Strategy as Transformation

Strategy & growth

Strategy as Transformation

Challenge your View of Strategy as a Driver of Real Change and Effect

Contents

strategy as transformation

Strategy: a Driver of real Change and effect

Strategy and Its Pitfalls

your Strategy Must engage hearts and Minds

your Strategy Must Dare to Challenge who you are

your Strategy Must Bring Clarity to Complexity

your Strategy Must Be Firm and Flexible

your Strategy Must Change Conversations

2 Implement Consulting Group

Strategy: A Driver of Real Change and Effect

to drive long-term value creation, it’s necessary to think and act strategically. as a result, the companies that perform best are the ones that manage to keep a strong strategic focus as they craft and implement their strategies.

this observation is also borne out by a recent survey we conducted among six hundred companies across europe. results show that the top companies are much more sensitive to market developments and more strategically flexible than the lower-performing ones. however, various other surveys show that it is still only around 30 per-cent of companies that manage to fully realise their strategies.

this leads us to believe that many organisations today have a vast un-realised strategic potential. But simple awareness that this potential exists is not enough to release it. as the world changes and becomes more dynamic, complex, and globally integrated, realising an organisation’s potential requires a new way of thinking about strategy and strategic transformation.

at Implement Consulting group we set out to help unleash and facilitate strate-gic transformation in the organisations we work with, rather than just figuring out what their ‘right strategy’ should be. we approach the task with humility and without claiming to have all the right answers, but from the feedback we get from organisations we’ve worked with, we can tell that our approach to stra-tegy and our way of working do result in real change and in lasting impact.

when it comes to succeeding with stra-tegic transformation, these are some important things to keep in mind:

• Today’s organisations are not iso-lated islands. More than ever, they are deeply intertwined in networks with suppliers, key customers, and stra-tegic alliance partners. this calls for strategies that challenge the view of ‘the organisation’ and strategy pro-cesses that take the complexity and uncertainty of the environment into account. anyone who aims at fore-seeing and controlling everything has a good chance of ending up being se-verely disappointed. Strategies must be both firm and flexible.

• The opportunities and challenges that organisations face are many and interrelated. Sometimes they drive a company in opposite directions, and often they are fast moving and come from new, unpredictable directions. Paradigms change, and so must stra-tegies. Strategy processes must dare to challenge who you are and bring clarity to complexity.

• The organisational pyramid has turned upside down. Most organisa-tions need to perceive themselves as highly knowledge-intensive, with em-ployees holding opinions, viewpoints, and insights valuable for the strategy as well as playing a key role in its implementation. this calls for stra-tegy processes that involve people throughout the organisation and for strategies with the power to engage each individual in order to ensure a successful implementation.

• Strategy is often disconnected from the organisation. Consequently, or-ganisations are not aligned with the intents of the strategy they claim to follow. Processes like budgeting, planning, reporting, and appraisals often focus too much on opera-tions. Management focus and ways of working do not clearly distinguish between ‘running the business’ and ‘changing the business’, which in many organisations means spending

too little effort on changing the busi-ness. to succeed, the strategy must change the conversations taking place in the organisation.

In this article, we elaborate on these challenges and present what we regard as the five essential elements of dealing with them. we hope you will find some practical ideas and principles to apply in your own approach to strategy.

the idea in brief

the world has become more dynamic, complex, and globally connected, and organisations are becoming more and more knowledge-intensive.

this makes strategic capability a key driver of long-term perfor-mance and value creation.

however, as only around 30 per-cent of companies manage to fully achieve their strategies, a new way to approach strategy and strategic transformation is much needed.

For a strategy to result in real change and effect, it turns out, it must embody five essential ele-ments:

• engage hearts and minds• Challenge who you are• Bring clarity to complexity• Be firm and flexible• Change conversations

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Strategy aS traNSForMatIoN

Strategy & Growth

Strategy and Its Pitfalls

Understanding strategy and its pitfalls sets the stage for the whole implemen-tation effort. It makes it possible to plan how to succeed at formulating a value-creating strategy that drives change and creates the effects you want.

