or has just kind of lost its way? Have you ever experienced any of these quite common corporate phenomena’s within your corporate team?
Leadership teams from businesses, local to global, small to large, public and private are often challenged from the lack of an effective, aligned and well communicated Corporate Strategy. This often results in a myriad of departmental and individual worker actions that are misaligned and inconsistent and effectively render a well-intentioned Corporate Strategy into a journey of Hopeful Discovery.
Outlined below are six (6) key characteristics that our research has shown are present in companies who have highly effective Corporate Strategies. In your next leadership team meeting, plan some agenda time to ask your team about the effectiveness of your Corporate Strategy using these 6 key characteristic questions as discussion guidelines.
Effective strategies have a clearly stated objective with measurable outcomes. Too often
strategy statements get mired in words about corporate mission, purpose and/or values, which in their own merit have value, but are not strategies. For example, “To delight our customer..” in itself is not effective strategy. Effective strategy statements are short and concise (try 30 words or less) and they should address who is the targeted market or customer, what you want to provide that target, why that product or service will be of value to them, what will competitively differentiate your firm in that offer and it must include a tangible measurement of success.
Companies whose leadership teams either cannot list their core competencies or even worse can’t agree on them are destined for trouble. For example, a company may list “manufacturing capability” as a core competency, leaving the audience to assume that the company has competency to manufacture everything from corrugated boxes to high performance automobiles? Without greater clarity and definition, your audience for your strategy is left to fill in the blanks and the outcome is often not what was intended. Spend time with your leadership team to clearly define and gain consensus around your firm’s strengths and weaknesses and then as you craft your strategy be sure that you are defining a strategy that accentuates your strengths and avoids exploitation of your weaknesses.
Strengths, Weaknesses, Opportunities and Threats (SWOT) must be equally evaluated as an effective strategy is developed. Ignoring threats in your strategy can be disastrous or even fatal to your firm’s future viability. Take for example the emergence of daily fantasy sports sites over the past several years. These firms strategies almost arrogantly ignored the threat that their businesses would be determined as online gaming sites by US authorities and thus deemed illegal to operate. Effective strategy embraces potential threats be they competitive, legal or governmental. Often one short phrase such as “working in harmony with legislators” will signal to your organization the need to develop action plans that embrace the need to diminish the threat or to develop contingencies around them.
Likely the most common missing element in corporate strategies has nothing to do with the words on the paper and everything to do with the lack of buy-in and consensus surrounding the strategy. Critical in building an effective corporate strategy is the process under which the strategy is developed. Take two strategies that are exactly the same and which both meet all of the other criteria of an effective strategy outlined herein, One was developed by the CEO and 5 or 6 VP’s on a weekend retreat and the other was a product of a visioning conference where a larger cross-section of mid to upper level leaders (20 to 40 people) came together for one to several work days and were structurally led through a process to develop the strategy. Ask yourself which process do you think creates the greatest feeling of ownership and accountability to the strategy? Clearly that is gained when a larger cross section of people gather in a structured fashion where broad participation and contribution is driven. This participation creates consensus and accountability to the outcome that is invaluable in an effective corporate strategy.
The late great Peter Drucker was oft quoted that “You can’t manage what you can’t measure” and that applies to Corporate Strategy as well. Drucker, in his book Management: Tasks, Responsibilities, Practices writes; “Work implies not only that somebody is supposed to do the job, but also accountability, a deadline and, finally, the measurement of results —that is, feedback from results on the work and on the planning process itself…” . Strategies without timelines and measurability leave the audience again to fill in the missing elements themselves. In contrast, for example, Strategies that outline “a 5-7% annual gain in domestic market share” or “15-20% annual revenue growth with steady gross margins” provide the foundation for the development of individual department action plans and incentive compensation that are directly aligned to the strategy. Absent time and measurement, you simply cannot have an effective strategy.
In a recent executive meeting the company’s founder and CEO discussed his desire to have quarterly “strategy themes” for the company and was imploring the management team to come up with some great new strategic ideas. Whoa you must be kidding? Effective corporate strategy provides a road map for a journey to a desired outcome that is meaningful and impactful within a determined time frame. Typically this time frame, in business, is 3 to 5 years or more. There are solid reasons for short-term strategies, for example when crisis strikes or when serious restructuring is required, or from startups using a “fail fast” development strategy, but these are generally very specific and isolated instances. Generally though Effective Strategies are not this month’s public service campaign and your team can’t be effective when the strategy is forever changing. Annual modest adjustments to an effective strategy are typically appropriate.
Need help developing an effective Corporate Strategy? 7 Seven Advisors, LLC can help. Contact Mark Layton @ firstname.lastname@example.org