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PEOPLE leave a strategy retreat with such high hopes and enthusiasm, the strategy is clever and the team is committed. Then something odd happens, nothing is achieved and in no time at all it is back to business as usual.
If this sounds familiar, it is because it is the more common post-strategy pattern. This is where Professor Simon’s book 7 Strategy Questions adds value.
After studying strategy implementation for 25 years, he has devised a set of seven questions companies should be asking to ensure they are clear on how their strategy will be executed. These questions will also assist in plugging any holes the strategy may have overlooked.
The first question, who is your primary customer? has its emphasis on the word “primary”. The need for clarity on this issue is crucial to the allocation of resources and attention. Primary customers should be given more so that their value can be maximised.
Amazon, for example, has two sources of revenue: the suppliers who buy space on its virtual shelves, and the customers who purchase the goods. Amazon took the view that its customers were primary and has invested heavily, making the buying experience as easy and pleasurable as possible. That it chose the correct revenue source is indicated by the fact that Amazon has 6% of the entire US retail market.
Cisco, in contrast, reinvented itself by making its “channel partners” its primary customers, with about 92% of sales comes from these intermediaries.
The second question relates to the prioritisation of shareholders, employees and customers. Whose interests should be put first? Simon points out that examples of companies that survive for long periods by putting shareholders first are hard to find.
Why everything stopped going right
The company needs to give clear priority to either its customers or employees, with the latter being the priority mainly in professional service firms.
The third question relates to the critical performance variables you need to track. These variables need to be a carefully chosen few, rather than a slew of measures, and must constitute a translation of the strategy into action. More is never better when the issue is the measure to track. This is because management attention is one of a company’s scarcest resources, and having too many allows the critical measures to get lost in the overload.
The fourth question relates to the boundaries that need to be set to control strategic risk. Toyota is a cited example of what happens when people are under pressure to perform.
In its efforts to outproduce GM, Toyota violated its quality standards with embarrassing results that tarnished its proud reputation for producing cars that “keep going right”. Its policy of never building a new product in a new factory with new workforce was sacrificed in the race to become the world’s largest manufacturer.
Businesses today, more than ever before, need to be creative. So crucial is creativity to survival that the creative process cannot be left to chance.
The fifth question is how are you generating creative tension? As Simon rightly points out, creating an environment conducive to creativity and teaching creativity tools has not been shown to produce creative solutions. Competition between units and people, for example, has been shown to be far more effective.
No strategy can be executed without a concerted effort from all employees to pursue the strategic objectives. So Simon asks as the sixth question: how committed are your employees to helping each other? Collaboration rarely happens without been fostered and actively encouraged.
John Chambers of Cisco forces staff to work with people they don't get on with, and famously withheld the bonuses of very senior executivesfor not being collaborative.
Simon's final question is: what strategic uncertainties keep you awake at night?
The seven questions, asked intensely and sincerely at the end of any strategy formulation or review session, will give impetus to the process. The practical clarity that will emerge from the exercise is certainly worth adding the extra day to your next strategy session.
Readability Light --+-- Serious
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Ian Mann of Gateways consults internationally on leadership and strategy.
