What it Takes to Make Good Strategy
The Problem With Template Strategies
Good strategy is absolutely predicated on good analysis. You cannot determine where you are going and where you are going to direct your energy and resources if you have failed to do the necessary analysis that tells you what is going on in the organisation, in the competitive environment and in the broader context in which the organisation conducts its business. In addition, strategy is essentially about making choices – what we do and don’t do; where we do and don’t direct money, people and energy; who we do and don’t do business with.
Template strategies pose a series of questions and require you to fill in the blanks. Generally a strategy template will look something like this:
Vision:
Fill in your vision of what the company/organisation/nation will be like in the future. It is popular to be “world class”, or “preferred supplier”, or “most reputable”. Here are some examples:
Mission:
Fill in a politically-correct and virtuous statement about why the organisation exists. Here are some examples:
Values:
These are usually non-controversial and pretty predictable. Is it only 80% of organisations that have “Respect, Integrity, Communication and Excellence” as core values – or was that just Enron? James S. Kunen wrote in the New York Times in 2002: “Every company’s statement ends up rehashing the same things, anyway: We will maintain the highest ethical standards, treat our employees with respect, encourage teamwork, make quality products, respect the environment. . . . As opposed to what? We will maintain fair-to-middling ethical standards? Treat our employees like old shoes, foment backstabbing, make shoddy products and lay waste to the environment?”
Strategies:
List some aspirations or goals (called strategies). These strategies tend to cover such areas as increasing profitability, increasing market share, expanding current product lines and improving employee retention rates. For example, the strategic goals of the South African Revenue Service are:
There is no doubt, in terms of its performance, that SARS is executing a good strategy – but these “strategic goals” are not what is doing it. Their real strategic goals lie at the heart of the coherent policies, plans and actions that are producing their performance.
In his wonderful book “Good Strategy, Bad Strategy”, Richard Rumelt comments that “template-style strategy frees [us] from the onerous work of analyzing the true challenges and opportunities faced by the [organisation]. Plus, by couching strategy in terms of positives – vision, mission and values – no feelings are hurt.”
The work of making good strategy is tough. It is not about pleasing the greatest number of constituencies. It is about coming to grips with the overwhelming complexity of the business and its context, cutting through this complexity in order to identify the critical aspects of the situation, designing an approach – a guiding policy – that will be taken in order to cope with or overcome the challenges and obstacles that affect the organisation’s ability to survive and thrive and create advantage, and coming up with a set of coherent actions that will bring the guiding policy to fruition.
Template strategies miss the whole point of making strategy – which is to make clear and coherent decisions about where to take the organisation, and how to get it there. At best, they are a PR exercise intended to persuade various constituencies to “buy-in” on some level.
Template strategies that produce a Mission, Vision and Values probably produce more problems than they solve – especially in the “rollout”. Employees are informed of the organisation’s “exciting new strategy”, and are given the bells and whistles presentation of the results of the most recent executive breakaway. The reactions usually vary from a sort-of low-grade cynicism “watch this space” type of attitude to a more deeply cynical “Yeah, right – like we’re going to believe that!”
The purpose of designing an organisation’s Mission, Vision and Values is to create clarity and to enable people at every level of the organisation to make decisions. Who the organisation wishes to be, where the organisation wishes to go, and how it wishes to get there should be the product of careful analysis and rigorous choice, rather than the product of wishful thinking and some fallacious beliefs about what it takes to get people to box above their weight.
I do work in too many organisations where people use the organisation’s values as the basis to heap criticism on leadership, have no idea what the mission is telling them (they know the words in some instances, but it doesn’t provide any real guidance) and use the vision to justify doing bad business.
The purpose of a mission is to provide clarity about who we are, what we do and why we do it. The purpose of a vision is to excite people about how things will be when we have climbed to the top of the mountain. The purpose of values is to provide guidance about how we will conduct ourselves – all of us at every level of the business. In my opinion, if these are not going to be used to guide how we do business every single day, it is better not to have them at all. They are not central to the ability to craft a good strategy – although they can emerge from a good strategic process. Most often they are nothing but “fluff” – which Richard Rumelt defines as “superficial restatement of the obvious with a generous sprinkling of buzzwords. Fluff masquerades as expertise, thought and analysis.”
The purpose of strategy is to create strength through:
If my “toe-dipping” into strategy has piqued your interest, I highly recommend that you read Richard Rumelt’s book, “Good Strategy, Bad Strategy: The Difference and Why it Matters.”
In the next article – or maybe the next few articles – I will be writing about the process of analysis that is at the root of good strategy.
The Problem With Template Strategies
Good strategy is absolutely predicated on good analysis. You cannot determine where you are going and where you are going to direct your energy and resources if you have failed to do the necessary analysis that tells you what is going on in the organisation, in the competitive environment and in the broader context in which the organisation conducts its business. In addition, strategy is essentially about making choices – what we do and don’t do; where we do and don’t direct money, people and energy; who we do and don’t do business with.
Template strategies pose a series of questions and require you to fill in the blanks. Generally a strategy template will look something like this:
Vision:
Fill in your vision of what the company/organisation/nation will be like in the future. It is popular to be “world class”, or “preferred supplier”, or “most reputable”. Here are some examples:
- Caterpillar
Be the global leader in customer value.
- Ford
To become the world’s leading Consumer Company for automotive products and services.
- Nike
To be the number one athletic company in the world
- South African Airways
To deliver sustainable profits and grow our market share through world- class service to our customers internally and externally. (Isn’t that Ethiopian Airlines?)
- Siyenza Management
Our vision is to be the client’s first choice provider of quality, service and value in the global market place. (I’m none-the-wiser).
