STRATEGY – Forecast, Rally or What?
A highly intelligent gentleman who had qualified at a top business school and who worked for a large, well-known and solid company told me his title – Head of Strategy. Asked what he did he said he produced the company’s strategic plan for the future, presented it to the Management Committee and the Board and piloted it through to execution by divisional business heads. He then monitored what the results were.
Further questioning got him describing the business heads’ reaction to his strategic plan. It was a mixture of cynicism and derision for the most part, he said. They had contributed their own forecasts to the planning exercise – and very optimistic forecasts they were. Not for next year, but the year after things were going to improve beyond all expectations because of new technology to make a better product, improved efficiency and reduced costs. SAP, McKinsey and a faster dough-mixer were the key to all this. Year of Plenty as he called it saw retirement of the manager of the business. His No 2 would ‘confidently’ reach the goal.
I was able to talk to the CEO of the business. An intelligent, street-wise lady who I guess is a good judge of character, she is efficient, analytical, balanced and brisk (or should I say ‘brusque’?). Her sense of humour wasn’t on duty that day. But she was open about her Strategy Department. “Inherited,” she said, “and confused about its role in the business.” She went on to explain the importance of KPIs, something with which I profoundly disagree except in very specific, measurable situations. Good targets, she said, were vital. When asked what a good target was she said it was simply a hard target.
This sample of one is replicated throughout the world. Kraft-Heinz couldn’t make strategic sense of acquiring Unilever, so it didn’t. We have talked to giant companies realising their social and political importance, many of them for the first time. We have talked to SMEs growing lineally with little or no strategy about the purpose or aim of the business beyond making money, on its own not a viable purpose. We have worked with Innovators struggling to finance the failures that accompany progress. What have we learnt about Strategy in a Volatile, Uncertain, Complex and Ambiguous (VUCA) world?
Strategy is not a department. When a company tries to make it so it reproduces the Corporate Planning Department that drove executives mad with management’s indecisions and flights of fancy. The CEO cannot be responsible for the details of everything that happens in a business. S/he has People, Technology, Sales / Customers, the Board and Shareholders as priorities. But Strategy comes at the top of this list. Only fire-fighting is above it. A CEO not in charge of strategy isn’t in charge of the business.
Is the VUCA world so volatile that we cannot adopt a strategy in it? Of course not. Military battles are hugely volatile. Even so, as Supreme Allied Commander of WWII, Dwight Eisenhower, said ”Plans are for the birds but planning is vital”. That is still true today.
Strategy involves forecasting but is not a forecast. It results in targets but is not a target. Nor is it a rallying call to greater effort though it requires great mental flexibility to succeed. Business is not war but it is a constant battle. Strategy is the art of successfully planning and directing commercial operations in the battle of business.
A competent CEO will be clear that s/he leads the troops and that means heading Strategy besides a whole lot of other things too. Above all it means developing the company’s culture through creative, imaginative, innovative thinking and execution. And that requires courage.
Do we know where that courage will come from?
Terrific Mentors International helps companies and individuals get their Strategy right.