Strategic Thinker Issue 4.2009 - The 10 Deadly Sins That Lead To Strategic Malaise

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“It’s easy to develop a strategy; it’s the implementation that’s difficult”. How often have you heard this statement? You might even have uttered it yourself! Our experience globally shows the exact opposite to be true. If a CEO or entrepreneur thinks that he or she has a solid strategy, and yet it is not being implemented, there can only be one of two things happening: 1. The management team doesn’t know or understand the strategy. (It is very difficult to implement a secret strategy!) 2. If the strategy is understood but still not being implemented, it is because some members of the management team don’t agree with it and may, in fact, be trying to sabotage it. Our view is that there are 10 deadly sins that an organization can commit that will inevitably lead to these two conditions – and eventually to corporate extinction. Read on to find out.
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    © 2009 DECISION PROCESSES INTERNATIONAL ASIA PRIVATE LIMITED Address : 1 Sophia, #04-16 Peace Centre, Singapore 228149 Tel : 6235 1733 Fax: 6336 8022 Email :enquiries@dpi-asia.com Asian Site :www.dpi-asia.com Asian Blog : dpi-asia.blogspot.com Global Site : www.decisionprocesses.com Issue 4/09: 10 Deadly SinsThat Lead To Strategic Malaise?   “It’s easy to develop a strategy;it’s the implementation that’sdifficult.” This is a statement we have frequently heard over theyears. Our own experience proves the exact opposite to be true.If a CEO thinks that he or she has a solid strategy, and yet it’s notbeing implemented, only one of two things can be happening:1.   The management team doesn’t know or understand thestrategy. (It is very difficult to implement a secretstrategy.)2.   If the strategy is understood but still not beingimplemented, it’s because some members of themanagement team don’t agree with it and may, in fact,be trying to sabotage it.In our view, there are 10 deadly sins that an organization cancommit that will inevitably lead to these two conditions andeventually to corporate extinction. Sin 1: Strategy By Osmosis In too many organizations, the strategy of the company isimplicit and resides solely in the head of the chief executive.Most CEOs have some kind of strategy. However, they oftenhave great difficulty articulating it to the people around them inwords that allow these people to make consistent and intelligentdecisions on behalf the company. A seniorexecutive of a major company once said tous, “The reason I have difficultyimplementing my CEO’s strategy is that Idon’t know what it is!”Because many CEOs have difficultyverbalizing their strategies, most people areplaced in the position of having to “guess”what the strategy is.The trouble is that they may guess wrong as often as theyguess right. Or else they learn what the strategy is over time bythe nature of the decisions they recommend that are eitheraccepted or rejected. Gradually, a subordinate learns where theline of demarcation is between the things that are permitted bythe strategy and those that are not. This is called “strategy bygroping”. This results when the strategy becomes clear orexplicit only over a long period of time, during which peoplemay have spent too much time pursuing and implementingactivities that did not fit, while neglecting opportunities thatrepresented a better strategic fit. Worse than that, the strategymay never become clear, or it may be badly misinterpreted bypeople making an earnest effort to figure it out.As one of our CEO clients once told us after our initialsession: “I was astonished that our senior management grouphad no concept of our strategy and disagreed with it once theylearned of it.” Lesson 1: People can’t implement a strategy that has notbeen revealed to them. Sin 2: Strategy In Isolation A second reason the strategy may not be implementedproperly is that the CEO developed it in isolation. This is anatural enough tendency, since a CEO’s job is strategy.Furthermore, most subordinates have no experience thinkingstrategically, so there is no inclination, or framework, to involveothers.Many CEOs have a strategy, but their keypeople are not involved in the process of developing it and therefore they have noownership. In such a case, subordinatesusually do not understand the rationale behindthe strategy and will spend more timequestioning it, or trying to figure out wherethey fit, than implementing it. The Strategic  Thinker   SM PURE   & SIMPLE Advice To Gain Supremacy Of Your Sandbox SM   In too many organizations, thestrategy of the company isimplicit and resides solely in the head of the CEO      © 2009 DECISION PROCESSES INTERNATIONAL ASIA PRIVATE LIMITED Address : 1 Sophia, #04-16 Peace Centre, Singapore 228149 Tel : 6235 1733 Fax: 6336 8022 Email :enquiries@dpi-asia.com Asian Site :www.dpi-asia.com Asian Blog : dpi-asia.blogspot.com Global Site : www.decisionprocesses.comThe CEO becomes more and more impatient as subordinatesquestion his or her logic more and more often. The CEO, on theother hand, can’t comprehend why his people are not executingwhat, to him or her, is a simple strategy.Some CEOs might involve one or two people in theformulation of the strategy. This is better than doing it alone, butit is still not good enough. The entire management team must beinvolved in order to achieve accurate understanding and properexecution. This can’t be accomplished simply by “going offsite”with this group to discuss the strategy. A methodology, orprocess, is needed to guide the discussion and keep it“strategic,” not operational. This is the basis of DPI’s StrategicThinking Process. Involvement by senior managers in the basicstrategic decisions is the most effective way to create a strategythat not only looks good on paper but also actually getsimplemented. Lesson 2: People don’t implement what they don’tunderstand. Sin 3: Outsourcing The Strategy To AnOutside Consultant  The worst of all strategic crimes and the“kiss of death” for any strategy – even a goodone – is to have an outside consultantdevelop your strategy. No outside consultanthas the right to set the direction of yourorganization or knows as much as your ownpeople about the business and theenvironment it is facing. Most strategiesdeveloped by outside consultants end up in the wastepaperbasket for two reasons:1.   