The Strategy Dialogue
Mihai Ionescu - Senior Strategy Consultant, Owner Balanced Scorecard Romania, Author
One of the most pressing issues of most executive teams in organizations worldwide is the business execution process. More precisely, the Strategy Execution, or the Strategy-Execution Gap, if you like.
It has been advocated over and over again that the processes of Strategy Formulation, Strategic Planning and Strategic Plan's Execution are not ad-hoc ones and that they should be driven by solid, stable and field-tested Strategy Management frameworks that have clear methodologies, rich collections of best practices and comprehensive logical tools and correlations systems.
Unfortunately, as we speak more and more often about methodologies and about management systems, we sometimes tend to forget that we are talking, in fact, about people. About our employees, with their personal and group relationships and aspirations, with their reasons to either feel motivated and get involved in changing the organization, or just perform the daily routine tasks and defend their comfort zones.
When we speak about our organization's Strategy and its execution, one of the big questions that frequently pop-up is:
Besides the innovative market insight, the inspired strategic intuition and the accurate Strategy formulation & execution processes, what else can make our Strategy successful?
Make Strategy Everyone's Everyday Job
Identified fifteen years ago, by Drs. Kaplan and Norton, as one of the five principles of Strategy-Focused Organizations, the day-by-day involvement of every employee in Strategy's management processes, tends to be more critical today than ever before.
The new generations of employees don't get motivated anymore by clear rules and by the discipline of accurately-designed processes. They don't get motivated by tasks that don't provide a high degree of Autonomy, Mastery and Purpose, as Daniel Pink has highlighted in Drive: The Surprising Truth About What Motivates Us (nearly 15 million people saw the video with the same title).
So, what do you say, how can we bring our employees to actively support the success of organization's Strategy? Is the Individual Alignment enough? The full line-of-sight between the top-level Strategy and the Individual Scorecard is what will do the trick? The comprehensive Strategy Communication will get everyone on board?
The Autonomy and the Strategy Dialogue
When the Organizational Alignment and the Strategy Communication are designed and executed as one-way processes, every employee will most probably understand the message about organization's Mission and Objectives, given Balanced Scorecard's role as Strategy communication tool and as strategic leadership tool. Moreover, the employees who are part of the Strategic Jobs Families will know what is expected of them, because their department's scorecard has been cascaded down to their individual ones.
But is all this enough to motivate our employees and ensure that they'll get involved in designing and executing the Strategy? The Purpose is there, clearly stated by the Strategy that is aligned and communicated down to their level. The Mastery may be represented by the quantified contribution they have to Strategy's success, at least for those who have got an individual scorecard.
What about the Autonomy? What kind of autonomy do the employees have along these Strategy formulation and execution processes? Should it be something along the lines of the work-time individual projects, adopted (and sometimes abandoned) by companies like Google, Apple, or Microsoft? Could this kind of autonomy help the Strategy be more successful?
Actually, let's take a quick look at this. Why would people enjoy to work and be paid for defining their own projects and then allocating them a certain part of their work-time? What kind of autonomy do they want to get through such projects? Think about this, for a moment.
Would they want to show that their ideas and initiatives make a difference? That they can have solutions for business or technical problems or challenges, besides those targeted by organization's action plans and budgets? And, ultimately, that they can have their own stake in something that can be (or should have been) part of organization's Strategy?
This raises even more questions. Have the people been asked (in meetings and workshops, not during lunch breaks) what do they think about:
Organization's set of Strategic Choices (how-to-win and where-to-play)?
About how to build a better Competitive Advantage?
About what important Capabilities might we be missing?
About what Strategic Priorities, Objectives or Initiatives should the organization focus on?
And beyond that, have the employees' ideas found their way up, into the top organizational (or at least departmental) Strategy Maps, Scorecards and Initiatives portfolios? Furthermore, let me ask you this:
Has the Strategy been formulated based on a dialogue between the leadership team and the rest of the employees?
Has the Strategic Plan been designed (above the individual level) with employees' contribution and based on their ideas?
As the Strategic Plan's has been executed, have the Strategy and the plan been adapted in accordance with employees' findings about what works and what doesn't and about what have proven to be false assumptions or invalid hypothesis?
The Three Stages of the Strategy Dialogue
The three questions above define the main areas of the Strategy Dialogue and its three main stages. We have illustrated it like this:
A. The Strategy Formulation Dialogue
The Strategy Formulation process is heavily-dependent on a system of hypothesis and assumptions regarding the future evolution of certain parameters that impact our selection of Strategic Choices about where-to-play and how-to-win.
But besides the various trend studies and forecasts that our strategy analysts use and besides our innovative industry insight and inspired strategic intuition, we have available a treasure trove of ideas and suggestions that may come from our employees, helping us formulate a more realistic and potentially better Strategy. With one caveat: to give them the possibility to contribute to the entire process and to make their opinion count. The same caveat is equally relevant for all the stages of the Strategy Dialogue.
There are three steps of the process in which we should involve our employees, in a layered approach. These are Strategy Formulation Workshops, where we provide our employees with a number of input information, together with the core guiding logic, and get back their ideas and suggestions that may:
improve the selection of Strategic Choices that our Strategy is built upon (the Strategic Positioning Dialogue)
improve our understanding of the differentiating positioning against our competitors (the Competitive Differentiation Dialogue)
identify more precisely the Strategic Coherence Gaps related to our Capabilities System, based on a better understanding of the feasibility of changing the required capabilities or developing new ones (the Strategic Capabilities Dialogue)
B. The Strategic Planning Dialogue
A number of BSC implementation cases and the experience of many Strategic Planning and Alignment Workshops have indicated that the contribution of our employees to the Strategic Planning process is most valuable in three areas:
the correct identification of the Cause-Effect relationships between the Strategic Objectives that are the backbone of our Strategic Plan (the Causality Dialogue)
the identification of the most relevant Risk Events that may affect our capability to achieve the Strategic Objectives (the Strategic Risk Dialogue)
the selection of the Strategic Initiatives (for both performance and risk) that should help us achieve the Strategic Objectives and protect them from the impact of potential Risk Events (the Strategic Initiatives Dialogue)
C. Strategy's and Strategic Plan's Adaptation Dialogue
No report structure or statistical analysis can produce better suggestions when it comes to adapting the Strategy and the model that we have used for designing and aligning our Strategic Plan than the feedback of the people who are involved in the execution of the plan.
The direct contact that our front-line employees have with customers, suppliers, and partners or the information they get all the time about the competition, through their marketplace interactions, is invaluable for the driving topics of two main areas of our Strategy's and Strategic Plan's adaptation processes:
the validation of certain hypothesis and assumptions that we've made when selecting the Strategic Choices that position our Strategy may come from marketplace interactions that our employees have, quicker and more relevant than from market reports, statistics and trends analysis (the Strategy Adaptation Dialogue)
the most practical feedback about why certain components of our Strategic Plan's model do not work as expected may come from the employees who participate in Strategic Initiatives' roll-out or who are required to contribute to those initiatives' realization (the Strategic Plan Adaptation Dialogue)
Finally, let me ask you this: Have you used the intelligence, ideas, feedback and suggestions of ALL your employees during the Strategy Management process, at least in those stages when their contribution may prove extremely valuable for ... (a) designing and executing your Strategy better and for (b) motivating them and gaining their personal involvement in the entire Strategy-focused process?
Ultimately, this can make the difference for how it translates, for every employee, in whether they might say:
This is the Strategy that me and my colleagues have designed and we are now implementing it together
This is the Strategy designed by my managers and I've been asked now to participate in its implementation
Your feedback is welcomed, as always.