Strategy is about creating value

the purpose of a strategy is to trans-late the vision of an organisation into actions which will enable people in the organisation to create value for its stakeholders. (See Figure 1.) It is only through the actions of individuals that value is created. how value is defined will depend on the type of organisation and its stakeholders.

this link to value makes the term stra-tegy applicable well beyond the military or business contexts where it is most commonly used. In our experience, the concept of strategy can also be useful in public sector or third sector institutions that have a vision (purpose, values, and long-term goals) to fulfil. It is of course necessary to adapt some of the terminology of strategy to suit

these organisations’ needs, but the general concepts are still applicable and useful.

Strategy is about answering key questions

For business organisations it often makes sense to distinguish between corporate strategy and business stra-tegy. the aim of corporate strategy is to set the direction for a portfolio of businesses. as a result, it is necessary to focus on answering the following ques-tions:

• which businesses are we in and what is the rationale for this portfolio?

• which corporate structure should we use to manage our businesses?

• what are the possible synergies among the businesses and between each business and the corporate cen-tre?

• what should our capital structure be?

• how do we allocate resources between businesses?

Business strategy, on the other hand, aims at providing the answers to four basic questions of any organisation:

• who are our customers?

• what do we deliver to them?

• how do we deliver it to them?

• what is the speed and sequence of the strategic moves which have to be made?

taken together, the two levels of stra-tegy provide the answer to how the vision is to be translated into action. Not all organisations have a structure where this distinction is relevant, and in such situations a combination of the two can be used.

Strategy is about people

organisational change and transforma-tion are central to strategy develop-ment and implementation. which actions are most relevant and create the most value? (that is, which actions are most likely to ensure the realisation of the vision?) the answer always de-pends on the given circumstances—and when the circumstances change, so must the strategy.

however, since strategies are created through interactions among people within the organisation, finding the best value-creating strategy is not just a question of clear and logical analysis. Strategies are rather determined as much by what creates meaning and energy for the people in the organisa-tion—as sketched in Figure 2—as by analysis and facts. Both of these per-spectives are essential to creating a successful strategy.

Beware of pitfalls on the road to a successful strategy

to create value is to do ‘the right thing’ well—even as challenges, opportunities, and ambitions change. For an organi-sation to stay competitive and deliver sustainable value creation over time, it must therefore constantly transform Figure 1. The strategy must show how to get from vision to action

Core ideologyCore values

Core purpose

envisioned futureten- to thirty-year bhags

Vivid descriptions

Vision

=

+

strategy

action &

change

Who are our customers?2

What do we deliver to them?3

how do we deliver it?4

When do we carry out which activities?5

What are our business boundaries, corporate structure, and capital structure, and how do we allocate resources?

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itself and its strategy. Unfortunately, this type of strategic management is not an easy task, and several potential pitfalls lurk along the way, as outlined in Figure 3.

strategy as decorationthe first pitfall is the idea that a stra-tegy is something you have rather than something you do. this can delay dis-covery of the need to change and thus cause you to move too late. this delay puts the strategy process under pres-sure, making it a crisis rather than an orderly response.

Delay is especially likely when strategy is seen as a yearly event (or one that happens every two or three years) rat-her than as a dynamic process. In that kind of environment, which is quite common, no one is following up from day to day and month to month to review the realisation of the current strategy and its critical external precon-ditions.

In addition, the mental maps of people in the organisation influence the way they perceive the world and whether they see a need for change. Seeing strategy development and implementa-tion as separate activities will increase the risk of not being aware of the need

for change. when implementation re-sults and experience are regarded as stand-alone data and not fed into the strategy review process, the strategy can be fatally weakened.

twisted Perspectivethe second pitfall is the ease of incor-rectly gauging the type of response needed to address opportunities and challenges. Many causes can lie behind this. Some of the main ones: not managing and chal-lenging assumptions; not balancing goals, capabilities, and opportunities; hav-ing too many and unclear goals; and forecasting too far into the future given the uncertainty of the competitive environment. In ad-dition, not daring to make the necessary and tough decisions and prioritisations can lead to a lack of focus and clarity.

inertiathe third pitfall re-lates to not acting,

even when the need to do so is obvious. this happens when the overall goal it-self does not create a call for action for the organisation, the plan does not con-nect to the personal and professional goals of the people in the organisation, or the implementation has been an-nounced but not followed up, leaving people with a lack of both ownership and accountability.

frictionthe fourth and last pitfall relates to not being able to carry the strategy all the way through even when the organisa-tion has overcome its inertia enough to get started. often this is attributed to the fact that the strategy is not being fully integrated and thus ends up as something separate from the organisa-tion’s day-to-day activities. other rea-sons are a lack of discipline and focus in implementation and the reluctance to share results (whether good or bad). when people don’t know what’s hap-pening with a strategy, it recedes from sight and they tend to conclude that it doesn’t matter.

