Warring factions?
What is your rationale for Strategy Invigoration and Alignment?
Consider the business challenge of a CEO for a fast-growing consumer business in South East Asia. Over the last five years, they have enjoyed a successful ride with impressive growth year on year that exceeded their company’s mid-term plan.
However, recently, they have found themselves with gaps in strategy alignment between the board and their leadership team. Their role has increasingly become one of peacekeeper rather than company visionary and leader. In this 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 need 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 eight possible reasons for wanting to implement a strategy alignment project:
New Leadership
Strategy Execution
Prioritising Initiatives
Driving awareness of corporate goals
Generating alignment
Communication and Education
Business crisis
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 them.
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 in the annual leadership planning meeting. The changes were aimed at doubling global revenues over the next five 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 strategic 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:
Rationale: be clear on your rationale. It must be appropriate and plausible.
Communication: ensure you have a competent internal communications function. Develop a communications plan. Communicate at all steps of the change process. Communicate differently to different groups…. appropriate messaging.
Provoke: change should create some discomfort with key stakeholders. You should provoke and then sell the vision and the reason for the change. If people are too comfortable, they may not be as engaged.
Executive Sponsor: Ideally, that is you, the CEO. If not, it must be someone senior with authority.
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.
Reference:
Balanced Scorecard Evolution Paul Niven 2014
Mastering the building Blocks of Strategy: McKinsey& Company