7 Reasons Why Your Strategy Is Slow, Incremental And Useless

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There is a failure at the heart of most businesses: they simply don’t have a strategy that works. Despite all the effort and talent that goes into a strategy process, most management teams, after months of analysis and discussion, somehow contrive to come out with something that is simultaneously incremental and unclear. It’s little wonder that fewer than 1 in 4 senior executives agree that they make strategic decisions during their strategic planning process.

At its heart, a business strategy is a framework for action and decision-making that enables you to succeed. So why is so hard to get right, and why does it take so long? There are 7 reasons why the results from many strategy processes are so anaemic:

  1. A focus on planning rather than strategy. Most business strategy processes are tied into the annual planning process. Unfortunately, this means that planning usually wins. A strategy process starts with a view of what kind of business you are trying to build. Your first tasks are to clarify how you can best win in the future, to agree your level of ambition for your company and to determine what size and shape of organization will enable you to make this happen. Once you have alignment on these issues, you can then determine some of the key steps you need to take to move you from your current position to your strategic future. In most planning processes, however, these questions are rarely asked. Instead, The big management discussions are not on major issues of strategy but on detailed budgetary issues, such as whether the gross margin target should be 29.64% or 29.65%. It’s little wonder that a survey of thousands of senior executives found that fewer than 25% of them said that they made major strategic decisions during their strategic planning sessions!
  2. Incremental Thinking. Although a planning-led approach will almost inevitably deliver incremental gains, a shift to a strategy-led approach does not guarantee that major breakthroughs will follow. Incremental thinking is driven by your own mindset as it is by a particular process you follow. A Business Week survey once found that the most important factor driving the success of many of Silicon Valley’s most successful entrepreneurs was an ability to ‘experiment fearlessly’. If you always need to be right, and you aren’t ready and willing to be wrong, you will only ever take incremental steps. You will never reach out far enough to set specific, stretching goals, never mind take the actions that would help you achieve them. I’m not suggesting that you should take reckless actions, but without prudent risk there is unlikely to be material gain.
  3. Putting Financials Ahead Of Ideas. A few years ago I was working with a retailer that was looking for new growth ideas. One of the ideas suggested was to target a new group of customers through a non-retail channel. The potential prize was huge – up to 50% top-line growth. There was one problem, however: the initial financial modeling suggested that the profit margins would be only half of the margins delivered by the existing retail business. For that reason – and that reason alone – the idea had been dropped. It took a proactive and persistent commercial manager nearly a full year of negotiation with the executive directors to show that, if certain changes to the new idea’s business model were made, the profitability could increase. A certain level of analysis is essential for business strategies to succeed. But without a greater focus on ideas, you will simply end up with a greater understanding of your current market position, rather than a compelling basis for driving new profitable growth for your business. Figure 1 compares analytical approaches with creative approaches to strategy. Which best describes your strategy development processes?
  4. All vision and no direction. A vision is not a strategy. Unfortunately, many executives believe that creating a vision can equate to setting out a growth strategy. It doesn’t. Your people may be inspired by your vision, but it won’t necessarily help them decide how they should focus their efforts. Only when you have sufficient clarity that helps determine your managers’ daily actions can you be confident that you have a strategy that is capable of becoming embedded across your business.
  5. A Failure To Make Trade-Offs. Making trade-offs means that you’re giving something up and, if you’re not 100% confident in your stated strategy, it is more than tempting to hedge your bets, have a look at what the competition is doing and say to yourself “Let’s try a bit of what they’re doing.” The result is that your own business spends all its time keeping up with the Joneses, rather than trying to create something that is distinctive and uniquely valuable.
  6. Insufficient focus on action. Few, if any strategies emerge from implementation unscathed. By pursuing your big objectives, implementing your initial plans and taking action you are likely to change, in some way, the direction you have set. It is only by learning from your actions that you can really clarify how you can best succeed in the future. The results of your actions will drive your strategy at least as much as your strategy drives your action. The critical aspect of this process is to learn as quickly and as cheaply as you can. Your ability to create competitive advantage is, to a large extent, driven by your ability to operate this cycle faster, cheaper and more effectively than your rivals. I can’t say it any better than Michael Bloomberg, the founder of the eponymous financial information and media empire, who put it like this, “We made mistakes of course. Most of them were omissions we didn’t think of when we initially wrote the software. We fixed them by doing it over and over, again and again. We do the same today. While our competitors are still sucking their thumbs trying to make the design perfect, we’re already on prototype version No. 5. By the time our rivals are ready with wires and screws, we are on version No. 10. It gets back to planning versus acting. We act from day one; others plan how to plan – for months.”
  7. A reliance on external consultants. As a consultant myself, you won’t be surprised, to read that I think that consultants can help you create a better strategy more quickly. But this doesn’t mean that you should delegate strategy to a consultant. On the contrary, it’s essential that if you and your team are to lead the delivery of a new strategy, you must first fully own it, and that only happens if you’ve been fully involved in all aspects of its development. As Dennis Sadlowski, the former CEO of Siemens Energy in the USA once told me, “Engagement starts with involvement, and I ensured that the executive team and key managers at the next level in the business were intimately involved in the development of our growth strategy. We didn’t rely on external consultants to tell us the way forward; we led the work ourselves, doing our own blocking and tackling to make sure we understood the detail.”