... changing

strategy is about people…

... creating a common point

of view

... thinking

... acting

... managing complexity & uncertainty

... making decisions

... creating & exploring ideas

... seeing things in a new light

Figure 2. See strategy as a people process

Figure 3.

To succeed at strategy you must be aware of the pitfalls

doing the right thing and doing it well.

discovering the right thing is now wrong.

figuring out what the new right thing is.

doing the new right thing, but doing it poorly

at first.

Pitfallstrategy as decoration

Pitfalltwisted

perspective

Pitfallinertia

Pitfallfriction

Strategy & Growth 5

Your Strategy Must Engage Hearts and Minds

a strategy doesn’t come about until people change their behaviours and align their actions with the intent laid out by the strategy.

Involve every participant as early as possible

Most change efforts pay too little attention to the process required to make the strategy happen, and what attention there is happens too late. the delay is built into the terminology: Implementation tends to be referred to as ‘rolling out the strategy’, thus imply-ing that implementation is something that happens at the end, after the stra-tegy is fully formulated. But making a strategy live and succeed requires more than just a good communication plan and a road show.

Creating change in today’s business organisations can’t be done by simply announcing the final strategy, saying that from tomorrow we will be doing things differently, and installing follow-up mechanisms. this approach is more likely to destroy motivation and energy than to create it.

Telling and selling is not sufficient

there are many reasons why telling and selling alone will not bring success, and most of them relate to how human indi-viduals deal with change.

For one, just processing the informa-tion about the new strategy and under-standing what the implications are will take time. and the way many strategy processes run today, those whose be-haviour needs to change the most in the organisation are given the shortest amount of time to prepare for the change.

Change also brings uncertainty. this uncertainty can take many forms: unsureness about the reasons for the change, or about what it means ‘for me personally’, or about the ability to do new things properly and correctly.

Meanwhile, people form opinions early—and the more uncertain they are, the less likely they are to believe any change will be favourable. So having a strategy process that people have heard about but do not participate in will influence how the strategy is accepted—and not for the better.

what this means for the approach to strategy is that the strategy process itself and the involvement of the people in the organisation are crucial to deve-lopment of a successful strategy. they are just as important as the ultimate content of the strategy itself, because it does not matter how well a strategy would have worked if it never gets a chance to prove its worth.

thinking about implementation should begin on the first day of the strategy

process, as shown in Figure 4. this is necessary to create a process that en-gages all the individuals who will ulti-mately be involved.

as a result, the strategy process should be more open and allow for more in-volvement of the organisation than what is usually the case today. and involvement of the organisation should start earlier in the process than would normally feel comfortable for most of who make a profession of leadership and change (either because we feel we should be the ones providing the answers or because we feel that peo-ple elsewhere in the organisation lack sufficient competence to contribute to strategic thinking).

of course, these observations do not mean that everybody should be part of every activity in the strategy process—today’s work still has to get done today. Nonetheless, every activity should be considered from two perspectives: First, how does it help create a better stra-tegic direction? and second, how can it be used to support the implementa-tion?

Figure 4.

You must think about making change happen right from the start of the strategy process

strategyimplementation

strategy formulation

time

focus

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Implement Consulting Group

Remember that participants need to find the strategy personally relevant

Most people are engaged in their pro-fessional life. on one hand, they want to see the big picture. excellent strategy communication and involvement in cre-ating the strategy (where relevant) sup-port this process. on the other hand, individuals must see how they fit in and what the strategy means to them. Much of this happens most smoothly during the strategy deployment pro-cess, where the strategy is translated into goals and initiatives for units and individuals. In this process it is very important to allow room for individuals to interpret and understand the big pic-ture and to adapt their own story and perspectives to it. the usual situation, shown in Figure 5, more or less reverses the ideal allocation of time.

