Vision & Strategy - how good is yours?

Intro

The following quote from the May edition of Inside Housing caught my eye:

“I can’t actually say what their purpose was. [...] I couldn’t find it. What I found was lots of stuff happening. And nobody had a focus on one particular thing.”

The quote is from Chief Executive Leann Hearne, who took over the helm of Knowsley Housing Trust (now Livv Housing Group) shortly after it was deemed non-compliant by the regulator.

Does the sentiment she expresses sound familiar? How many organisations do you know where everyone is so busy, exhausted even, yet nothing seems to actually get done? Or worse, the things that do get done just don’t move the needle? They simply do nothing to help the organisation fulfil its ambition.

The importance of having both an overall vision and a solid corporate strategy in place is tacitly understood across boardrooms and within start-up huddles alike - but how good are we at this in reality? When is the last time you have reviewed your strategy, talked about your vision to staff and connected these two concepts to the everyday work happening on the ground?

What do we even mean by vision, or strategy for that matter? Everyone seems to have their own interpretation of what they think they mean when they use these words. And maybe that is not necessarily a bad thing - as long as you are explicit. If you give your employees the right tools to be successful, to make good decisions and to come together behind a common goal, who cares what you call these bits of information! Ultimately you have to do what’s best for your company and what works in your context - but it needs to be a deliberate choice, not something you stumble into. And regardless of what words you use, the meaning within them has to be tangible. It has to provide a North Star for those around you, something they’re aiming for, something that enables good decision-making at all levels, irrespective of seniority, department or job title.

In this article, I want to try and demystify some of the terms discussed, show the good, the bad and the ugly and provide food for thought that will allow you to assess where you are in your vision and strategy journey. Is everything as it should be, or could these fundamental principles do with an overhaul? If you think you’re in a good place, does the rest of the organisation agree? Could you walk up to any employee today and they’d know what matters most? Has your strategy permeated throughout the organisation, or is it stuck in the boardroom?

Terminology

Your vision paints a picture of the future that you are looking to create. It should be aspirational yet tangible; people have to be able to envision the world you’re describing in order to be inspired by it.

Your organisation alone may not be capable of realising this vision, but you will contribute what you can towards this utopian world. A world where…

… “sustainable living is commonplace”

… “every person uses their unique experiences and backgrounds, together – to spark solutions that create a better, healthier world”.

… “people live longer, healthier, happier lives”.

… “content creators around the world can find a global audience”

… “the world‘s information is organised and universally accessible and useful”

… “every single person is given free access to the sum of all human knowledge”.

… “everyone is given the power to create and share ideas and information instantly, without barriers.” [1]

You get the point. A vision is not just where the company wants to be in the world, but where it wants the world to be because of it. It is meant to inspire by painting a picture of a future worth working towards.

Your strategy then describes a concrete, actionable plan that will move your company closer towards the vision it describes. Review the opportunities you perceive and how they may evolve over time. Diagnose any risks and challenges you anticipate and outline how you might respond to them. A strategy should include the type of products/services that you plan to build, the customers you want to sell to and the markets you want to serve. In doing that it seeks to answer questions such as: “What makes our products and services unique?”, “Who do we compete with and how?”, “What is our company’s value proposition, why should people buy from us?”, “Who is our target client and what motivates them to seek out our product?”, “What job is our product performing for our target customer?”.

Assessing opportunities and threats against existing strengths and weaknesses is a good starting point for a strategic exploration.

Leave room for change. Your strategy will and should evolve as you embark on your journey and learn more about your operating environment. As you replace assumptions with facts, as the world changes around you, be prepared to re-assess. As Richard Rumelt puts it in “Good Strategy/Bad Strategy: The Difference and Why It Matters”: “Opportunities, challenges and changes don’t come along in nice annual packages. The need for true strategy work is episodic, not necessarily annual.”[2]

A well-crafted strategy outline provides the foundation for subsequent goal-setting exercises, both at company and department level. With a clear direction of travel, objectives are anchored to desired longer-term outcomes rather than appearing devoid of context and short-term opportunistic.