Which of these 7 reasons are preventing you from creating a clear and compelling strategy for growth, and what steps can you take to address them?

© Stuart Cross 2014. All rights reserved.

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New Testimonial: Andrew Trofimowicz, DFS

I have been working with Andrew Trofimowicz, an executive director at the UK’s biggest sofa company, DFS, over the past few months. Here’s what Andrew said about the experience:

“Stuart’s unique combination of understanding how large organisation’s work, his ability to ask the right questions at the right time, and his challenging yet supportive approach, has transformed the way I see my role, my own value and my contribution to the business.”

Are you looking to raise your performance, impact and the value you add to your organisation? Please call me on 01636-526111.

© Stuart Cross 2014. All rights reserved.

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What Is Your Question?

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One of the interesting aspects of the recent independence vote in Scotland was the question that was asked on the voting form: Should Scotland be an independent country?

That question enabled supporters of independence to be the “Yes” campaigners, while the supporters of the Union to be the “No” campaigners. This starting point created a very different feel for the two sides, and enabled the “Yes” team to characterize their opponents as Project Fear.

The independence question could have been asked differently. If the question, for instance, was ‘Should Scotland remain as a nation within the United Kingdom?’ the “Yes” and “No” badges would have been reversed. It would than have been up to the pro-independence campaigners to overcome that negative badge.

Personally, I believe that this different starting point will have added percentage points of support for the pro-independence camp. I’m not alone: according to The Economist Patrick Briône, the Director of Research for Survation, one of the key polling companies, also believed that the way the question was asked added votes for independence. In other words, if the alternative question had been tabled, it is more than likely that the vote in favour of staying in the UK would have been even greater.

Briône’s view is supported by research from behavioural economists. In his book Thinking Fast And Slow, Daniel Kahneman shows how the way a question is asked affects the response given. Here are a couple of examples:

  • In one experiment, surgeons were given one of two statements about a particular treatment for lung cancer. The first statement was that ‘The one-month survival rate is 90%’, while the second was that ‘There is a 10% mortality in the first month.’ The two statements logically mean the same thing, but while 84% of surgeons shown the first statement supported the treatment, only 50% of those shown the second statement favoured the approach.
  • In another piece of research Kahneman found that when respondents were asked, ‘Would you pay $5 to participate in a lottery that offers a 10% chance to win $100 and a 90% chance to win nothing?’ they were far more likely to respond positively than if they were asked, ‘Would you accept a gamble that offers a 10% chance to win $95 and a 90% chance to lose $5?’ The reason for the difference is that the second question raised the idea of ‘losses’, while the first question only talked about ‘wins’.

What are the questions that you are asking yourself, your people and your entire organisation to drive new improvements and new growth? The chances are that the way you phrase these questions will materially affect the responses you get in return.

© Stuart Cross 2014. All rights reserved.

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Are You Better Together?

There are no common British values. There is no shared vision about the how the United Kingdom can succeed in the future. And, as a result, there are no coherent strategies to instantiate and deliver those values and vision.