Communicate with passion and authenticity

the communication around the strategy—both the formal sessions and all the informal meetings between leaders and employees—must have pas-sion and authenticity. the actions that

leaders take must be in line with what they say. you must create trust through your communication by showing re-spect and by talking with the recipients of the message rather than just to them. you have to show that you believe in the message and that the message is important to you. It must be a message from the heart—and peculiarly enough, you demonstrate that best by listening to others and being prepared to modify it to make it something they can also be passionate about.

Stay focused—it isn’t fixed yet

From a top management perspective, strategy thinking is mentally at the top of the agenda early in the transforma-tion process. It is very easy and natural to reduce focus and intensity as stra-tegy formulation ends, but for most of the organisation the process is just beginning. therefore one must establish reinforcement activities to regain the focus. Campaigns initiating the next phase, consistent ongoing communi-cation, and regular meetings and dia-logues are necessary.

your message should be repeated many times if it is going to stick, and all activities should be related to the stra-tegy. Not because people are stupid. Not because they are uncommitted or indifferent. Not because they by nature are unwilling to change. But simply because it is a demanding act for in-dividuals to change their actions and behaviours—and this is what strategy is about.

Figure 5. Typically not enough time is allowed for change

IDeaS oN how to eNgage heartS aND MINDS

Start strategy development with a general mind-setting activity where you tell the organisation about the strategy process—what will happen and what directions you are looking in.

Be honest about the situation, the reasons, and the direction—the smart people in your organisation already know—and it’s best to assume they’re all smart.

Challenge your perception about who can contribute to the process. you can use up-and-coming young talent, experienced new hires, and directors of subsidiaries as well as your usual planners.

Focus on creating the right mood and energy throughout the process—the mood can be more important than what is on the PowerPoint slides and what is being said.

7Strategy & Growth

time toprepare

impact of change

executive management

senior management

team leaders

employees

Your Strategy Must Dare to Challenge Who You Are

Strategy is not about finding the easy answers—it’s about finding the right answers.

this means taking a good hard look at yourself, challenging your own normal perceptions and assumptions about who you are as an organisation: What is actually our core purpose? What busi-ness are we really in? Has the world changed and rendered us obsolete?

Doing this as an organisation, as op-posed to as an individual, requires a different kind of strategy process. you need a process that allows for the right questions to be found and asked, and one that allows for challenging assump-tions, learning, and adjusting both hy-potheses and goals along the way.

one way to do this is to treat your strategy as an innovation process: a process of exploration, experiments, and challenges to key assumptions, as well as logic and structured creati- vity. avoid attempting to force strategy development into a linear process—as with other forms of innovation, it is often necessary to loop back and incor-porate new learning.

this does not mean that the final stra-tegy in itself always has to be ground-breaking and radically different from its predecessor. Its content should be dic-tated by the situation and the particular circumstances surrounding it. Perhaps your existing strategy already is the best and most innovative approach—that’s always a comfort to believe, but you won’t know unless you challenge it properly.

Spend time finding the right questions

Strategies are made by people and are decided on because of what makes sense and what motivates. however, like innovation, sense-making, learning, idea-generation, and decision processes rarely move in a straight line. Neither should the strategy process, as it de-pends heavily on these very elements.

the early part of the strategy process should be focused on challenging your preconceptions and assumptions by bringing in new views and suitable disturbances—that is, challenges to your traditional worldview that get you thinking in new and productive directions focus should be on searching for the right perspectives and for the right questions to ask. as understanding and insight grow, this phase will often bring ‘eureka moments’. the aim is to ensure that the current situation, opportunities, and

challenges are well understood.

Don’t just pick the first strategic direc-tion that comes to mind or seems to present itself. Force yourself to experi-ment with your thinking to spark off new ideas and explore the full scope of possible strategic initiatives.

Part of this involves synthesising your knowledge and ideas into unique per-spectives and hypotheses about the future. these hypotheses can then be tested through further analysis and local experimentation in the market.

In this kind of strategy process you are certainly able to set up a specific activity plan, but cannot necessarily predetermine the timing of insights and final results. you will need to keep the strategy process flexible so it can be adjusted to support new ideas and di-rections as they develop.

