Page 23 – N2Growth

ADVANTAGE STRATEGY

Five Paradigm-Shifting Principles

Repeatable processes and procedures add great value in stable and predictable times. Those are not the times we live in today or likely in the future. Strategy that works has got to be based on something that proves successful in the unpredictable, fast-moving, and changing times. Principles, not processes and procedures, provide the overarching guidance in any situation for making the right decisions and taking the best action.

A move toward the Advantage Strategy Paradigm begins with the adoption and commitment to a set of principles that guides all executives in the decisions and actions they take related to developing, planning, and executing strategy. Principles provide a broad context for strategic action and guidelines that can be communicated and taught at all levels of the organization, eventually becoming part of the organization’s culture. Throwing out standard processes and procedures in favor of a handful of powerful but easily remembered principles for managing strategy will soon begin to show improvements in your business results.

Here are the five principles that guide Advantage Strategy:

#1. Priority on People

How many times have you heard this one? How many more times do people have to hear it before it actually becomes a priority? One of the biggest contributors to strategy failure is the lack of priority, linkage, and integration with people and organizational development programs. Typically, there are many strategic initiatives required to realize an organization’s strategy, and there are usually more of them than can be done within time and financial constraints. Trade-offs and decisions on priority initiatives must be made. Here is the rub and the reason why adopting this principle is so critical: in our experience, the priority initiatives turn out to be on a new product, service, customer, and technology initiatives accompanied by an assumption that the organization has the capabilities to execute them. These initiatives typically become the first strategic initiatives to be funded and launched to execute the strategy.

People and organizational capability initiatives are typically included in the strategic initiatives but tend to be a lower priority and are pushed back on the overall timeline. This is a little like spending the money to buy a racehorse expecting to win the derby without having a jockey. No matter how fast the horse is, if you don’t have the right jockey with the right skills, victory will elude you.

One of our pharmaceutical clients was recently recognized for successfully executing his company’s strategy and told us:

“If I had to do it over again, I would have had the human resources organization intimately involved much sooner to ensure that our organization and people were prepared to deliver. We struggled for the first couple of years with having people in key positions that were either not prepared or not on board.”

The principle of Priority on People needs to come into play much earlier in the new strategy paradigm in two very important ways:

The strategy formulation process should include a detailed analysis of people and organizational capabilities that will lead to understanding capability gaps and result in setting goals and objectives to close those gaps as part of your strategy. Much more than your typical SWOT analysis is needed here to get it right. People and organizational capabilities should not be an afterthought or thought of only as a strategy enabler. Strategy should include, inform, and integrate with leadership development, talent management, organization design, and proactive culture management.
Many organizations are either planning or already have strategic initiatives underway in leadership development, talent management, organization design, or culture management. That is good news. The bad news is that way too many of these programs are developed within their own organizational silo; they are not informed and specifically designed as part of and in support of the overall strategy and strategic plan. With the best of intentions, these programs, leveraging content from recognized academic and/or business thought leaders, deliver sound but basically generic solutions. Advantage Strategy principles and next practices should be applied to ensure strategically integrated and aligned people and organizational capabilities are delivered to successfully drive strategy.

Current best practices for initiative prioritization are seriously flawed and do not take into account the criticality of having the right leadership, talent, organization, and cultural capabilities in place to execute strategy. The Advantage Strategy principle of Priority on People should be adopted to ensure that your organization does not fall into the trap of investing in strategic initiatives ahead of ensuring you have the capabilities to deliver them.

#2. Collaborative and Co-created

Developing, planning and executing strategy must become much more inclusive than it is today if you want to be among the 20-30% of organizations that actually succeed. In the majority of organizations we have observed, strategy management activity is limited to the involvement of the senior team and a few staff functions that facilitate the process. To achieve real competitive advantage and sustained breakthrough results, strategy must become the job of every employee, not just a handful of senior executives. Every employee, and in many cases other key stakeholders like customers, suppliers, and shareholders, must understand and support the organization’s strategy.

