September 2010

THE CHALLENGE

A strategy looks good on paper but doesn’t “take” in the organisation

THE KEPNER-TREGOE RESPONSE

Create a “Strategic Culture” for successful implementation

Earlier this year we completed research into the impact of the recession on leader’s strategic thinking. Responses from the 375 leaders who completed our survey suggest that strategy is firmly back on the agenda and for them, the two key concerns were:

how to differentiate products and services in a period of over supply and low demand

and…

having understood how best to compete in these straitened times, how to implement a new strategy quickly and effectively.

In this edition of Strategic Response, we address the second of these two issues. We argue that implementing your strategy is most unlikely to succeed unless you can focus your organisation on your chosen strategic path through the creation of a strategic culture.

Strategy begins with a vision of where and what you want your organisation to be that guides your day-to-day decision making and operations, and is easily communicated to the people responsible for its implementation.

Yet it isn’t enough to just have a vision. You’ve got to implement it, too. And the comprehensive planning and commitment to bringing your strategy to life at all levels of your organisation must come from the top, as well. For over 40 years we have successfully defined strategy as the “framework in which choices are made about the future nature and direction of an organisation.” These choices are fundamentally around product/service scope and emphasis, market scope and emphasis (markets being customers, end users, and geographies), and the capabilities needed to take products to markets.

In our experience, however, a strategy cannot be successfully implemented and sustained unless there is a corresponding strategic culture in place.

We define culture as “the combined effect of behaviors, values, heritage, thinking, and relationships and the way they manifest themselves in an organisation and its performance.”

When this manifestation is strategic, these cultural features are deployed to ensure strategic coherence, consistency, and success. Without this an organisation’s strategy, no matter how sound, will inevitably run aground.

What are the specific strategies for ensuring that a strategic culture becomes ingrained in your organisation? For KT, there are 12 key drivers to success:

1. Basic Beliefs and Values: relating to your firm’s strategy: Must be universal, measurable, count in decision making, and capable of being role modelled by top management.

2. Thinking Patterns: Should be strategic in nature, big picture, questioning the status quo, outward looking, creative, open-minded, cross-functional and future-oriented..

3. Organisational Structure: Clearly designed to fulfil strategic objectives, structure is a powerful enabler. When misaligned or designed for operational or other purposes, structure inhibits strategy implementation. It has a major impact on culture and acts as a relationship framework inside and outside your firm.

4. Management Processes and Reporting Systems: Should provide visibility and control over the strategic dimensions of the organisation as well as financial and operational ones.

5. Education, Training, and Development: Help shape strategic skills and mindsets and prepare your executives for roles in strategy formulation and implementation, the key function of any leadership team.

6. Goal Setting and Appraisals: Should support the strategy process with an increasingly strategic flavour for those closer to the top of your organisation. A long-term perspective rather than the traditional annual one is needed.

7. Reward System: Tied to strategic achievements and paid over longer periods, should form the bulk of top management’s total compensation and a significant proportion for people at other levels who influence your strategic success.

8. Myths, stories, legends, and symbols: Can have an important role in developing your strategic culture. These are heard in corridors and bars and their slant is often an indicator of focus. Executive leadership needs to shape this aspect of culture, which for many is, “What is really happening around here?”

9. Marketing Programs: Such as PR, advertising, branding, image creation, and related activities must reflect the unique character of your organisation, creating in the minds of external stakeholders the desired strategic culture and the motivation to contribute to its success.

10. Information and Knowledge: A strategic culture values different information and knowledge as compared to commonly used financial analyses and historically-based data. Scenario planning, strategic competitor profiling and tracking, strategic benchmarking, and technology watching are a few examples.

11. Communication: This most vital aspect of your strategy should be frequent, encourage feed back, promote action, and answer the question, “What’s in it for me?” for each employee’ and be carefully tailored to internal and external audiences.

12. Behaviors: If the above culture features are in place, appropriate strategic behaviors will result. Your executives will act longer-term, be more visionary, balance ambiguities, take risks, be open to the new and unknown and, above all, think more.

All these factors need to be in place to create a strategic culture for your organisation. Any weak link in the chain can mean trouble. Your strategy must also be challenged, tested, and updated constantly to reflect changing needs and realities. Only then will you have a strategy that guides your organisation smoothly and successfully to where it wants to be.

 

Sam Bodley-Scott; Copyright © Kepner-Tregoe, Inc. All rights reserved. 9th September 2010

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