Figure 6. To succeed you must be able to combine four distinct competences

analysis

Visioning

Challenging assumptions

navigating social and political interaction

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Use the innovation approach to avoid decision traps and manage uncertainty

In a traditional problem-solving and linear approach to strategy, we often see organisations get caught in some of the following traps:

• attaching too much importance to initial thoughts and data.

• giving too much weight to the cur-rent situation because it feels more comfortable than the unknown future.

• Posing questions the wrong way and thus looking in the wrong direction for the answers.

• Seeing what you want to see and making evidence fit with your precon-ceived notions.

treating strategy as an innovation process enhances uncertainties and complexities that affect strategy deve-lopment in most organisations today. It is uncomfortable but useful to recog-nize the uncertainties relating to the competitive environment and to what is perceived to be the opportunities and challenges, and also those related to the understanding, assumptions, and goals of the organisation.

Use creative tension between facts and assumptions to develop new ideas

treating your strategy as an innovation process requires combining and balancing four distinct competences: analy-sis, visioning, challenging assumptions, and navigating social and political inter-actions. (See Figure 6.)

analysis can provide objective data, which forms a foundation for challen-ging assumptions by painting a clear and factual picture of the situation. Creative tension between the data from analysis and the assumptions can stimulate fresh and innovative thinking. these new ideas and possible future directions can in turn be subjected to analysis for a reality check. this process is often iterative, going back and forth between formulating and testing ideas and solutions.

From beginning to end, you must be able to understand and navigate through the social and political interac-tions in the organisation. this will allow you to facilitate the strategy process in the cultural context of the organisation, so it keeps moving forward and ensures that constructive decisions are being made.

IDeaS oN how to ChalleNge who yoU are

Use hypotheses to plan and drive activities. this will allow for planning to take place without being locked into one direction too early. Be ready to change your hypotheses as understanding grows.

try out new settings for the strategy process.

Create a suitable disturbance by bringing customers, partners, employees, and other stakeholders into the process.

Create a suitable disturbance by appointing a person who always asks what-if questions to ensure that all aspects of the strategy are being looked at.

9Strategy & Growth

Your Strategy Must Bring Clarity to Complexity

a strategy serves as a guide. to suc-ceed, it must show how to translate vision into real action, creating insight and deep understanding of the market and of your own organisation. It also must tell a clear and compelling story about how to get where you want to go, and it must bring clarity to the dy-namic and complex setting in which your organisation—if it is like most organisations today—must live and compete.

to create this clarity requires a strategy that is strong, balanced, and simple—all at the same time.

Focus on the core issues and act decisively

what makes a strategy strong? you can recognise a strong strategy because it provides for a powerful response to the opportunities and challenges facing

the organisation. It focuses attention on core issues and not just symptoms, and it allows you to move decisively and with commitment.

Determining what the core issues are requires knowledge of your organisa-tion, your business, and your market. and it requires a willingness to face the facts of your current situation. acting decisively requires an understanding of what needs to be done and a willing-ness to do it, both individually and as an organisation.

Create a balance between goals, capa-bilities, opportunities, and challenges

having a balanced strategy is about creating a fit among goals, capabilities, opportunities, and challenges.

Clear and shared goals are necessary to evaluate which opportunities are relevant and which capabilities to build. that means that you must determine what it is you really want to achieve, as sketched in Figure 7.

you need to understand what capabili-ties would give you a competitive edge in pursuing opportunities in your mar-ket, and to know which ones you cur-rently have as well as which ones you can develop in the future. this requires a clear insight into your business model, including the critical drivers of custom-er value and business economics.

Determine what possibilities the market presents and whether a good return can be made by pursuing them—and what challen-ges may block your attempt to capitalise on those possibilities. Identifying opportunities takes good knowledge of market structure and development as well as of competitor strategies; truly understanding the challenges requires the same level of knowledge.

Strategy development can start at any of the three points of the triangle in Figure 7. to achieve a realistic and co-herent strategy, however, all of them must be covered by the end.