That is my conclusion from the debate on Scottish independence.

The ‘Yes’ campaign has given some indication about the future of Scotland – making the most of North Sea oil and enhancing the welfare system, as far as I can make out – but the ‘Better Together’ team cannot provide any sense of direction for the UK, preferring to focus its message on the risk of independence and going it alone.

You must clarify and embed some shared values, set out a clear, coherent and compelling vision for the future and give some idea about how you’re going to achieve that vision if you’re going to engage and galvanise your people and partners into delivering that success.

Without those values, vision and strategies you end up focusing on incremental financial and operational improvements and reacting to external events – rather like the UK government of every political hue does – rather than proactively delivering an agenda that step changes your future.

The UK needs a clear set of values and a coherent future vision. And so does your organisation.

© Stuart Cross 2014. All rights reserved.

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Stuart’s Five Minute Friday Focus – 1 August 2014

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This week’s focus: At the end of a particularly long and gruelling strategy meeting a CEO once turned to me and said, “In a few years time people will laugh at us for developing three-year plans.” He was right. Most long-term plans last about as long as an ice storm in the desert. As military experts put it, plans rarely survive contact with the enemy.

Despite these realities many executive teams remain stuck with nineteenth century approaches to strategy development. It is not long-term plans that you need, but the ability to adapt rapidly to fast-changing markets in a way that helps you achieve your goals. As Jeff Bezos, the CEO of Amazon once put it, you need to be fixed on your vision but flexible on the journey.

Don’t spend 6 months developing a 1-year plan. What can you do to accelerate the development of your growth strategy?

Off the record: Time by Pink Floyd

Every year is getting shorter never seem to find the time

Plans that either come to naught or half a page of scribbled lines

The 6-Day Strategy: A new mindset and new approaches are needed to create a robust and compelling strategy at pace. But it can be done. I’m delighted to launch our new offering, The 6-Day Strategy, which can help you set the direction, and generate the focus necessary for you to succeed at a pace that is 20 times faster than traditional approaches. And in a world where plans rarely last a year, gaining a six-month start on your competitors can create lasting advantages and benefits for your business.

To find out more visit our website page on The 6-Day Strategy here and download the white paper here.

© Stuart Cross 2014. All rights reserved.

 

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The 6-Day Strategy

Why spend 6 months developing a 1-year plan?

The pace of change is just too fast to develop your strategy the old-fashioned, twentieth century way. We are delighted to announce that we have just launched our new service, The 6-Day Strategy, to help you build your strategy rapidly and to dramatically accelerate  the performance and growth of your business.

How you will benefit

  1. Focus, Direction and Ambition. Generate the passion, energy and alignment in across your business by creating a laser-like focus on the future success of your organisation.
  2. Strategic Advantage. Instead of playing to the rules set by your competitors, you will focus your efforts on building and exploiting your own organisation’s advantages.
  3. Accelerated Growth. Identify your key priorities for growth and channel your resources and talent where you can have most impact.
  4. Executive Leadership Transformation. The dedicated involvement of your top team throughout the process will transform your leadership capabilities and alignment.
  5. Rapid Results. Translate you future drivers of success into ways that you can deliver immediate gains and rapidly grow profits and performance.

Find out more

Special Offer

If you’re interested in swiftly step-changing your company’s ambitions and finding new and better ways to deliver profitable growth, and want to implement The 6-Day Strategy in your business in 2014, we’ll offer you a complimentary 33% discount from any project fee for being a ‘charter client’.

We look forward to hearing from you!

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Rapid Steps To New Growth – Testimonial

Developing a strategy for your business needn’t take months of effort and result in 100-page documents. You can develop and refine your business strategy through brief, focused discussions and the use of some simple tools.

