In the late 1990s, I took up my first major strategy role, leading the strategy team at the UK retail and pharmacy chain, Boots the Chemists. Not long after I started my role things changed for Boots – and not for the better! Wal-Mart’s acquisition of the UK’s third largest grocer, Asda, led to a price war with its key rivals, particularly Tesco. Health and Beauty, a relatively high-margin category for the grocers, was an effective battlefield for these retail giants, and Boots quickly began to suffer from collateral damage.
Overnight, it seemed, the company’s share price had fallen by a third as investors saw the value of the market evaporating and Boots’ competitive position crumbling. As the price gap with the grocers widened, and the pressure on future growth and profit margins intensified, the sense of urgency – and periodic panic – took off like a rocket from the once-calm quarters of the executive corridor.
While we had previously talked about the need for greater pace and stronger differentiation, our actions and our diaries had reflected a belief that we were still in control of events. Not any longer – we needed a different approach. In the space of three months I had led a cross-functional team of senior managers on a full-time project to develop radically alternative business models, run a series of strategy ‘away days’ for the executive team, and had undertaken reviews of pricing, cost and growth strategies. Some of the ideas and initiatives that resulted from this work helped to improve the company’s competitive position and performance; others didn’t. The interesting point, however, was that the reaction to greater chaos, uncertainty and turbulence was more strategy, not less.
So, how do you organise for effective strategy management in the twenty-first century? I suggest an approach that incorporates five specific elements:
- Annual Strategy Summit. For the past five years, I have run an annual strategy summit process for the executive team of a homewares business that has sought to test its existing strategy against a range of mutually exclusive alternatives. The process has allowed the team to kick the tires of its strategy and each year has enabled the team to shift resources into new priorities. There have been no huge single strategic “revolutions”, but five years on, the strategy is very different from its original focus.
- Half-Yearly Growth Summit. If the annual strategy summit is a forum for the executive team, and selected senior managers, to thrash out major strategic alternatives, a six-monthly growth summit enables a far broader set of managers to become involved in identifying and developing potential new growth opportunities and engaging with the leadership team on their relative merits. The aim of the summit is to identify a handful of new growth ideas – probably no more than two or three – that you agree to develop in the following few weeks and months. In addition to the executive team, managers from across the business are invited to the summit, along with external experts who can add further value to the discussions.
- Quarterly Priority Reviews. When a new leader joins a business, they often create a 90-day or 100-day plan. I think that this period is great for focusing effort –three months is enough time to get some serious work done, but short enough to keep the pressure on delivery – that I don’t know why more executives don’t have on-going 90-day plans rather than an initial, one-off. Some programs and initiatives can take years to deliver, but most can be broken down into quarterly milestones and, if you focus effectively, you can make rapid progress on some of your most important issues within a three-month timeframe. At one retail client, for example, a new CEO decided to focus on the single metric of product availability for the first three months of his tenure. Availability had been a perennial problem at the retailer, despite major investments in systems, but the new CEO’s focus on this single issue created the energy and collective focus required to improve availability levels by 10% and grow sales by 2% in that initial quarter.
- Monthly Strategy Sessions. These regular sessions enable you to build up the shared knowledge and insights of your business, your markets, your customers and your competitors that create the confidence for the bigger decisions that can come out of the annual reviews. As surveys have shown, big strategic decisions rarely come out of the big set-piece, annual reviews, but from the more regular meetings, and the corridor conversations that surround them. As Peter Birtles, the CEO of the Super Retail Group in Australia once told me, “As the leadership team has developed I have found it is the more regular, less formal meetings and conversations where our key strategic objectives and initiatives are really developed.”
- Weekly Big Idea Reviews. Effective strategy delivery is generally a messy process of development, testing and refinement. If this process is to work, you need to have regular updates and reviews. One way of doing this that cuts the chain of command between the ideas and the leadership team is to have weekly ‘big idea’ reviews. During the turnaround of UK grocer, Asda, in the early 1990s, the executive team met each Monday morning at a local store that had been set up as a laboratory to run series of experiments and to test new ideas. The team walked the store, reviewed the week’s progress and agreed the priorities for the following seven days. The pace of innovation at Asda rapidly accelerated, and its subsequent growth and profitability attracted Wal-Mart sufficiently to buy the business.
Which of these five steps could help your business to develop, refine and deliver a more effective strategy for growth?
© Stuart Cross 2017. All rights reserved.