Strategy governs an organization's success.
"Strategy! Need some." Number 5, Short Circuit
While most people will agree they need strategy, there is plenty of debate over what strategy is and what constitutes a good strategy.
At its essence a strategy is a defined way to achieve the organizations vital goals. A good strategy clearly shows what the organization wants to achieve, how it will achieve it, the key people that will implement it and the resources they will use.
There are many ways to craft a strategy...and many consultants that will be happy to charge and organization to help or even to do it. The actual process, however, is not not magic.
Vital Goals, Ends, and InterestsWhat is a "Vital Goal"? The military uses the term "ends". That is simply what is the strategy is supposed to accomplish and comes from the concept of "end state". At the conclusion of the strategic execution, what do we want the organization and environment to look like? That is a useful concept that is perhaps lost in many non-military strategies (and in some military strategies as well). It involves a strategy "ending". Does a strategy end? A well crafted strategy should--that's the whole point to achieve that desired end state. When the end state is achieved or nearly achieved, the strategy is adapted to meet new ends. These new ends could be something as simple as maintaining a current position in the face of challenges or adapting to meet new conditions. Regardless of the degree of change, the strategy must be reviewed and assessed.
The key is "vital". Let us go back to Short Circuit again. In the movie a robot designed to be a weapon becomes sapient and a pacifist. It essentially re-programs itself after a massive lightning strike. Nova, the company that made it, wants to recover it and discover the "malfunction". As Number 5 says, life is not a malfunction. To dissemble is to die. Number 5 clearly has a vital interest: to remain alive. In many ways, that is exactly what a vital interest or end is: to remain alive and to thrive. For an organization, this could well mean to achieve its purpose.
Purpose gets equated to a mission statement or a vision statement. These became all the rage as consultants promulgated the concept. However, if you look at the the average mission statement on a company's website, most are generic. You can really tell what they are or their purpose. For many organizations, the generation of a mission statement seems like something they checked off in a canned strategy generation process. Same for many vision statements. Let us take an example of one that is not too bad:
...combines our competencies in information, training and management solutions and services to address our customers' mission critical problems. We thrive in environments when the need for agility, creativity, efficiency, and change management are essential, resulting in success for our customers and meaningful careers for our employees.
The mission clearly articulates what the organization does and the purpose. It uses core competencies to solve critical customer problems. Some one looking at the mission statement can readily determine whether an action they are taking contributes to the mission or not. A customer can easily determine whether the organization may help them or not. If a mission statement does not do these simple things, it probably needs work. This is important, since strategy should flow from the mission statement and provide the vehicle to achieve it.
The mission/vision must be able to pass both the "so what?" test and the "elevator" test. After reading a mission can the reader clearly understand what is unique about the organization and what it does? Does it provide enough information to govern resource allocation and focus decisions?
Strategic ExecutionOnce the organization identifies its vital ends, mission, and vision, it then needs to determine how to achieve them. There is an old saying, "if you don't know where you're going, any road will get you there". If the organization properly identifies the vital ends/goals/interests then it does know where it is going and now must determine the best "road" to get there.
The fundamental key is to ensure that all the organization's efforts are aligned to the strategy. While that seems like common sense, in the day-to-day management of tasks the strategy can sometimes get forgotten and the organization can drift from strategic execution to a tactical mindset of solving the day's or quarter's issues. The strategic "how" needs to clearly state what the organization will do to achieve the vital goals and provide a comprehensible, high-level map. This could range from growing a critical part of the organization to shutting down a non-critical part that may be draining resources away from the strategic goals. In its essence, it needs to chart a path from the current state to the desired state and provide the organization's members with the tools to evaluate whether their activities support or inhibit strategic execution. Tools such as the Strategy Map may help in this process, provided the organization adapts the basic concept to meet their requirements.
Execution details should be linked to this clear map and provide a way to show how each activity supports a stategic goal. If an activity in the strategic execution plan cannot be readily linked to a goal, then it may either be irrelevant to the strategy, highlight ineffective activities or highlight a weakness in the strategy.
Measuring SuccessA strategy is designed to accomplish something. Measuring strategy then is the measurement of how well that something is accomplished. That means measuring the actual implementation as well as the outcome. The first are measures are performance. Is the organization doing what the strategy says/executing the strategic plan. These are useful measures from an execution management perspective, but don't necessarily measure success. Doing a counter-productive task well is...well counterproductive. The second measure are measures of effectiveness. Are we actually achieving our strategic goals. That implies that:
The strategic plan must define MOPs and MOEs and then ensure that the tools used to execute the strategy have metrics that gather data on them, tools to analyze the data, and dashboards that display the results.
Otherwise, the strategy is just words.