The era of 100-page PowerPoint point decks that no one really uses or understands to explain a company’s strategy is over.
This version of strategy as a eureka moment captured in an encyclopedia of insight during a retreat to be fed to employees is not practical. The reality of seeing strategy decks or binders sitting on a shelf tells the story that these formats are seldom if ever used to drive day-to-day decision-making of the company.
Today few leaders really care to interpret bubble charts, sit through regurgitated quarterly reviews or recite values tracking across their screensavers. These overly complex or feel-good actions miss the mark on what strategy is.
The best CEOs I have seen in action and worked with know their mandate is to chart and execute a course that their leadership team owns, understands and can translate to the employees on the frontlines. It must drive decision-making. Complexity, abstract concepts or elitism in strategy are not helpful to drive sustainable and predictable decisions and profit.
Strategy is decision-making. Decision-making is strategy. The two of them cannot be disconnected. They are in fact the same. Decisions are the currency of business that creates change, makes things happen and propels a company forward. Leaders make key decisions that impact the hundreds or thousands they manage.
There are no bigger decisions than those critical few that define the essence of strategy: Products, Markets and Capabilities relative to the competition through the eyes of the customer.
This book on strategy was written for three reasons that emerged and still emerge from my work with clients. Strategy by and large in many, many organizations is:
Strategy and strategic thinking as a competency – despite all that has and will be written – is still not practiced or embedded in companies as an approachable and pragmatic tool to test, exploit and mitigate profitability gaps and empower those closest to the frontlines.
Many leaders in companies climb the ladder of responsibility through an operational lens and set of competencies. When they get to own a P&L or become the CEO, in many cases they are “rusty” at strategy or have never even been given a set of tools to set strategy.
They are in no better position to either develop strategy or build this competency with the people around them. Strategy remains elusive and misunderstood. The cycle repeats itself and the company stalls or begins to accept average EBITDA as the norm, as no leaders eliminate the reliance on operational rather than strategic decision-making. This cycle must be lessened or stopped.
Strategy tools, methods and lingo have gotten too complex, unapproachable or disjointed from its true purpose. When strategy was “formalized” as a planning approach in the 1950s, it was the birth of a needed management tool and discipline of thinking.
Today I routinely observe a company’s strategy residing as a morphed beast of reports, slides, tools, charts and presentations – rather than the critical few set of decisions around Products, Markets and Capabilities. The misunderstanding of what strategy is abetted by the misdirected need to make it complex makes the administration of the “Strategy Process” more important that the decision-making itself.
The best example of this unneeded complexity is when companies embark on annual calendar events of long-term planning, budgeting and strategy development that are all stand-alone activities! This complexity needs to be removed and strategy put back to where it belongs – as a discipline of decision-making.
Companies that are successful and deliver enduring profits in the marketplace have a couple of things in common, from my vantage point. They see strategy as a dynamic tool that allows them to make conscious choices and mid-course corrections as influenced by their external environment (e.g., Customers, Regulatory Competition, Technology).
Second, they clearly know WHY they are making tradeoffs and tough choices on a daily basis. Many companies’ strategies and strategy processes have become so static or event driven that the “word” strategy brings a roll to the eyes of executives. They cannot wait to complete the retreat so they can get back to the real work of running the business.
Strategy needs to be reintroduced as tools for decision-making that create agility, are not event driven and draw on profound competitive insights from the organization to serve its customer better, relative to the competition.