Mission:
Fill in a politically-correct and virtuous statement about why the organisation exists. Here are some examples:
- Walmart
Saving people money to help them live better. (Simple, clear, Sam Walton’s original mission).
- Barnes and Noble
Our mission is to operate the best specialty retail business in America, regardless of the product we sell. Because the product we sell is books, our aspirations must be consistent with the promise and the ideals of the volumes which line our shelves. To say that our mission exists independent of the product we sell is to demean the importance and the distinction of being booksellers. As booksellers we are determined to be the very best in our business, regardless of the size, pedigree or inclinations of our competitors. We will continue to bring our industry nuances of style and approaches to bookselling which are consistent with our evolving aspirations. Above all, we expect to be a credit to the communities we serve, a valuable resource to our customers, and a place where our dedicated booksellers can grow and prosper. Toward this end we will not only listen to our customers and booksellers but embrace the idea that the Company is at their service. (Impressive huh!)
- Fedex
FedEx will produce superior financial returns for shareowners by providing high value-added supply chain, transportation, business and related information services through focused operating companies. Customer requirements will be met in the highest quality manner appropriate to each market segment served. FedEx will strive to develop mutually rewarding relationships with its employees, partners and suppliers. Safety will be the first consideration in all operations. Corporate activities will be conducted to the highest ethical and professional standards. (That should keep everybody happy.)
- South African Airways
To deliver sustainable profits and grow our market share through world- class service to our customers internally and externally. (To make money by doing what all the other airlines promise to do).
Values:
These are usually non-controversial and pretty predictable. Is it only 80% of organisations that have “Respect, Integrity, Communication and Excellence” as core values – or was that just Enron? James S. Kunen wrote in the New York Times in 2002: “Every company’s statement ends up rehashing the same things, anyway: We will maintain the highest ethical standards, treat our employees with respect, encourage teamwork, make quality products, respect the environment. . . . As opposed to what? We will maintain fair-to-middling ethical standards? Treat our employees like old shoes, foment backstabbing, make shoddy products and lay waste to the environment?”
Strategies:
List some aspirations or goals (called strategies). These strategies tend to cover such areas as increasing profitability, increasing market share, expanding current product lines and improving employee retention rates. For example, the strategic goals of the South African Revenue Service are:
- to optimise revenue yield;
- to provide excellent service;
- to engage in responsible enforcement;
- to transform our people and culture;
- to transform the business and build capability; and
- to promote good governance.
There is no doubt, in terms of its performance, that SARS is executing a good strategy – but these “strategic goals” are not what is doing it. Their real strategic goals lie at the heart of the coherent policies, plans and actions that are producing their performance.
In his wonderful book “Good Strategy, Bad Strategy”, Richard Rumelt comments that “template-style strategy frees [us] from the onerous work of analyzing the true challenges and opportunities faced by the [organisation]. Plus, by couching strategy in terms of positives – vision, mission and values – no feelings are hurt.”
The work of making good strategy is tough. It is not about pleasing the greatest number of constituencies. It is about coming to grips with the overwhelming complexity of the business and its context, cutting through this complexity in order to identify the critical aspects of the situation, designing an approach – a guiding policy – that will be taken in order to cope with or overcome the challenges and obstacles that affect the organisation’s ability to survive and thrive and create advantage, and coming up with a set of coherent actions that will bring the guiding policy to fruition.
Template strategies miss the whole point of making strategy – which is to make clear and coherent decisions about where to take the organisation, and how to get it there. At best, they are a PR exercise intended to persuade various constituencies to “buy-in” on some level.
Template strategies that produce a Mission, Vision and Values probably produce more problems than they solve – especially in the “rollout”. Employees are informed of the organisation’s “exciting new strategy”, and are given the bells and whistles presentation of the results of the most recent executive breakaway. The reactions usually vary from a sort-of low-grade cynicism “watch this space” type of attitude to a more deeply cynical “Yeah, right – like we’re going to believe that!”
The purpose of designing an organisation’s Mission, Vision and Values is to create clarity and to enable people at every level of the organisation to make decisions. Who the organisation wishes to be, where the organisation wishes to go, and how it wishes to get there should be the product of careful analysis and rigorous choice, rather than the product of wishful thinking and some fallacious beliefs about what it takes to get people to box above their weight.
I do work in too many organisations where people use the organisation’s values as the basis to heap criticism on leadership, have no idea what the mission is telling them (they know the words in some instances, but it doesn’t provide any real guidance) and use the vision to justify doing bad business.
The purpose of a mission is to provide clarity about who we are, what we do and why we do it. The purpose of a vision is to excite people about how things will be when we have climbed to the top of the mountain. The purpose of values is to provide guidance about how we will conduct ourselves – all of us at every level of the business. In my opinion, if these are not going to be used to guide how we do business every single day, it is better not to have them at all. They are not central to the ability to craft a good strategy – although they can emerge from a good strategic process. Most often they are nothing but “fluff” – which Richard Rumelt defines as “superficial restatement of the obvious with a generous sprinkling of buzzwords. Fluff masquerades as expertise, thought and analysis.”
The purpose of strategy is to create strength through:
- Co-ordination of policies and actions – the strength being the coherence of the strategy’s design; and
- The creation of new strengths as a result of shifts in points of view and “gamechanging insights”.
If my “toe-dipping” into strategy has piqued your interest, I highly recommend that you read Richard Rumelt’s book, “Good Strategy, Bad Strategy: The Difference and Why it Matters.”
In the next article – or maybe the next few articles – I will be writing about the process of analysis that is at the root of good strategy.
