Imagine if I told a friend that my health and fitness plan was to fast and exercise intensively for two days at the start of every year. They would naturally think I was joking.
However, companies frequently adopt an annual planning cycle with an intensive two-day strategy session as a core part of the process. Strangely, investors don’t seem to think that boards, CEOs and senior management are joking!
The problem
We all know that business strategy, fitness and health are vital for the length and quality of businesses’ and people’s lives. Sadly, most of us know from our New Year’s resolutions to exercise, eat well and join a gym, that the results are terrible unless our good intentions translate into healthy habits.
Companies’ strategy results reflect an equally poor ability to translate their intensive two-day strategy master plans into goals, objectives and actions that actually deliver the forecasted results.
Brightline “Closing the Gap: Designing and Delivering a Strategy that Works, 2017 found that “59% of survey respondents admit that their organizations often struggle to bridge the gap between strategy development and its practical, day-to-day implementation”
The reality is that business strategy, fitness and health all need to become a way of life to produce amazing results; simplicity, visualisation and slow and steady wins the race!
With health and fitness, we intuitively know what we must do and avoid. But we still need a plan that we helped to create or can take ownership of, to prevent the day to day noise crowding out our good intentions.
However, with business strategy, we don’t even intuitively know what to do and avoid. Building a business that can sustainably deliver superior customer value relative to the competition is a dynamic and intricate process.
The solution
Business strategy must have execution embedded in it and employees across all levels of the organisation must intuitively understand, contribute and buy into it.
A winning strategy will provide guidance to employees on what type of actions to take and which ones to avoid. Employees must be able to simplify and visualise the strategy in a way that creates a mental model so they can tailor their activities to align with the company’s short, mid, long-term goals and overall mission.
Only then can a company develop a capability system that actually delivers a unique value proposition and superior customer value relative to the competition. Additionally, employees will be emotionally and technically aligned and even inspired to go the extra mile to help make the company’s mission a reality.
How to translate strategy to everyday activities
Herbert Simon created the theory of bounded rationality, where humans can’t necessarily make the optimal decision due to cognitive limitations and time available. Hence, it is essential for strategy creation to embrace this concept and to avoid boiling the ocean of data and strategic choices.
IVC’s Strategy Blueprint©, see below, simplifies strategy to five fundamental building blocks:
- What is the Mission?
- How to Create-the-Value? (Core Capabilities System)
- How to Deliver-the-Value? (Value Proposition)
- How to Capture-the-Value? (Target Customer)
- What measurement systems are needed?
As a result, our Strategy Blueprint© enables firms to create a winning strategy that is intuitive, innovative, implemented and makes the business agile.
Moreover, it is possible to visualise our Strategy Blueprint©, on one-page (see below), so all employees can intuitively understand the strategy and translate it into their everyday activities.
IVC’s Strategy Blueprint©
What happens if there isn’t a mechanism to translate strategy to everyday activities?
Without a concise and powerful framework held together by economic logic, employees struggle to connect their activities and department strategy to the overall company strategy.
Instead, the noise of the business hijacks people’s attention, drains resources and the most important goals get lost in the noise of doing the day to day work.
The facts support this view:
- Donald Sull and Rebecca Homkes, “Why Senior Managers Can’t Name Their Firms’ Top Priorities,” London Business School, December 7, 2015, conducted a survey of eleven thousand senior executives, leaders and managers from more than 400 companies who were asked to list their company’s top three to five priorities. The survey found that: “Even with five tries, on average, only around 50% can list the same one priority. Only a third can list their firm’s top three.”
- Franklin Covey in their research found that “15 percent could not name even one of the top three goals their leaders had identified. The other 85 percent named what they thought was the goal, but it often didn’t remotely resemble what their leaders had said.”
The problem gets magnified when in today’s world most companies competitive advantages are driven by an integrated capabilities system that forms part of a broader ecosystem.
By Hugh Page
MD Integrated Value Consulting (IVC)
- What IVC does: we help SME entrepreneurs and leaders build & exit a valuable business at a premium
- How IVC Does It: we demystify business strategy & valuation and help you work “on” the business using our Valuable Business Builder System©