The Good, the Bad, the Ugly

It is always easier to think about abstract concepts through tangible, real-world examples so, drawing on Rumelt’s book mentioned above, I wanted to share a few here. If you recognise yourself, or your organisation’s current strategy, in any of these examples, chances are you still have some work to do.

Rumelt identifies four hallmarks of bad strategy:

• Fluff

• Failure to face the challenge

• Mistaking goals for strategy, and

• Bad strategic objectives

The last two particularly hit home with me. I have been a massive fan of OKRs ever since my dear friend Dan North introduced me to them. BUT. OKRs are not the same as strategy. They are part of a strategy, not the be-all, end-all. Let’s have a closer look.

“Fluff is a superficial restatement of the obvious, combined with a generous sprinkling of buzzwords. Fluff masquerades as expertise, thought and analysis. It uses [...] words that are inflated and unnecessarily abstruse, and apparently esoteric concepts to create the illusion of high-level thinking.” [2]

Ouch.

In a retail bank’s strategic memorandum we find the following statement: “Our fundamental strategy is one of customer-centric intermediation.”[2] Wikipedia kindly provides an easy to understand definition of the word intermediation: “Intermediation involves the matching of lenders with savings to borrowers who need money by an agent or third party.” So this bank is telling us that their strategy is to be a bank. But hang on, they talk about being a customer-centric bank - so maybe they aim to differentiate themselves by providing better products or customer service than their competitors. If Rumelt is to be believed, this is not the case. He concludes: “The phrase customer-centric intermediation is pure fluff. Pull off the fluffy covering and you have the superficial statement “Our bank’s fundamental strategy is being a bank””[2].

As an example of what good looks like Rumelt shares an excerpt of the Defence Advanced Research Projects Agency’s (DARPA) strategy: “DARPA focuses its investments on this DARPA “hard niche”, a set of technical challenges that, if solved, will be of enormous benefit to US national security, even if the risk of technical failure is high.”[2] This is expanded upon by “DARPA focuses on projects the military services see as too risky or too removed from their current missions. It tries to imagine what commanders want in the future rather than what they are calling for today.”[2] It is clear that the organisation is well aware of the challenge it is facing - as yet unsolved technical challenges with an inherently high risk of technical failure. To overcome these challenges, the strategy includes a list of specific policies designed to help the agency achieve its objectives, such as:

• A retention limit for programme managers of 4-6 years to limit empire building and to bring in fresh talent to challenge the ideas and work of predecessors.

• Limited investment and overhead in physical facilities to prevent entrenched interests that may thwart progress in new directions.

DARPA’s strategy carefully defines the challenge, it anticipates the real-world difficulties to overcome, it eschews fluff and it creates policies that aim to overcome these difficulties. It “has the shape and structure common to all good strategy”[2].

Let’s look at goals and objectives next. Here’s an example from Rumelt’s book of goals that do not add up to a coherent strategy:

“We will be the graphics art service firm of choice.

We will delight our customers with unique and creative solutions to their problems.

We will grow revenue by at least 20% each year.

We will maintain a profit margin of at least 20%.

We will have a culture of commitment. Corporate goals are commitments we all work to keep.

We will foster an honest and open work environment.

We will work to support the broader community in which we operate.”[2]

These are admirable values but insufficient on their own to be classed as actionable strategy. For starters, unless you’re a start-up at the beginning of your journey, revenue growth of 20% is a big ask, particularly when said growth is expected year after year. Ambitious goals that stretch the organisation are not a bad thing but you need to have an actual strategy for achieving it. Throwing a number out there because it sounds good is not sufficient. Where is the additional revenue going to come from? New markets? New customer segments? Opportunity to steal from the competition, if so why and how?