Figure 7. A good strategy requires balance

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opportunities/Challenges

Capabilities

goals

balance

Simplify your goals, your communica-tion, and your plan

Simplicity in a strategy is important be-cause too much complexity interferes with implementation. the road to stra-tegic simplicity is illustrated in Figure 8. Keeping a strategy simple requires focus on three different areas:

• First, make the strategy itself as simple as possible by reducing the number of goals and initiatives and focusing on a few key must-win battles. Make sure that the strategy has a clear story line with an inner logic from actions to goals.

• Second, simplify communication of

the strategy by creating a clear yet strong message around the central story line of the strategy, explaining what needs to be done to achieve the strategic goals.

• third, simplify the implementation plan and make sure that projects and initiatives not directly supporting the strategy are not allowed to obscure the view of what needs to be done. Make roles and responsibilities for leading key transformation initiatives clear and well-known.

the key to successfully simplifying your strategy is to have consistency between what you want to do, what you say you

will do, and what you actually do.

IDeaS oN how to BrINg ClarIty to CoMPlexIty

Keep asking questions to make sure you get to the core of an issue.

Use simulations, games, and role-playing to explore different scenarios and test your strategy. test consequences, market reactions, feasibility, and goals to see if your strategy is balanced.

Use visualisation (pictures, diagrams, sculptures, movies, and the like) rather than just text to describe and express your strategy.

Make a list of the kinds of things your organization has done in the past but will not do in the future. this will help keep focus on execution of the new strategy.

11Strategy & Growth

Figure 8. Simplify your goals, your communication and your plan

focus on the core issues

reduce the number of goals

select a few must-win-battles

Keep messages clear and simple

reduce the number of parallel initiatives

Issue

s

Goals

Focu

s are

as

Comm

unica

tion

Imple

men

tatio

n

Your Strategy Must Be Firm and Flexible

Modern organisations operate in a complex and dynamic world where it is rarely possible to predict what the future will bring. Nonetheless, it is still necessary to think and act strategically to keep from floundering in the cross-currents.

Strategy is both planned and emergent

when most organisations look back over the last three to five years, they will discover that two main sources are contributing to the state of their cur-rent strategy: executing the actions of the original strategic plan and reacting to unforeseen situations that emerged during the execution phase. Figure 9 sketches the whole dynamic system.

the planned strategy is typically de-veloped through a formal strategy process, where the aim is to arrive at in-tended strategic goals, a direction, and a plan. often this formal strategy pro-cess is cyclical and carried out at fixed intervals; in the best cases it is deeply integrated with other cyclical processes like board and management meetings, budgeting, and performance apprai-sals. the planned strategy is what most organisations know best, and is what management literature and models typically describe when defining the concept of strategy.

In contrast, the emergent part of the realised strategy is cumulative and grows from the individual actions and decisions made by people in the or-ganisation when they react to new and previously unknown opportunities and challenges. the emergent strategy is often less formal and is in large part determined by the way the organisation learns, that is, the culture, structures, and decision-making processes. the

ignition of a change or adaptation can be a major event (new competitor en-tering the market, a new technology, a new acquisition proposal, or the like), or it can involve several smaller internal or external actions building up to a tipping point that forces (or allows) the com-pany to act.

A flexible strategy requires both an adaptable plan and an agile organisation

Because you need both adaptability and agility, being excellent in strategic management is not only about being able to foresee, plan, and execute; it is also about sensing, discovering, and responding. Furthermore, strategy must be seen not as something generated once every two or three years but as a dynamic and continuous process.

Successfully creating an adaptable strategy requires making the strategic plan flexible enough to avoid being locked into a set of actions which can-not easily be changed. It also requires gearing the organisation as a whole to be better at responding to emerging opportunities and challenges. to ac-

complish this, the strategic plan should consider various scenarios, be carried out frequently, focus on creating stra-tegic agility and resource fluidity, and include strategic options that can be brought into place depending on how the situation develops. the ability to identify new signals from the environ-ment (customers, competitors, part-ners, regulators, and so on), learn from them, and act fast (that is, allocate time and resources promptly and appropri-ately), is what makes an organisation agile and good at managing emergent strategy.

