Make Strategy Management a Competitive Advantage
There was a great article by Bain & Company written in 2017 entitled Strategic Planning that Produces Real Strategy: Is your planning process a competitive weapon or a waste of time? We liked the article back then and still do because it supports everything about our strategy management framework. 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 get behind. Here are some quotes from the article.
- “Strategic planning and budgeting are both essential, but they are not the same thing” – Bain & Co. research suggests separating the strategy process from the annual operating plan (AOP). Each year, leaders should debate how markets, customers, and competitors are changing. The outcome from that debate should then inform the AOP.
- “Strategy amplifies the voices of front-line managers and customers” – Strategy is traditionally viewed as a C-Suite responsibility. However, best practices encourage leaders to engage front-line managers early in the process. Front-line managers can provide the leadership with the critical internal and external information. By engaging front-line managers early, buy-in to the strategy increases significantly.
- “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.
- “Don’t let the earth’s rotation around the sun determine when you make decisions” – Successful strategy processes have a cadence of continuously challenging and questioning the strategic choices. Create a process where leaders are regularly debating strategic direction and exploring alternative strategies based on current market realities. This provides a rolling, decision-based dialogue on a real-time basis.
- “Leaders focus on the most important decisions and simplify the rest” –Don’t get bogged down in data analysis and paralysis. Simplify 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. Please feel free to share this article with your friends and associates as you see fit.
“Manage the top line: your strategy, your people, and your products, and the bottom line will follow.” Steve Jobs