A lot of people think that the creation of business strategy is a mysterious process — something that’s secretly practiced behind closed doors in the boardroom. There’s a lot of mysticism around strategy setting, and so we avoid it for fear that we’ll do it wrong.
But there’s no magic in strategy — just as there’s no magic in IT. There are only two reasons for strategy: focus and communication. Let’s look at each reason in more detail.
In management, focus is the process of concentrating your effort on the things that are important while stopping work on the things that are unimportant. You don’t need focus if you have unlimited resources and you can pursue all possible objectives simultaneously. But most of us don’t have unlimited resources, and so it’s necessary for us to pick and choose where those resources will be used.
As a child you may have moved a magnifying glass back and forth to focus the sun’s rays on a piece of paper. The magnifying glass was able to concentrate the sun’s energy on a single point, generating enough heat to start a fire.
Focus in strategy works the same way. We have a limited amount of resource, but we pick the small number of things that are most important for us to accomplish, and we’re able to use our strategy to focus our resource on those important things.
If you’ve ever seen the Blue Angels (see photo above) or the Thunderbirds, then you may have marvelled at how these pilots can fly their jets at over 600 mph with such precision. The planes pass over our heads at an air show just 18 inches apart. How can the pilots achieve such control?
Part of the answer is, of course, amazing training and lots of practice. But one of the secrets to being able to fly in formation with the planes so close together is the way that the pilots steer their planes.
In any formation, one of the pilots flies the lead plane. This lead pilot sets overall direction for the formation, picking the altitude and direction. The other pilots don’t look out of their front cockpit window or even at their instruments. Instead, they steer their plane based on their relative distance to the other planes in the formation. For example, if a pilot knows that his right wing tip is supposed to be a certain distance from a certain part of the lead plane, then he steers his plane to maintain that distance. Then when it’s time for the formation to break up, the pilot of the lead plane gives commands over the radio, and the pilots move apart just as they practiced.
Strategy in a large organization works the same way. It isn’t possible for everyone in the organization to steer by “looking out the cockpit window” at market conditions, competition, the economy, shifting customer demand, and all of the things that drive a business strategy. There just isn’t enough time for everyone to do this, and it would be impossible to coordinate everyone if this approach was taken.
So instead, certain people in the organization are designated to act as the “lead pilot.” These people — often the key executives of the business — decide which way the business will go and what things will be done. They write this down in a strategy, and the strategy is used to communicate this overall direction to the rest of the organization.
Lower-level executives steer their own organizations by “lining up” with the overall strategy. Lower-level strategies may be created to provide more detail on how each organization will fulfill the requirements of the higher-level strategy. Then these lower-level strategies are used to align the actions of the still-lower-level departments and employees.
If all goes well, then the large organization acts just like the Blue Angels in formation. Everyone does his/her job, the different parts of the business move together in formation, and the business achieves its objectives. The strategy has become the basis for communicating direction and alignment.
Dealing with Human Nature
Human nature tends to oppose the use of a business strategy. People have their own individual objectives, and want to spend their time on those things rather than on the things the strategy tells us are important. And people keep wanting to look out the cockpit window — they see the world changing around them and want to respond directly rather than just focus on doing the tasks that have been defined for them by the strategy.
How do you deal with these weaknesses of human nature which threaten to sabotage our use of strategy in business? It’s not enough to just develop a strategy, write it down and disseminate it to your employees. You have to give the employees frequent status reports. They need to know whether or not the strategy is working and what you’re doing about it. They have to celebrate progress, mourn failure, and see the response — if any — to changing business conditions. They need a way to provide feedback on the strategy so that they can apply their own experience to make it better. But they also need constant assurance and encouragement to keep them focused on the things that matter, and to discourage their pursuit of non-strategic goals. Basically, you have to inspire trust in your strategy — enough trust that your employees are willing to follow the strategy instead of their own short-term interests and distractions.
It’s not enough to set strategy — you have to keep your organization “connected” too. Focus and communication are the only two reasons for strategy. But for strategy to succeed, you’ve got to keep everyone in the know.
Use your strategy to focus your limited resources. Use your strategy to communicate where you’re going and how you’re going to get there — to your business units, to your employees, and even (in subset) to your customers, suppliers and partners. If everyone believes in the strategy, understands their individual contribution to the effort, and sees where the business is going, then it’s a beautiful thing. Just like seeing the Blue Angels scream across the sky in a tight formation.
Photo: Wikipedia Commons