The Discipline of Strategy Management

Most organizations and their management have high expectations of achieving goals set during strategic planning meetings. But to be achievable, a well-executed strategy requires forethought, planning, and precise incremental steps of action. Often, companies struggle to bridge the gap between their lofty strategic plans and their day-to-day implementation.

The Economist Intelligence Unit (EIU) undertook a global multi-sector survey of 500 senior executives from companies with annual revenues of over $1 billion and found that nearly 90% of survey respondents admitted that they fail to achieve all strategic goals because they don’t implement them well.

Meeting and exceeding goals requires a clear vision communicated to the team and the subtle nuance of weaving in day-to-day practices that keep them on track and moving towards a target. The rigor of everyday tasks coupled with the momentum of a company-wide vision can be described as the Discipline of Strategy Management.

Strategy Management combines an organization’s top priorities and essential tasks, a set of internal metrics to measure results, and consistent face-to-face team meetings to evaluate and course correct.

Here the key components are broken down:

Choosing Your Priorities

Priorities are the collective agreements made among your business’ team members to guide the company to its stated mission. In setting your priorities, you need to challenge, understand, and evaluate your business. Click here for the types of questions you might ask yourself. You also need to define what success means to your organization.

Doing so is not always simple. Management must be able to delineate between Return on Investment (ROI) and Cost of Inaction. Is an investment going to provide a good enough return? Or are you going to miss out because you didn't take any action?

When successful companies face significant environmental changes, they often fail to respond effectively. Consider companies such as Blockbuster, Blackberry, or Kodak. History has shown that they’ve made classic missteps in failing to recognize marketplace disruptions and how their customers were doing business. And if they did recognize the seismic shifts in consumer behavior, they failed to act on this knowledge, causing their brand’s demise. Lack of strategic planning and waffling on making decisions squanders resources and fails to make use of our most precious finite commodity – Time.

To track priorities, organizations can perform Scenario Analysis, a strategic planning method to make flexible long-term plans. It helps a firm anticipate the impact of different priorities and identify weaknesses. Using scenario analysis is a way to compare these different playbooks against multiple “what ifs” to mitigate inaction. Simulations become a question of if we spend X, will we get Y? And if we do not spend X, what will that cost us in the long-run in lost opportunities to meet our company’s objectives?

Measure your efforts to achieve them

To effectuate change, companies must have a set of guidelines that measure progress, stagnation, or regression. It is impossible to tell the difference without tracking the proper metrics and Key Performance Indicators (KPIs). Management must set up the right performance evaluation structure to measure a strategy’s success and progression towards improvement.

To ensure alignment, your business needs a clearly defined set of Metrics and KPIs listed out based on your strategic objectives. Your KPIs will measure the performance of or progress of specific business activities or strategies, and your Metrics will provide context to your business activities. The combination will allow for strategic decision-making and optimal strategy management. For example, one of the most common metrics is ROI, and some examples of KPIs may be EBITDA, operational cash flow, net profit margin, etc.

Most good strategies include 5-7 core metrics and KPIs . To determine your set, you must ask:

• What is our desired outcome?
• How does this outcome help our vision of success?
• How will we know we’ve achieved our desired outcome?
• Is this a leading indicator of performance or a lagging indicator of performance?

In short, your performance metrics should express what you want to achieve and by when. They are quantifiable, outcome-oriented statements you’ll measure to remain on track.

The Anatomy of your performance measurement structure should include:

• A Quantifiable Target—Example: X New Customers
• A Timeframe—Example: By the end of FY 2023
• A Data Source—Example: A CRM or Financial Model
• Reporting Frequency—Example: review Monthly

An agile financial model is one of the tools used to evaluate progress and support an organization's planning process. Traditional budget models rely on static, linear thinking as it pertains to their financial planning. Agile is a management process that allows teams to focus on delivering the highest quality in the shortest time. It uses an iterative approach where each stage of work will be reviewed multiple times until the goal has been met. An agile modeling approach values flexibility, allows for more efficient operations, easily adapts to changes, and offers more accurate forecasting and clarity when tracking performance.

The brightest corporate minds are driven and motivated by metrics. It answers the evergreen question: how am I doing?

Meet routinely and rigorously to make sure you stay on course

Once management has reached a consensus on the top priorities, parameters, and have developed the company’s key performance measures, it’s critical to trickle down the message, review progress and make micro corrections.

Meeting regularly ensures that priorities continue to align with the overall vision of the company’s stated mission. Meeting regularly keeps the lines of communication open and gives space and structure for critical feedback and strategy fine-tuning. Routine also builds expectation and trust between the executive team and their staff. They now have a ticking clock for when to be ready and prepared to give progress updates.

Additionally, meeting routinely not only requires time and effort to gather the troops, but also requires management to develop a communication and message style that deeply engages employees with company priorities. Management must be thorough in preparing a readily digestible plan of action if the staff and employees are expected to carry out specific marching orders and be held accountable for their execution.

A strategy needs to be explicit, in a document that describes in as much detail as necessary, past performance, current situation and a discussion of what choices are being made and why they are important.

Summary

Many companies fail to achieve the full value of their strategy, so a great opportunity exists for organizations that embrace technology, rigor, and perspective. Business leaders can quickly lose perspective when they spend too much time muddled in solving day-to-day operational problems and lose sight of overarching strategic priorities. The Discipline of Strategy Management will help your organization successfully bridge the gap between strategic thinking and tactical execution.