Match your strategy approach to the uncertainty you face

Determining the right balance between how much to plan and in how much detail, and how much room to leave for emergence and adaptation, requires a good understanding of your competi-tive environment as well as a thought-ful balance of the need for flexibility against the extra costs (in the form of added communication and coordina-tion) that increased flexibility carries with it. It is especially important to understand the degree of complexity,

Figure 9. Strategy is a dynamic process

Unfulfilled strategies

emergent strategy

strategy through action

strategic learning

emergent opportunities and threats

strategic outcomes

strategic intent – thedesirable

future

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uncertainty, and speed of change that you face, as these factors heavily influ-ence the decision on how to approach the development and execution of a strategy.

when the future is relatively clear and easy to predict, strategy becomes a matter of determining the most prob-able future and reacting as though it was a certainty, as shown in the first row of Figure 10.

the greater the uncertainty and com-plexity of the competitive environment, the greater the number of possible fu-tures. as future possibilities proliferate, strategy development needs to focus more and more on efforts to under-stand these possible futures and spot which one is actually playing out.

Ultimately things may become so complex and ambiguous that it is not possible to form a clear picture of any possible future—neither by analysis nor by probing. at that point, strategy is a matter of developing the ability to quickly understand and respond to events in the environment. Fast learning and agility are keys to building a sustainable competitive advantage in such situations.

generally we believe that organisa-tions must prepare for an increasing degree of uncertainty and adjust their strategic processes accordingly. an im-portant and often very challenging part of this is to achieve the right mind-set, stepping away from the planning and control that have long been praised as virtues of business and management.

Figure 10. Complexity and uncertainty play a significant role for your strategy

IDeaS oN how to MaKe yoUr Strategy FIrM aND FlexIBle

Use scenario planning to create enhanced understanding of the possible futures of your industry and to prepare for them.

establish strategic initiatives focusing on creating an increased freedom to act by removing constraints (which may involve financing, legislation, structural or contractual relationships, or capabilities).

Increase the number of forward-looking indicators in management reports.

Don’t ever think, ‘we have finally got it right!’

Challenging assumptions

How to express the strategy

Characteristics of the competitive environment

How to approach strategy

A relatively clear future

True ambiguity and chaos

Complex – with a range of possible futures

Complicated – with dis-tinct possible futures

it is relatively easy to predict the future development for the industry value drivers.

Cause-and-effect relationships are repeatable, perceivable, and pre-dictable.

SENSE > CATEGORISE > RESPOND

fact based management.Use of best practices.Clear communication.ensure that proper processes are in place.

the future is unknown, and it is not possible to identify clear scenarios.

no clear cause-and-effect relation-ships, and the drivers of future market development might not be known.

ACT > SENSE > RESPOND

Look for what works instead of seeking right answers.take immediate action to re- establish order.Clear and direct communication.

it is not possible to define distinct and mutually exclusive scenarios.

Cause-and-effect are only coherent in retrospect.

PROBE > SENSE > RESPOND

Create experiments that allow patterns to emerge.increase levels of interaction and use methods that can generate ideas.

Long-term plan which lays out how to implement the strategy.

Create an organisation which is able to react in the right manner in any given situation.

establish simple rules and guiding principles for how to make deci-sions.

short-term plan split into cam-paigns with frequent or periodic reviews and adjustments.

increase focus on rules and guiding principles rather than plans and fixed processes.

short-term plan split into campaigns with frequent/periodic reviews and adjustments.

it is possible to determine a limited set of clear and mutually exclusive future scenarios for the industry.

Cause-and-effect separate over space and time, but can be deter-mined.

SENSE > ANALYSE > RESPOND

expert diagnosis.Listen to conflicting advice.scenario planning and systems thinking.

abC

?

13Strategy & Growth

Your Strategy Must Change Conversations

Strategy is not just planning, it is also implementation. without implementa-tion value cannot be created, and that means you must make your strategy real and urgent to everyone in the or-ganisation.

Make your strategy live every day

to make your strategy come alive and keep living every day, you must change the conversations at all levels in your or-ganisation. Pursuing a different strategy means having different conversations tomorrow—not instant replays of the ones you are having today.

It is not just the conversations within in your organisation that must change; the ones with your customers and partners need to change too. and the change of conversation should concern not only the topics but also the setting, the words that you use, and the mood.

