Albu On Strategy

What Makes Strategy Happen?

What better way to end the year than with an article about Making Strategy Happen?  In this newsletter, I want to reference a great article by Bain & Company entitled Strategic Planning that Produces Real Strategy: Is your planning process a competitive weapon or a waste of time?  It hit home for us because it expounds on everything Albu Consulting’s strategy management framework stands for.

In a survey by Bain & Co., 300 global executives were asked to rate their company’s strategy process.  Only 33% said that their strategy process met the authors criteria of a strong strategy: bold ambitions, adaptability in the face of changing markets, and clear guidance for their management and front line employees.  Another 60% were satisfied with their process even though they did not meet the standards of a strong strategy.  Of those companies that produced great strategies, they invested in people, processes and tools to enable bold ambitions, adaptability and clarity of direction.

The authors are careful not to overstate by reminding the reader that there is no one-size-fits-all approach.  They do, however recommend five important principles to a successful strategy process that Albu Consulting certainly can support.

  1. “Strategic planning and budgeting are both essential, but they are not the same thing” – Bain & Co. research suggests that separating the strategy process from the annual operating plan (AOP) process improves the quality of strategy development. Each year, the first step should be evaluating your strategy, allowing forward thinking to explore and debate how markets, customers, and competitors are changing, and to identify evolving opportunities, issues and the necessary actions. The next step is a drill down to develop the detailed AOP that supports the ambitions of the long-term strategy.
  1. “Strategy amplifies the voices of front-line managers and customers” – Strategy is traditionally viewed as a C-Suite responsibility. Rather than pushing strategy down, best practices engage front-line managers early in the process. Front-line managers can provide the Leadership Team with the voice of the customer, and by engaging them in the process, execution is improved significantly.
  1. “Resource allocation is purposely undemocratic” – The tendency of many companies is to establish the AOP based on “last year plus” (the rear-view mirror). Often this is where resources are spread thinly across too many opportunities. Winning strategies demand brutal prioritization to redeploy trapped resources. Purposely allocating resources means focusing on the biggest and boldest opportunities. The authors suggest to “overwhelm the opportunities that really matter.”
  1. “Don’t let the earth’s rotation around the sun determine when you make decisions” – The most successful strategy processes have a cadence of continuous improvement. Bain & Co. research found that companies are 60% more likely to make timely decisions if business needs, not calendars, determine the cadence of the strategy management process. Creating a continuous process ensures that the leadership team are regularly debating strategic direction and alternatives based on current market realities.  This provides a rolling, decision based dialogue on a real-time basis.
  1. “Leaders focus on the most important decisions and simplify the rest” – Don’t get bogged down in data analysis and paralysis. Simplify the agenda and focus only on the most critical information needed to make strategic decisions.  Complexity leads to unfocused, confused debate and undermines the process.

Strategy management requires a long-term commitment.  It needs to be a continuous, multiyear and collaborative process that informs the AOP, and becomes the guide for decision making.  Through our client work we have found many companies are still struggling with these five basic principles of strategy management.  Those that do embraced these principles drive toward their vision with energy and excitement.


Posted in Newsletter.