At a recent meeting of the Family Business Futures Academy, run by The Wilson Organisation, for example, I led a strategy session for a group of business owners. In just a few hours each of the participants had some new ideas about how they could drive their company’s future success. Here’s what Annabel Prow, CEO and Gary Cormack, Deputy Chairman, of The Wilson Organisation, said about the meeting:

Stuart recently ran a Strategy session for the Family Business Futures Academy. The session, aimed at family business owners, was perfectly pitched at people who know their business intimately, but who need some assistance in turning their insights into a coherent strategy, capable of coordinated action and effective communication throughout their business. Stuart judged the attendees superbly and discussed a set of processes and tools that would help any of the owners put together a strategy that would be relevant to their customers, different from their competitors and commercially successful. The session was interspersed with relevant examples and well led discussions. All the participants left with a sense of momentum and excitement about their future plans for their business!

What steps are you taking to develop your company’s strategy, and how are you building your level of momentum and excitement about the future success of your business?

(c) Stuart Cross 2014. All rights reserved.

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Stuart’s Five Minute Friday Focus – 13 June 2014

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This week’s focus: I am working with several clients that are driving major changes to their customer offer and organisation. Communication is critical: the leadership teams want their people to understand why the changes are necessary and what new goals and behaviours are required.

This communication is about engaging both hearts and minds. And in such cases personal stories trump generic lists everytime. When Sir Stuart Rose became CEO at M&S, for instance, he used a story of a manager developing a new product in a week to highlight his desire for greater speed across the struggling organisation. Pscyhological studies have shown that personal stories like Rose’s generate far greater interest, empathy and emotion in audiences and, as my business coach is always telling me, logic makes people think but emotion prompts them to act.

Where can you start using stories – in your speeches, meetings and individual discussions – to help people engage with, and act on, your ideas and objectives?

Off the record: The Story Of The Blues by Wah!

Here in my pocket I’ve got the story of the blues

Try to believe me

‘Cause it could be front page news

© Stuart Cross 2014. All rights reserved.

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Stuart’s Five Minute Friday Focus – The King Of Procrastination

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This week’s focus: I don’t particularly look forward to writing. This week, for instance, I have yet again put off writing this Friday Focus until 30 minutes before it is due out. Even worse, I am currently writing a new book, which is a little ironically called First and Fast. I have nine months to write the book, but the first five chapters have taken me over six months to write, leaving a little over two months for the final five.

I am not alone. Through my experience of coaching other executives, I am starting to think that procrastination may be one of the biggest management issues. Forget selling skills, innovation, becoming tech savvy or leadership capabilities; if more business leaders could simply get on and do the things they don’t want to do, more organisations would thrive and profits would grow.

The best way I’ve found of dealing with procrastination is to make your accountability and action public, commit the time in your diary, do it, and, importantly, give yourself some sort of reward for getting it done. I’m committing to you that I will complete my new book by 31 May and will update you each week on my progress (I’ll think about my reward!). What are your areas of procrastination and what steps will you take to overcome them?

Off the record: Busy Doing Nothing by Bing Crosby, William Bendix and Cedric Hardwicke (written by Jimmy Van Heusen and Johnny Burke)

We’re busy doing nothing, working the whole day through

Trying to find lots of things not to do

We’re busy going nowhere, isn’t it just a crime?

We’d like to be unhappy, but we never do have the time

© Stuart Cross 2014. All rights reserved.

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Stuart’s Five Minute Friday Focus – Recipe For Success

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This week’s focus: I was talking to the CEO of a highly successful company this week who was lamenting the fact that although the business was growing and profitable, he wasn’t entirely sure why. “What we need,” he told me “is to fully understand our recipe for success.

He’s right to be concerned. If you don’t understand your ‘recipe for success’ you are unlikely to be able to sustain or replicate it. This is particularly true in dynamic, fast-changing markets where constant tweaks and amendments to the recipe will be required.

Take Morrisons, for example. The UK grocer announced major losses this week and saw its share price fall by 10%. The underlying reason for the poor results is clear: management did not understand Morrisons’ ‘recipe for success’ – in particular, the importance of value to its customers – and as discounters have changed shoppers’ perceptions of value, Morrisons failed to make the necessary adjustments to its offer.

What is your company’s ‘recipe for success’ and what are you doing to ensure that you develop and sustain it to drive future growth?

Off the record: What Is Success? by Bonnie Raitt

Now what, what, what is success?

Is it to do your own thing

Or to join the rest?

© Stuart Cross 2014. All rights reserved.

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