We have a great strategy — no, really, we do
By Kannan Ramaswamy, Ph.D.
The rank and file in many organizations big and small is usually plagued by doubts about the strategy that their company is supposedly pursuing. Often, these are not questions about the specifics of the chosen direction but ones of a much more fundamental nature. They typically wonder whether their organization does indeed have a strategy in the first place. To them, the stutter steps that their firm is making, a quick market entry here, a new product launch there, a set of technology alliances and acquisitions all seem unconnected to any central purpose.
The view from the top is very different however. The CEO huddles with her team and the conversation drifts to how poorly understood the strategy is. Often the senior team that has architected the strategy is at a loss of words trying to fathom the dense depths of the organization where their ideas seldom penetrate. It must be their poor analytical ability, one side says, while the other is of the opinion that the ones in the comfortable offices at the highest points in the building must be breathing rarefied air because they cannot seem to understand reality. The truth is somewhere in the middle. Here are some reasons why you could think you have a strategy when you actually don’t.
1. Lack of coherence. Your strategy is a set of well-intentioned initiatives, but they might lack coherence. Although each initiative in and of itself might be well thought and well designed, ask whether it directly addresses the competitive position that your firm seeks to occupy. You could easily be growing the best specimens of trees possible, but it does not mean you are making progress toward creating a sustainable forest.
2. Too fuzzy. Your “strategy” may be more of a vision than a strategy. Organizations routinely confuse vision for strategy. Consider BP’s vision of going beyond petroleum by focusing on alternative fuels. In hindsight it ended up sapping the creative energy of the company with very little corporate funding, resulting in a series of cost containment efforts which some blame as the starting point of the company’s downward slide. Strategy is a vision with a plan of action going along with it.
3. Bridge to nowhere. When conceiving strategy, it is useful to focus on the question of future competitive positioning that your company seeks to achieve. If your plans do not address the competitive position directly and defensibly, all you might have is a collection of steps, the ultimate bridge to nowhere. Don’t confuse steps for strategy. Strategy is about competitive position and steps are only meant to take you there. Short-term thinking might lull you into believing that these steps are indeed your strategy, but that could be a mirage and a transient illusion before failure.
4. Lack of clarity. When you wonder why people below you cannot seem to understand your strategy, it could be useful to ask whether the strategy itself has clarity to it. The lack of understanding of your strategy below the C-Suite could be traced to lack of clarity in linking desired actions to a clear set of goals that help articulate your future competitive position. If you cannot express the fundamentals of your intended strategy in a few short sentences, it might be a sure sign of the need to rework and rethink.
5. Lack of alignment. Another challenge is a lack of alignment or buy-in from the ranks. Without good alignment across the organization, your employees are most likely to feel overwhelmed, less motivated to engage, and consequently feel the onset of burnout. If they do not know how their role contributes to the accomplishment of the larger purpose of your strategy, these consequences are hardly surprising.
Kannan Ramaswamy, Ph.D., is the William D. Hacker Chair Professor of Management at Thunderbird School of Global Management near Phoenix, Arizona.