Strategy Adjustments or Concept

Some companies are adjusting their strategies to compensate for the current economic conditions, but if "strategy" is the long-term blueprint for an organization, why change it for temporary insecurity?

Michael Porter, Harvard Business School professor and leader of the University's Institute for Strategy and Competitiveness, told the senior-level executive audience at HSM's World Business Forum in late September that many leaders are misinformed about how to develop long-term competitive strategy plans for their companies. They often confuse strategy with some type of action, such as merging, internationalizing or outsourcing. Other flawed concepts are strategy as aspiration (becoming the "tech leader" or to "grow"), and strategy as mission/vision statement. "Companies spend days arguing over which six words go in the sentence. It's a concept. Don't confuse it with strategy," said Porter.

A simple, yet accurate, way to test whether your organization is on the right strategic track is to see if your entire management team would be able to independently articulate the same thing. If they can't, Porter said, you don't have a true strategy.
There are five tests of a good strategy, Porter outlined:

• A unique value proposition. "If you don't have one, you're competing on operational excellence but unlikely to achieve superiority."
• A different, tailored value chain. "If not, you are competing on operational excellence — who can do the same thing better?"
• Clear tradeoffs, and choosing what not to do. "If you choose what to do, you have to also choose what not to do because they are incompatible. It's very hard because tradeoffs limit opportunity."
• Activities that fit together and reinforce each other. Porter said to harness the synergies across the value chain instead of discrete advantages.
• Strategic continuity with continual improvement in realization. "Strategy takes about three years to kick in. If you shift strategy every year, year and a half, you'll never get there."
  

As the economic markets fluctuate by the moment, the senior leaders who presented at Argyle Executive Forum's CEO Leadership Forum in early October also had long-term strategy on their minds, and one CEO summed it up best: "If you are not in a crisis, assume you are."

Your comments and input are always appreciated, please email me at wgstevens2@gmail.com .

Coaching Tips - October 2008

This month’s tips come from Charlie Goretsky, one of the newest members of the CCI team. Given that strategic thinking, planning, and measuring progress on strategic goals are areas within the scope of his expertise, we asked him to write about just that.

Great leaders think broadly, in an inter-connected manner, and into the future. They anticipate trends, understand their customer’s needs and competitor’s strengths, and have an awareness of global trends that may impact the ability to achieve their vision. Strategic thinking is essential for success in leadership positions, and can be developed. The key lies in understanding the world around you, both inside and outside your organization, with a conscious effort to collect, analyze and apply knowledge to both your strategies and daily work. To develop and hone your strategic thinking:

Broaden your perspective beyond your current function or role in the organization. This requires ongoing consideration of potentially interrelated factors by staying abreast of the strategies employed and the challenges faced by your peers in other parts of the company. This is done in through building relationships and communications with the leaders of other functions, and by scanning their reports and presentations for issues that impact them and potentially yours. How might the CFO’s stated concerns about capital spending levels impact your strategy to increase investments in necessary technology or facilities upgrades? How does a lowered sales forecast for the next two quarters impact your customer service strategies? Understanding how other functions interconnect can lead to improved decision making for the overall organization.

Know your marketplace and competitors. What are customers buying in your segment of the economy? How are they using the products and services provided by you and your competitors? With whom are you in direct competition, and how do their products compare with your own? Not the sole domain of the marketing or product development teams, all leaders need to be aware so they can improve service delivery, product quality, and internal resource allocation. This is also crucial information to be used when recruiting top talent. Success is driven by understanding your employment offering relative to peer companies and how to target your recruiting efforts to both bolster capability shortcomings and assess cultural matches with potential recruits from competitors.

Anticipate future trends, changes and consequences. This drives quality executive thinking and action. Keeping abreast of technological, political, regulatory, economic, social, and workplace trends arms leaders with the ability to prepare for and respond to changes well in advance, thus leveraging opportunities and avoiding downturns. Scanning news clipping services, newspapers, magazines, blogs, business and trade publications, attending professional meetings and networking will all keep you informed about the current and future business environment.

Focus on possibilities. This is the most challenging, in as much as it requires both creativity and a positive outlook, which can be difficult when you are facing serious and multiple challenges to your business outlook. While some people certainly come by this naturally, all leaders need to scan the environment for clues and cues to how operations can be improved or the future re-imagined. An excellent vehicle to both communicate your thinking and gain different perspectives and ideas is an annual or quarterly brainstorming meeting with your team to discuss what could enhance or accelerate the achievement of your organizational vision. Time away from the office to collect and crystallize your thinking can reinvigorate your focus on possibilities.

Practice integrative thinking and action. Take disparate concepts and ideas from a variety of venues and disciplines and bring them together for unique solutions to old issues and challenges. Look outside of the traditional solution sets for answers. Integrating all that you learn from the previously mentioned actions and bringing them back to your own organization creates informs great tactical decision-making and strategic direction.

Charles is a former executive of Reed Business Information and a good colleague. We had the opportunity to work together in the late 90's and colloborated on many human resources issues and topics. He is a consultant for CCI in California.