Get the most out of your strategy process: Two simple pitfalls to avoid
I’ve noticed a marked improvement over the last decade in the quality of Finnish companies’ strategy work. Strategy processes have gained an institutional role in management systems, increased investment in business intelligence provides a more comprehensive fact base to strategy work and strategy processes are generally well organized.
Yet I still find that strategy processes often fail. That is, they fail in meeting the two primary goals of a strategy process: creating a playbook for beating market performance and elevating the capabilities of the management team to continuously renew the company’s competitive edge in the future.
Too often strategy processes comprise a hasty mechanistic treatment of the topics supposed to be covered (vision, mission, competitive advantage, targets, development programs, financial projections, risks, …) combined to mind-numbing wordsmithing discussions (“do we target being the first, or primary, or preferred, anyone”?). The result is a lot of companies performing below their potential and suffering from poor quality strategy dialog within its management team.
Undoubtedly there are more than a few drivers to this problem, but below I discuss two essential pitfalls to which companies seem to stumble into time and again. I have selected to highlight this pair of issues because they are very straightforward to mitigate and have a disproportionally high reward if recognized and tackled.
PITFALL 1: Insufficient time allocation for strategy discussions and thinking
Strategic thinking and high-quality strategy debate require time. It is not a trivial challenge to define a strategy which gives a company a competitive edge in its market. True value creation in a strategy process requires time investment in many forms.
Firstly, time is required for analytically preparing strategy sessions to ensure the discussion builds on a correct understanding of what is happening within the company and its environment. Secondly, and more importantly, management needs time to study the fact base, prepare insight and participate with full engagement in common work sessions in which shared thinking is further refined. Finally, strategy sessions need to extend over weeks and months to allow the topics and decisions to cultivate in everyone’s subconscious.
When there is too little time to truly debate the strategy, the process can fail to create significant added value for the company. Major trade-off decisions may prove difficult to make, commitment to key outcomes may remain superficial and a large portion of the actual decision-making is in practice delegated to the next organizational layers.
To diagnose whether your management team has this issue ask this question:
What is the total percentage of time spent by the management team on high-quality strategy discussions over a calendar year?
If the answer is in low single digits (as is common) there is most likely room to improve.
The simple solution for this pitfall is to design your next strategy process well in advance with adequate time allocation.
PITFALL 2: Failing to leverage the strategy process as a learning experience
A strategy process is a unique opportunity for the management team to elevate their collective insight on the key value drivers of their business and industry – as well as to develop shared capabilities for problem solving and strategic planning.
Through a well-designed strategy process the management team can define a great strategy, while cultivating their collective capability to identify and tackle opportunities in the future. However, the learning aspect is easily neglected because of the high pressure to quickly develop a plan for seizing immediate opportunities and responding to emerging challenges.
Managers often join strategy work thinking they already know what the key challenges to tackle are and approach the whole process primarily as a chance to persuade others of their diagnosis. This makes learning and developing new thinking rather unlikely. Same managers leave the strategy process frustrated by the rest of the group for “not getting it” and having learned very little.
To identify whether you have been exposed to this pitfall consider the following questions:
- Do the management team members manage to set aside their roles and responsibilities for the strategy debates and focus objectively on the firm level view as a team?
- Does the management team’s strategy dialogue build on the thinking of each member in a healthy way – or is it dominated by a few and revolving around same topics?
- Is the discussion based on a common analytical foundation – or is the discussion often driven by anecdotes?
- Are sufficient feedback loops and consistent reflection practices in place to ensure continuous learning from past decisions?
Once recognized, this pitfall is also straightforward to tackle. Strategy work participants need to be reminded of the learning aspect of the process. Simple methods are available to help management team members to break out of their organizational roles. This issue is also directly linked to the above discussed time allocation. Fully leveraging strategy work as a learning experience requires investing time into addressing the emotional side of problem solving and decision making as a team. For this purpose, time should also be set aside for collective reflection on the quality of the dialog and defining the key bottlenecks to work on.
As mentioned, there are straightforward actions to mitigate these two pitfalls once they are identified. However, doing so is seldom easy. Management does not have excess time to allocate and no clear activities to de-prioritize to acquire it. Leveraging the strategy process as a learning tool is a lot about the mindset of the executives taking part. This makes it easy to note but very difficult to truly change. Hence, tackling these two issues requires full appreciation of the challenge and an active response from all participants.
Properly addressed, strategy work has the potential to provide an edge for Finnish companies. Finns have an exceptional foundation for it in our fact-based, engineering-oriented thinking, combined with our inclination for straightforward honest communication. All in all, Finnish companies are already on a steep learning curve with strategic planning and it is a privilege to support our clients on their journeys.