This list of “key strategies” is little more than a wish list without the required substance that would guide, align and enable the organisation to achieve these goals. “A good strategy defines a critical challenge. What is more, it builds a bridge between that challenge and action, between desire and immediate objectives that lie within grasp. Thus the objectives a good strategy sets should stand a good chance of being accomplished, given existing resources and competence.”[2]

Finally, let’s turn to examine bad strategic objectives. Bad strategic objectives tend to fall into two categories: Exhibit A is the endless task list that results when nobody is willing, or able, to make hard choices between competing opportunities. If you leave a planning meeting with 27 objectives, initiatives, projects or action items (call them what you wish), you haven’t made any hard choices, you haven’t enabled your teams and your organisation to double down on what matters; because among 27 competing priorities, who really knows what matters? As the old saying goes, “if everything is important, nothing is”[3].

Exhibit B is more subtle, particularly in an age of moon-shot objectives as advertised by the “Gods of OKRs”, Google. But if the strategic objectives are just as difficult to achieve as the overall challenge the strategy outlines, then little value has been added. I’m not saying that stretch objectives in themselves are bad, but they have to be carefully managed as teams can easily feel overwhelmed rather than inspired by seemingly insurmountable goals. You have to offer at least some guidance on the way forward. Not showing up avenues to tackle the identified challenge suggests that not enough work has been done to outline a plan of attack. “Strategy is the craft of figuring out which purposes are both worth pursuing and capable of being accomplished.”[2]

Now what?

Where to from here? If you want to look at your vision and strategy with fresh eyes, what should you be looking for?

Sun Tzu, the Chinese general, military strategist, writer, and philosopher, talked about five factors that affect strategy: have a purpose, a moral imperative, understand your landscape, the environment you’re competing in, then understand the heavens. While we may struggle with the latter, his other factors provide a good starting point for a discussion on business strategy. Simon Wardley (of Wardley Mapping fame) picked this up in a recent talk at the Business of Software conference which is nicely summarised in this infographic:

An approach to defining strategy. Image reproduced with permission © Aslam Khan

Establish your purpose by articulating and communicating your vision. Imagine a world where [your vision goes here].

From there explore your landscape and climate. Uncover the most promising opportunities for your business. These may be internal such as improving the organisational design to improve the flow of value delivery for your customers, or finding better ways of engaging with and satisfying your customers’ needs. Or they may present themselves in the shape of changes in environment, technology, consumer tastes, laws, resource crises or competitive behaviour, either realised or anticipated. Consider both external and internal risks and threats that may prevent you from capitalising on these opportunities.

Go through this exercise with your senior management team to gather input into this discussion. Encourage divergence to bring as many useful pieces of information to light as possible. Edward de Bono’s Six Thinking Hats may be a helpful mechanism to guide the discussion.

Converge on those areas that matter most. Don’t attempt to satisfy everyone’s view or you’ll end up with the dog’s dinner equivalent of strategic objectives - the task list.

From here, build a hypothesis of how to capture that opportunity. Be explicit about likely obstacles you may encounter and how these should be handled. Rumelt likens this to a doctor’s diagnosis when faced with a patient’s ailment. The diagnosis is a hypothesis as to the reasons the patient is showing symptoms and provides guidance on how to address the underlying cause.

Finally, set out a number of actions, your objectives, to guide the executing teams in capturing this opportunity and eradicating obstacles to success. In our medical metaphor this is the treatment plan you’d expect on the back of a diagnosis - which may be any number of things from lifestyle changes to drug prescriptions.

As you go about implementing your strategic objectives, ensure there is clarity among staff as to the context that led us here: “We believe we have to do X in order to accomplish Y”. This is equivalent to you sharing your diagnosis along with the patient’s symptoms and medical history. Context is important because you wouldn’t be the first professional to misdiagnose a problem.

Monitor whether your actions are creating the desired outcomes. Explicitly stating the diagnosis as a hypothesis ensures that course corrections can be implemented should our treatment plan not yield the desired results.

If you would like support in facilitating such an exercise or challenging the outcome of a previous endeavour, get in touch. “Bad strategy generates a feeling of dull annoyance when you have to listen to it, or read it.”[2] Let’s hope yours doesn’t!

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[1] In order of appearance: Unilever, Johnson & Johnson, CVS, Netflix, Google, Wikipedia and Twitter

[2] Richard Rumelt: Good Strategy/Bad Strategy: The Difference and Why It Matters, chapter 3

[3] Attributed to Patrick M. Lencioni