We live in a world of ever-accelerating technological development, where ideas, products, and services spread faster than ever before. Political and market changes that seem distant can significantly impact one’s own organisation. In such environments, strategy work is more important than ever. In the article series ‘Mastering Strategy’, we dive into the challenges associated with strategy work and explore what defines a successful strategy process.
Strategy development and implementation involve anticipating and positioning the organisation to meet future needs. It’s about understanding one’s environment, exploring uncertainties, and making decisions about the use of organisational resources so that objectives are achieved. Strategy development is the responsibility of leaders.
Most leaders find strategy work challenging. Employees often think that strategy development is disconnected from reality, unrealistic and impractical. Yet, there is little that can create greater value and provide more engagement and drive for an organisation than a sound strategy delivered at the right time. So how do you ensure that the strategy is valuable? At THEMA, we have spent years considering how to conduct effective strategy work and when it is the right time to initiate a strategy process.
To answer these questions, we will, as part of a series of articles, explore what defines a successful strategy process. Among the questions we will discuss are:
- What are the most common pitfalls in strategy work?
- Do we need an annual strategy process?
- What is the goal of the strategy process?
- What kind of strategy process should we conduct?
- What role should those responsible for strategy take?
- How do we organise the work?
- How do we effectively involve the board, management and business units?
- How can the strategy process best support implementation?
The insights in these articles are based on experience conducting strategy work for several companies in the Norwegian energy sector, discussions with corporate strategy leaders in some of Norway’s largest publicly listed companies, and interviews with a select group of Norwegian business leaders with extensive experience from Norwegian and international companies.
We begin the series by looking at the biggest pitfalls present in strategy work.
How do you avoid the biggest pitfalls present in strategy work?
It is challenging to develop sound strategies that leverage an organisation’s strengths to meet future needs. And it is perhaps even more challenging to conduct a strategy process that facilitates successful implementation afterwards.
Sometimes the most effective way to approach a difficult task is to identify what one should avoid doing. To that end, we have developed a list of the biggest pitfalls when developing a strategy and subsequently trying to implement it. The most important process-related pitfalls are as follows:
1. The strategy process lacks clear objectives at the start
“It’s that time of year again. Time to start a new strategy process.”All too often, organisations launch a strategy process without a clear understanding of why it’s needed.
What has triggered the need to think strategically (other than the calendar)? Is a new strategy needed, or is there another, non-strategic issue that needs solving? And once the need for a strategy process is clarified, what are the objectives of the process? Strategy processes are often initiated without clear goals.
Strategy processes without clearly articulated objectives risk spending too many resources figuring out what needs to be done. Analysis is conducted that “boils the ocean” and meetings are held that bring little progress. As a result, work quickly becomes ineffectual, lacks clear direction and fails to provide the organisation with the energy necessary for implementation. The strategy ends up in the bottom drawer until it’s that time of the year again.
2.The process’s goals are insufficiently anchored, and management are not engaged
Establishing the need for a process and its objectives is essential to ensure that people buy into the work. If a lack of engagement remains a problem, it is often because the issues covered by the work don’t resonate with the management team. If so, and the process is launched anyway, it will quickly lose legitimacy within the organisation. This leads to frustration and a lot of draining meetings at all levels of the organisation. It can also, over time, undermine the credibility and importance of work on strategy more generally.
Management must actively engage in the work if the process is to maintain sufficient energy and intensity throughout. The importance of management’s involvement cannot be underestimated, although the level of involvement may vary slightly depending on the type of strategy process (more on this in later articles). However, without a doubt, the greater the potential change for the organisation, the more critical it is that top leaders are heavily engaged in the process.
The conclusion is clear: if top management and the board are not fully committed to carrying out a strategy process, don’t.
3.The strategy team lacks credibility within the organisation
Do not make the strategy team too large. A good team consists of a combination of experienced, recognisable people and less experienced members from within the organisation. Look for people who ask questions and bring energy. And, as with any team, people need to have fun, feel valued and be seen. Since the core of strategy work is exploring uncertainty, it’s important to establish trust within the team. This makes it easier to open up to constructive discussions around premises, analyses and potential solutions.
There are often a lot of key people who need to be involved for strategy work to succeed. Involve broadly but do so by integrating them into the process while preserving a small, focused core team to drive the process forward.
4.The board is insufficiently involved in the process
The responsibilities of the board, especially those of the chairperson, have become increasingly extensive in recent years. The demands placed on the leadership and administration have also intensified due to rapidly changing external factors. These changes have increased the importance of bringing in a broader range of skills and perspectives to help shed light on challenges and develop sound strategic initiatives.
Boards’ demands to be more involved have grown in line with their increasing responsibilities. This provides an opportunity for management to access expertise that they may not possess themselves.
We expect this trend to continue as boards’ responsibilities grow and more former CEOs take on the role of chair.
5.Management has not made it clear that the conclusions from the strategy process will be implemented
This is more often a problem than one might expect, especially when there has been a failure to reflect on and articulate the goals of the process. Even when the goal is clear, management often fails to implement strategic decisions. This contributes to a loss of creditability in strategy work over time.
In the next part of the Mastering Strategy series, we will examine the central elements of strategy work, focusing on the ‘strategic cycle’.
Read also:
Strategimestring 2: Godt strategiarbeid skjer best i en syklus
Strategimestring 3: Hva avgjør om du trenger en strategiprosess?
