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“Strategic development” or “business as usual”. Which do you want in a market in constant flux under the pressures of technology, geopolitics and changing expectations from customers? We thought so. But too often general management strategies are created without substance. They look good on paper or projected on the boardroom screen, but don’t yield tangible results. Some of the reasons strategy development fails are:
Ok, enough on the negative. Let’s look at strategy development that works.
Strategy, according to the Oxford English dictionary, is: “A plan of action designed to achieve a long-term or overall aim.” For the actions that make up a strategic plan to have any relevance, you need to know the goal and its capacity to contribute to your overall business objectives. Strategy development starts with clearly defining a specific goal, making decisions from among options for getting there, and fully scoping out the potential results of selecting a particular option.
“The first critical element of any strategic choice is to think through potential options that could be pursued,” says Professor Albrecht Enders of IMD Business School in Lausanne, Switzerland. “To actually choose which option to pursue, you must have clarity around your objectives, or criteria. Criteria give you a sense of what qualities to look for in a specific strategic option.”
What makes a decision strategic is not only that the decision is important for you and/or your environment, but also that there is no silver bullet solution that ticks all the boxes.
Albrecht Enders, IMD Professor of Strategy & Innovation
Your strategic destination must be coherent with your overall business objectives. It is important to define how you will achieve this at the outset of your strategy development. “What makes a decision strategic is not only that the decision is important for you and/or your environment, but also that there is no silver bullet solution that ticks all the boxes,” says Professor Enders, who leads programs in Strategy and Innovation. “Instead, different options will score high on some criteria and low on others. When making strategic decisions, it is critical to be clear about options and the trade-offs they entail. On the one hand, we need to ask and challenge ourselves if we have thought broadly enough about potential options.”
And here’s a little action-plan for getting the strategy team working on the right direction, from IMD Business School Professor Bettina Büchel (What? Did you think there’d be no infographics in this article?)
“Strategy design workshops should lead to a concrete strategic agenda that can be executed,” says Professor Büchel. “If you cannot demonstrate the path to deliver on the strategy and you do not have clear outcomes for the rest of the organization, then you don’t have a strategy that can deliver the expected financial outcomes.”
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Professor Büchel regularly leads custom strategy development programs for leadership teams at high-profile international organizations such as Nestlé, Commerzbank and Tetra Pak. Leading companies create and implement complex strategies by putting in the time at the beginning, bringing top people together to assess the starting conditions and make explicit choices about the trade-offs that will need to be made to make it happen.
Implementation of strategic change is rarely straightforward… involvement and communication have repeatedly been underestimated.
Bettina Büchel, IMD Professor of Strategy & Organization
Professor Büchel says it is important to know who will be involved, and then to what degree. On top of that, those involved need to be clear on their roles not only for the development but also throughout the implementation. She says that in speaking with top leaders, “implementation of strategic change is rarely straightforward, and despite years of experience, we often heard that involvement and communication have repeatedly been underestimated.”
Denise Beachy, President of Hemlock Semiconductor Group (a subsidiary owned in majority by U.S.-based Dow Corning Corporation), says that ensuring a variety of perspectives are brought to the table is critical for a strategy development team. “The awareness level is critical,” she says. “You don’t want to have meetings related to strategy and everyone shares the same opinions and thinks the same. You want to drive discussions that force people to think outside of the box and see things from others’ perspective. I was able to bring in this mentality during our strategy creation process.”
Beachy says that after completing a strategy program at IMD, she brought the skills she learned to become a strategy teacher, conducting strategy workshops with her teams. Conducting internal strategy workshops enables her to ensure that everyone “gets” the strategy and is working together towards the same goal.
On top of having the right strategy leadership team, that team needs to be able to bring the process further and gain buy-in from all stakeholders – communication is critical.
“Just making a strategic choice is not the end of the story: if it is poorly implemented in the organization, the strategy is likely to fail,” says Professor Enders. “While there are many reasons why even well thought-out strategies don't get implemented, one critical issue is that senior managers fail to bring the rest of the organization on board and convince them about the new course of action. The underlying problem is that those managers who have not participated in the strategy process around exploring options and criteria, and weighing off trade-offs are at some point just confronted with a choice that's been made by others. In fact, they might not even know the reasoning that led to the choice, but they are nonetheless supposed to implement it.”
Not too long ago, IMD held a Discovery Event called “Your Strategy Needs a Strategy”. At the event Professor Howard H. Yu, who is Director of IMD’s Advanced Management Program, pointed out that changes in business models over the last 20 years are driven by accelerated developments in technology and increased social expectations. Given this, it’s not surprising that strategy frameworks have also grown like mushrooms. So what kind of a strategy should you develop and implement? Things move so fast, you might not even be in the market you think you’re in and your competitors might not even be who you think they are!
To make sure your strategy development process is solid, you need to get a sense of where you are – really – and what will be your actual challenges in getting where you want to go. Here’s the strategy palette that the 50+ participants of the Discovery Event used to understand how to find the right strategies for their strategy development. It comes from a book by Martin Reeves, Janmejaya Sinha and IMD Professor of Strategy and International Management Knut Haanæs:
The strategy palette has three dimensions: predictability (can we predict and plan it?), malleability (can we shape it?) and harshness (can we survive it?). The resulting five types of business environments differentiate the strategy approach best suited for each:
So what do you do once you have assessed your environment and figured out what kind of strategy you want to develop? Well, develop your steps and indicators along the strategic lines that work best in the environment – and keep them front of mind throughout implementation.
IMD’s Advanced Management Program, which helps participants propel business growth through strategy, includes a “strategy lab” to help participants define and devise strategies. In the “lab” ideas – potential strategies – must be crystallized and stress-tested. Only if they pass these tests do they become the strategic destination.
Your baseline for strategy development that’s sustainable must be a clear fit with the broad business objectives, as understood through the optics of the strategy palette.You need to make the choices and trade-offs that will best support the big picture. It also requires buy-in from all stakeholders, especially those who will be responsible for implementation.
“Beyond strategy design, leaders must consider the importance of post-strategy governance and implementation,” says Professor Büchel. “Organizations can only implement a strategic agenda through employee engagement, which entails individuals working together over time to achieve the intended goals.”
And finally, as an integral part of the strategy development phase, you need to consider its renewal or reiteration, and integrate this into the plan. Strategy development and strategy implementation are not two separate things but rather an interconnected cycle. You may need more than one strategy (re)development workshop both before and during implementation. This is because your environment can change unpredictably: Renewing strategy development (consciously, not “on-the-fly”) doesn’t mean that you didn’t think of everything. Integrating agility into the strategy development process is just smart in an uncertain world.
IMD Business School in Lausanne, Switzerland and Singapore has been ranked first in open programs by the Financial Times seven years in a row (2012-2018). IMD has been training global leaders for more than 70 years.
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At the top of the charts
IMD's programs are ranked highly by the world's most influential business publications.