Another three-day strategy retreat in some ritzy hotel surrounded by a wrap-around golf course or with a breath-taking ocean view. This is the usual setting of a top management meeting where we discuss, usually with support from a consultant, how the business will grow in the next five years.
This five-year ritual is punctuated by a mid-strategy review where a post-mortem is undertaken to discuss what was done and what was not done, point fingers and agree to do better next time. Research shows that only about 10 percent of strategies ever get implemented as envisioned.
After these relaxing retreats, most employees and their managers return to business as usual as soon as they are back in their offices. Many of the retreaters do not even participate effectively in the strategy planning sessions, choosing to continue sending off missives to the office and responding to a myriad of emergencies. This is the beginning of the tragedy of poor strategy implementation – failure to participate in a strategy session while you are in attendance not only deprives the company of your insights and commitment but also the funds they have been used to pay for your travel and accommodation and, lately, daily subsistence allowances.
Strategy has become a “thing-we-do” rather than an important determinant of how we set direction and compete, or better still, discover new horizons where we can offer value to our clients or citizens. Confronted on the lack of commitment to the strategy process, many employees retort that this is not the first strategy session they have attended and nothing has come of it. There is clear apathy on display when most organisations in the public and private sectors discuss strategy implementation.
Why have we lost faith in the strategy development process, could it be because strategy does not work? Should we shelve strategy and deal with whatever happens when it happens or can we make strategy an integral part of our success?
Strategy development is an important part of defining value we intend to offer to our clients and citizens and this is probably the first point where strategies fall apart. Strategies are meant to be outward looking and it is here that decisions are made on what the clients need rather than what they want.
Steve Jobs put this eloquently: There will always be a need for organisations to re-imagine what they can offer their clients to meet their needs better, clients cannot comment on something that does not yet exist as such market research can only be used for slow incremental changes rather than significant product alterations or new products.
This is the purpose of strategy retreats— to allow management teams to re-imagine their businesses and by so doing significantly change their ways of working.
A strategy retreat should therefore be accompanied by visioning sessions where restrictions of current state assessments are removed and methodology of strategy development is turned on its head.
Tools that previously helped organisations define their strategies such as SWOT (strengths, weaknesses, opportunities and threats) and PESTEL (political, economic, social, technological, environment and legal considerations) now only serve to restrict the step-change required to truly create stand-out value in the market.
This is even more stark considering the pace of change where dominant global companies today did not exist 10 years ago. The pace of change means that it is important to build an agile organisation that collects information quickly, processes it and turns it into strategic executable intent. Each organisation in this rapidly changing environment therefore needs to anchor itself on an unchangeable bedrock philosophy. This philosophy is organisational purpose, the answer to the question, why do we exist?
EY in conjunction with Simon Sinek, the award-winning corporate strategist, researched the importance of purpose led transformations and discovered that purpose-led companies outperformed the S&P 500 by 10 times between 1996 and 2011.
Case in point is Apple, around 1997, Apple was on the verge of bankruptcy. That year, Steve Jobs replaced Gil Amelio as the CEO and transformed Apple. Jobs always wanted to contribute to the world by making tools that advance humankind.With this vision, he focused on designing products that were distinctive and easy for customers to use. Jobs successor, Tim Cook, is following a similar path of creating unique products. Today, Apple is one of the two companies that have hit the US$ 1 trillion mark in value.
Strategy does not fail in one fell-swoop, no, it dies a slow whimpering death under a pile of business as usual.
A successful business strategy would, of necessity, require a change of business processes within the organisation, the organisational governance, incentives and tools to accomplish what is required. Technology requirements are defined by the strategic needs of the business. Technology therefore must be viewed as an enabler of the business rather than a game-changer.
The game-change occurs at the strategy formulation where we envision what could be. This also means that developing a strategy from different departments serves to not only entrench the silos but leads to disjointed “strategic” initiatives and pet projects that serve interests of different fiefdoms within organisations. It is this “disjointed” approach that leads to our focus being diverted from our strategic intents.
The same disjoint drains resources and energy such that the right capabilities are not available to the most critical aspects of the strategy. It is not a monstrous dragon that swoops from the skies and kills our strategic intents, rather it is the gnats that arise daily and fill our vision and nostrils and knock us off course. These gnats are cleared easily if we focus on our purpose and change our business to get to this purpose.
Make your next retreat one where you discard business as usual and “this-is-how-we-have-always-doneisms” and embrace the rapid environment change of your future clients who are well informed and now more than ever clearer on what they need.
The writer is Partner, EY in charge of Consumer Industries Group and Performance Improvement for East Africa.