Do You Have an Effective Strategy?
It has been a bit since the last blog. In short, in late March while on a calm, recovery training ride, an incident occurred with a car that has occupied a great deal of time and has seriously impact my ability to continue with the blogs. I am happy to say that I will resume the blogs; however, they will not be as often as once a week at this point in time. Today’s blog also deviates from the focus purely regenerative medicine and stem cell biology. Today, I will be discussing strategy.
Regardless of one’s marketplace arena, having an effective strategy is crucial for success. As a consultant in various settings (business, academia, hospital/clinical, and private practice), I have witnessed time and again that few individuals or companies have effective strategies and are often unable to identify fundamental components of strategy. Today, I discuss the components of an effective strategy and address a key area often overlooked in implementing strategy (communication).
What is Strategy?
The English word “strategy” derives from the Greek words, “στρατηγός” and “στρατηγία” (the leader or commander or an army; general and office of general, command, generalship, respectively). What constitutes strategy? In short, strategy is the art of the general. Prior to providing a detailed definition, let us first address a few examples of what many individuals and organizations have offered as strategies. I have heard numerous examples of non-strategies proffered as strategies: “our strategy is to be listed in the top 25 hospitals of the nation within the next five years,” “our strategy is to be the company with the highest revenues in this market,” and “my strategy is to be the highest quality provider in the region.” There are numerous similar phrases that are provided as answers to the question of “what is your strategy?” While these examples are admirable goals, they are not strategies.
What is strategy? In their article, Hambrick and Fedrickson discuss what a strategy is — it includes five important elements: arenas (where the business will operate), vehicles (how the business will get there), differentiators (what’s needed to win that market), staging (pace and sequence of moves), and economic logic (how returns on investment will be made).(1) The development of strategy is crucial because it encompasses the deliberate actions that help shape the future of the organization.(2) Another definition of strategy is “a coherent set of individual discrete actions in support of a system of goals, and which are supported as a portfolio by a self-sustaining critical mass, or momentum of opinion in an organization.”(3) If you imagine being a military general, it would be insufficient to say “the military’s strategy is to win the war.” Certainly, that is the overall goal; however, that statement fails to meet the criteria of a strategy as it provides no information on the actions to accomplish that goal. Strategy, in the military setting, tells the general how, why, and where the battles and wars will be won.
Moreover, it is insufficient to simply develop a strategy. The quality of strategy to accomplish its objectives must also be analyzed. In fact, it is quite common to have competing strategies developed that all seek to accomplish the organization’s goals. Selecting the most effective strategy is tricky. Hambrick and Fredrickson provide a helpful set of questions (e.g., Is there healthy profit potential? Are there sufficient resources to exploit the strategy? Is the strategy consistent with company mission and values so that it can be implemented?). There are numerous other questions that need to be asked, but these are helpful to consider when trying to ascertain the quality of the strategy being proposed. There are also methods to test strategies with various organizational models; it is tremendously beneficial to develop and rehearse strategies, test them, and engage in debate about the appropriate strategy to select.
Effective strategy has answers to pressing questions, as well as embraces and addresses challenges; ineffective strategy tends to skip over details and often embraces conflicting demands that are out of sync with the reality in which the business operates or can operate. Moreover, it is important to note that there is a difference between strategy and success. Success is an outcome whereas strategy determines how, why, and where success will occur. In other words, strategy must include the dirty, gritty details of implementation and execution. When these are incorporated, it minimizes the distance between high-level views of the strategy because it incorporates specific actions. As Richard Rumelt wrote, “a strategy is a coherent set of analyses, concepts, policies, arguments, and actions that respond to a high-stakes challenge.”(4) Without these specifics and action plans, strategy becomes confused with goal setting and when that happens there is great difficulty in execution and implementation because the actions have been removed. In other words, strategy is a means of devising implementation plans to achieve established goals.
A common example experienced in the medical world (whether as the healthcare professional or as a patient) is physicians first diagnose disease(s) (the opportunity/challenge) and then develop a strategic prevention/treatment plan. Similarly, developing a good business strategy requires understanding the challenges to be overcome and the opportunities that the organization faces. Once the challenges and opportunities are diagnosed, strategy is developed that addresses the five elements of strategy. In this way, implementation and strategy go hand-in-hand so that business battles and wars can be won.