They need to understand the key strategic objectives and initiatives that will deliver advantage and how they can actively support them in their day-to-day work. To accomplish this, the Advantage Strategy principle of Collaborative and Co-created strategy should be adopted. Teams of employees representing all levels of the organization’s hierarchical (business and functional) structure should be proactively engaged in the strategy development, planning, and execution process. Through the application of this principle, you can rapidly increase the quality of your strategy, build broad ownership and commitment, reduce resistance, and mitigate execution risks that typically cause the strategy to fail.

#3. Focus on Advantage

All strategy work is supposed to be focused on getting better results. Nothing new here, right? Wrong. The problem in many organizations is that getting results is all too often not the real focus and not where most of the energy and time is spent. Strategists, consultants, and many senior executives are so caught up in their methodology, processes, best practices, tools, techniques, and politics that they can’t see the forest for the trees. The focus and energy on results typically happen months into the traditional strategy development process and are most usually focused on defining the financial outcomes expected from the strategy. Too much time is spent identifying business results expected (lagging indicators) with too little time and attention paid to how to create (leading indicators) those results.

The benefit of adopting the Focus on Advantage principle is that it immediately directs the strategy team to spend significant time, attention, and energy on the identification of how better results can be realized. The strategic conversation shifts towards strategic performance drivers and competitive advantages that can be delivered in days, weeks, or months… not years. Implementing improvements and advantages that drive better results throughout the strategy planning and execution process is the key to success. Those advantages and corresponding improvements in performance help fund the execution of the strategy, build confidence that the strategy is working, and build momentum towards truly breakthrough performance. The focus on near and medium-term drivers and advantages that align with your long-term vision but bring near-immediate improvements to performance is key to this principle.

#4. Agile and Fast

Your strategy process must deliver all aspects of strategy fast! How long do you think the traditional strategy formulation and execution planning process takes most organizations? We have observed that the traditional process takes between six months to one year from the time most start their strategic analysis to the time they actually begin execution of their strategy. At that pace, by the time execution begins the strategy is already out of date. This is particularly true if your company is in a fast-paced dynamic industry. The current strategy paradigm that requires adherence to an inflexible step-by-step linear process and overly structured best practices are just too slow. Breakthrough performance must happen quickly.

Speed and agility are badly needed and must become one of the principles followed to get better results, faster, from your strategy. The clock is ticking, change is accelerating, and a disruptive technology or business model is just around the corner. Agile and Fast is the fourth principle of Advantage Strategy. Adopting this principle will help to make your approach to strategy fast-moving, adaptable and action-oriented, often completing strategy and seeing improvements in 90-day increments. It will help your strategy process to be capable of rapid adaptation in response to unexpected and unpredicted changes, competitors, market opportunities, and customer expectations.

#5. Engineered to Win

If you are a vehicle manufacturer, a bank, a utility, a consumer products company, an insurance company, or government agency, chances are your strategy management process looks very much the same as everyone else’s. Our clients are usually quick to tell us that they are different and unique and that we must understand their industry and culture before we can help them create advantage and value. We totally agree. Why is it, then, that these organizations use basically the same approach to strategy?

Think about it: why would your organization’s approach to strategy look the same as everyone else’s? How can competitive advantage be created following the same approach as your competition? That makes no sense. Your organization’s approach to strategy should be specific and custom to your current needs… period. When it comes to strategy, no organization does everything wrong and no one does everything right. The key is to truly understand what is working, what is not, and what your organization needs to do to realize better results from strategy. Your approach to strategy management should be specifically engineered for your organization. Taking an honest look at your organization’s performance in managing strategy is the first step toward adopting the principle of Engineered to Win, and will help you move toward a new paradigm where your approach to managing strategy will produce much better results for your organization.

When these five principles are combined together and adopted by your organization as the way to think, decide, and act on strategy, big improvements to strategy management and corresponding results will follow. Huge leaps in sustainable performance improvements and value will come from having these principles as a part of the DNA of your culture.