What is your rationale for Strategy Invigoration and Alignment?
Lydia* is the CEO of a fast growing consumer business in South East Asia. Over the last 5 years she has enjoyed a successful ride with impressive growth year on year that exceeded her company’s mid-term plan.
However, recently, Lydia has found herself with gaps in strategy alignment between the board and her leadership team. Her role has increasingly become one of peace keeper rather than company visionary and leader. In Lydia’s case the problem lies in the absence of alignment between the direction the board wants to take the organisation and the decision and priorities the leadership team prefers.
In other related examples it could be that the Board and the CEO are aligned but other functions and levels within the organisation are doing their own thing leading to poor execution and even dysfunctional behaviour.
Announcing a strategy alignment initiative in your organisation needs a reason. As with all change projects you should expect a wide range of responses. How, when and what you announce for the review of the strategy will determine whether it “gets off the ground” and “how far it will fly”.
Therefore, your rationale and messaging needs to be carefully thought out and planned. As CEO you may get one chance to make the change and the announcement.
Every organisation has its issues around strategy. Research shows that many organisations have poor strategy execution. McKinsey references the most often quoted comment from CEOs is “I’d rather have a good strategy and great execution than vice versa.”
It’s not just the strategic planning but the implementation and the alignment which needs extra focus.
If you are a new CEO then the rationale is easier. You need to make a mark and paint a picture for all of the stakeholders. What is the direction you are going to take the organisation and what will it look like in the midterm under your leadership?
If you are the incumbent CEO you need to carefully consider the reason for the “shake-up” and possible perception for a “change in direction.”
One thing is for certain. The pace of change in business demands more organisational agility when it comes to strategy and its implementation. Having a culture that is closed to the idea of regular change and honing of the company direction is a road to a gradual demise.
Niven (2014) advocates using the Balanced Scorecard approach as a start to better strategy implementation. He describes 8 possible reasons for wanting to implement a strategy alignment project:
1. New Leadership
2. Strategy Execution
3. Prioritizing Initiatives
4. Driving awareness of corporate goals
5. Generating alignment
6. Communication and Education
7. Business crisis
8. Creating accountability
In my experience making these types of changes is always more difficult when business is doing well. One of the best times for a strategy review was during the Global Financial Crisis, 2007~2009. It is an extreme case but it was easy to sell the need for change in direction and alignment.
In good times you should expect pushback and resistance from all areas of the business. In general, as CEO, you are charged with a mid to longer term vision for the company. Other stakeholders will, generally be more short term. The board may be focused on short term bonuses or stock allocations. Sales heads will be worried about their anticipated commissions. Operations leaders will want to avoid unsettling a steady course. Regardless of the view, a great leader will sell the Strategy and the Vision and bring people with her.
Recently, a friend recalled a time when he worked for a global beverage distributor. The company was doing well. However, the CEO decided to communicate a major strategic change at the annual leadership planning meeting. The changes were aimed at doubling the global revenues over the next 5 years. The announcement marked the beginning of a well thought out change program featuring all areas of the business and how they executed. The CEO involved all key leaders in his vision and supported them on the execution. Initially they were provoked but then set about to focus on “How” rather than dwelling on the “Why”. In the end they were successful because of the planning and the strategy alignment across the organisation and through the various layers.
Here are some critical success factors you need to consider around why, when and how you launch a strategy adjustment initiative:
1. Rationale: be clear on your rationale. It must be appropriate and plausible.
2. Communication: ensure you have a competent internal communications function. Develop a communications plan. Communicate at al steps of the change process. Communicate differently to different groups…. appropriate messaging.
3. Provoke: change should create some discomfort with key stakeholders. You should provoke and then sell the vision and the reason for change. If people are too comfortable they may not be as engaged.
4. Executive Sponsor: Ideally that is you, the CEO. If not, it must be someone senior with authority.
5. Project Team: it needs to be small and senior. They should give regular updates to the board, CEO and Leadership team.
In conclusion: Warring factions or dysfunction caused by lack of alignment on strategic direction and priorities can be reset and aligned. As the CEO you need to be clear on the rationale and communicate regularly, clearly and convincingly through the process. You need a well thought out plan.
*Lydia is a made up name and is used to reflects a number of CEOs and their predicament that I am working with in SE Asia.
Balanced Scorecard Evolution Paul Niven 2014