If what you talk about and how you talk about it stay the same, your new strategy will never really be adopted.

you’ll just have one more binder for the might-have-been-a-good-idea collec-tion.

a strategy ought to be integrated into the organisation, and eventually every-thing should be aligned with the stra-tegy in some way. however, this does not always happen as planned, for a number of reasons. For one, it can be difficult to keep up the momentum in the transition from the first stages of strategy development through the final stages of strategy implementation—it’s easy to grow weary before the new ways become routine.

also, the strategy often represents something new—which requires change that can be difficult to get going. and new endeavours represent a degree of risk that add to the difficulties of ma-king change happen. Finally, the organi-sation may have structures—processes, procedures, and It systems—that keep making people act according to the old strategy. overcoming these hurdles requires a dedicated effort and strong leadership.

Create momentum around your new strategy

a key element in getting your strategy going is providing symbolic actions and quick wins early in the transformation process. early results not only demon-strate the benefit of the strategy, they demonstrate your new strategic focus and commitment to the new way of working.

the symbolic actions can be anything from buying another company to say-ing no to a specific customer because your strategic focus is being shifted to other products.

In addition, making your early actions irreversible and public will help to show the intent and commitment backing the new strategy. one way to do this is to make external commitments in a series of campaigns that require you to suc-ceed with the new strategy, as shown in Figure 11.

to keep the momentum going, it is im-portant to share results broadly in the organisation so that everybody can see that things are moving along and learn

Figure 11. Use time-boxed campaigns to ensure quick results and frequent reviews

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strategy develop-ment

Campaign a4–12 months

Campaign b4–12 months

Campaign C4–12 months

strategy execution through campaigns

review and adapt

act and managemobilisereview and adapt

act and managemobilise

major strategy review and update (~ new strategy develop-ment)

act and managemobilise

from the examples. this also means that both good and bad results should be shared—if something isn’t working, you won’t be able to keep the secret, and attempting to do so will both make you look foolish when the word gets out and deprive you of the contribu-tions people could make towards fixing the problem and getting the strategy back on track.

Keep focus on the strategy

to stay alive, the strategy must be a natural part of the conversations in your organisation. In the beginning this requires a conscious effort, as the stra-tegy is new and unfamiliar.

the conversations must be ritualised until it becomes more natural. one way to do this is to ensure that enough management time is spent on realising the strategy. For example, you can divide management meetings into two separate themes—one around ‘running

the business’ and the other around ‘developing the business’—to cre-ate the necessary attention on stra-tegic issues.

the appraisal and performance ma-nagement systems are other areas where conversa-tions should be shifted to include the strategy. goals related to the new strategy must quickly be inclu-ded in corporate performance management systems to be visible and part of the manage-

ment conversations. as noted earlier, these systems can put a serious drag on implementation—as long as you pay people to carry out the old strategy, that’s what you’ll get. Instead, individual goal-setting sessions on all levels in the organisation should be anchored in the new strategy so that everybody can see how they contribute to making it hap-pen.

Clear roles and responsibilities for dri-ving the main strategic initiatives will provide the organisation with a number of ‘champions’ whose actions will serve as examples of what to do in order to realise the strategy.

Align organisational structures with your strategy

one of the main drivers of action and focus in any organisation are the structures (processes, procedures, It systems, and so on) that support them.

aligning these structures with your strategy therefore is the key to making sure you can realise your strategy.

of course, changing the basic struc-tures of an organisation takes time and cannot be completed on day one, but it must be done as quickly as possible. as with performance appraisal, if this doesn’t happen, the surviving struc-tures will keep pushing actions and behaviours toward the old strategy, making it difficult for people to follow the intentions of the new strategy. and after a while they will give up trying.

IDeaS oN how to ChaNge CoNverSatIoNS

Change your budgeting cycle and structure to support the flow and timing of your strategy.

Make tools and templates to guide the goal-setting sessions where the new strategy is translated into team and individual goals. hold introduction sessions for managers and consider the use of role-playing to illustrate how to bring the new strategy into the conversations.

Include at least two new goals related to the strategy in business unit performance reports—even if measuring them has to be done manually at first.

Set up new decision-making forums centred around the key focus areas of your strategy.

Figure 12.

Aligning structures with strategy is important for long-term success

15Strategy & Growth

Workspace design

management and

governance structure

Competences operational processes

People, values, and

culture

organisational structure

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