Communication is Crucial for Implementing Strategy
Strategy requires constant updating and adjusting in order to meet the needs of the present and planning for the future. Stagnant strategy does not allow for companies to deal with ever changing market conditions. Employees must be ready for change. This readiness requires effective communication from the CEO and others. Employees need to understand why the changes are occurring, what the changes are to be, how the changes will take place, and who is doing what to bring about the changes and when those actions will occur. After all, the return on investment that is needed for addressing the economic logic element of strategy will be brought about by employees. Employees are the ones taking the action to implement the changes. They need to feel valued as people rather than simply cogs in the wheel of business change. Communication is the critical tool used for this.
Communication requires several elements (e.g., having transparent and honest dialog). Communication must be brought into strategy in which open dialogs occur without ignoring the bad and the ugly realities for the sake of focusing solely upon the good. In these communications, attention should also be given to commend hard work. Even if poor financial results occurred that led to developing a new strategy, there were employees working hard and doing excellent work; this cannot be ignored. Two other critical items that a CEO must incorporate are being sure that the senior management team are: (1) all on the same page, and (2) able to effectively articulate the strategy along with company mission, vision, and values. Finally, communication must be simple. It should not be a 4 hour presentation or 100 pages of text. Think about the top items important for implementing the strategy and get people focused on them. In physics and mathematics, the simplest formulae are the most elegant and sophisticated. An an example, E=MC2 is incredibly simple and yet an extremely sophisticated and information-packed formula. Simple is hard to obtain, but absolutely necessary and worth the process of reaching it.
It is critical that communication be given the place it deserves as a tool used in strategic and tactical maneuvers. Communication is a two-way street, so communication from top-down only is not an effective approach. Communication must also be allowed to flow from bottom-up. Therefore, having an assessment on the communications within the organization is critical and should involve both verbal and non-verbal means of how the organization is projected to the public through numerous activities. Feedback loops within the organization are necessary as are two-way communications with external stakeholders. Communication is a crucial tool in strategy development and implementation; it should be treated in ways that reflect its value.
Summary
Too often the term “strategy” is used flippantly and applied to many things that are not strategies. As discussed, often the term strategy is used to describe goals. Goals are important, to be sure; however, goals and strategy should not be confused. Strategy addresses how a company moves from its present situation to achieve its goals. In other words, strategy is composed of answering why, what, how, when, where, and who. These are the items that must be communicated to help employees feel that they matter as people.(5) When strategy is properly defined as a means of problem solving (or seizing opportunity), it can be communicated clearly so that there is buy-in on the actions to be taken. Additionally, employees are then able to understand why those actions should be taken, the importance of them, and the role they play to help the organization achieve its goals by following the strategy.
In developing strategy, it is necessary to recognize the limitations of individuals and the business. If there is a strategy that incorporates a new market space in arenas in which the business will operate, it would be unwise to commit to such a strategy without knowing which resources available understand that market space and are able to contribute to it. If there is insufficient expertise available, the strategy staging must include when and how to bring sufficient resources into the company. However, money and talent are not the only measures for resources. One must also determine time - both for the problem/opportunity to be addressed as well as the time managers have for managing employees working on this new strategy.
The most effective strategies are when there is consistency amongst all the five strategy elements and each piece reinforces the other four elements. This again points to the need to have honest and open communication that occurs in a two-way manner. Moreover, change is almost always met with disdain. Much of that is simply fear of the unknown, which can include worry of being left behind as the organization advances. For example, if a change requires a company “guru” to once again become a “beginner” due to tactical changes supporting the strategic change, such a change may frighten the “guru” to the point of looking for other work because of fear of being terminated. The “guru” likely identifies as the “guru” and will likely interpret “beginner” as writing on the wall to termination. Communications addressing such potential fears need to occur and employees need to be able to voice their concerns. Additionally, management needs to address those fears and concerns to demonstrate they care about employees and not just the bottom-line. Employees are the ones that will implement the strategy and impact the bottom-line; therefore, all efforts to help employees accomplish these efforts are time and money well spent.
References
1. Hambrick DC and Fredrickson JW. (2001). Are you sure you have a strategy? Academy of Management Executive; 15:48-59.
2. Dyson RG, Bryant J, Morecroft J, et al. (2007). The strategic development process.
3. Eden C and Ackermann F. (1998). Strategy Making: The Journey of Strategic Management. Sage: London.
4. Rumelt R. (2011). Good Strategy, Bad Strategy: The Difference and Why it Matters. CURRENCY: NY.
5. Campbell CM and Clarke S. (2018). Your people are the hard, not the soft side, of change. Great Leadership. March 22, 2018.