Everyone can quickly tear the conclusions apart becausethey are not based on an intimate knowledge of thecompany, the business, or the industry.2.   There is no commitment to that strategy by seniormanagement because it is not their strategy.Experience has shown that almost any strategy will work tosome degree, unless it is completely invalidated by negativeenvironmental factors. Experience has also shown, however, thatno strategy will work as well as it should if a couple or a fewmembers of senior management are not committed to thatstrategy.In effect, if total commitment is not present, thoseuncommitted to the strategy will at best implement ithalfheartedly and, at worst, on a day-to-day basis, do everythingin their power to prove it wrong.In order to obtain commitment, key managers must beinvolved at each step of the process so that their views are heardand discussed. Participation, although it may seem timeconsuming, builds commitment and, in our experience, savesexponentially more time on the deployment end of the equation.Key managers buy into the strategy because they helpedconstruct it. It is as much their strategy as the CEO’s.Many CEOs have used our process knowing the outcome inadvance. They did so anyway, using it as a tool to tap the adviceand knowledge of their people and to obtain commitment to theconclusions, so that implementation of the strategy can thenproceed expeditiously. Still others, thinking they knew what theoutcome would be, discovered new ideas, or flaws in theirassumptions that would have caused difficulties down the road.By gathering the collective knowledge of key people, such ideascan be evaluated and problems can be flushed out and dealtwith before they happen. Lesson 3: Don’t outsource your thinkingto an outside consultant. Sin 4: Operational Managers Are Not Trained As Strategic Thinkers Because most people spend their entirecareers with an organization dealingexclusively with operational issues, they arenot good strategic thinkers, as noted earlier.With few exceptions, we have found that onlythe CEO or the general manager sees the “bigpicture” and views the business and itsenvironment in strategic terms. There usuallyis only one strategist in any organization, andthat is the CEO. Most managers are so engrossed in operationalactivity that they have not developed the skill of thinkingstrategically. Therefore, they have difficulty coping with strategicissues, especially if these are sprung on them out of the blue at a“retreat.”“The problem,” says Milton Lauenstein (a planning guru) inan article in the  Journal of Business Strategy “is that manyexecutives have only the fuzziest notion of the functions of strategy formulation.” This is why a process that guides themanagement team through these strategic issues is essential.Expecting your operational people to suddenly becomestrategists without such a tool will create more problems than itsolves. On the flip side, given such a process, most seniormanagers will surprise you with their ability to think strategicallyand creatively once they have the framework, permission, andopportunity to do it. Lesson 4: Encourage the participation of key subordinatesin the strategy creation process for strictly educational value. Many CEOs have a strategy, but their key people are not involved in the process of developing it and therefore they have no ownership.   The worst of all strategic crimes and the “kiss of death” for any strategy –even a good one – is tohave an outsideconsultant develop your strategy.      © 2009 DECISION PROCESSES INTERNATIONAL ASIA PRIVATE LIMITED Address : 1 Sophia, #04-16 Peace Centre, Singapore 228149 Tel : 6235 1733 Fax: 6336 8022 Email :enquiries@dpi-asia.com Asian Site :www.dpi-asia.com Asian Blog : dpi-asia.blogspot.com Global Site : www.decisionprocesses.com Sin 5: Planning Numberosis People will implement a strategy more effectively if theyunderstand the difference between a strategic process and eitherlong-range or operational planning. They also need to be able todistinguish between strategic and operational issues.Participation in a clearly strategic process is an eye-opener formost managers. Most have never participated in a strategysession, or if they have, most find that they have primarily dealtwith operational issues, and so never learn the difference. Again,Milton Lauenstein concurs:Management should understand that planningencompasses two distinct functions: long-range operationalplanning and strategy formulation. Confusing these twoactivities has contributed to the sorry record of strategicplanning. They are better performed separately.The process needed to determine the future direction of anorganization is not strategic planning but rather strategicthinking. Strategic thinking is a process that enables themanagement team to sit together and think through thequalitative aspects of the business and its environment. The teamcan then decide on a common and shared vision for the future of that company.Although most companies have very sophisticatedoperational planning systems, they do not have a formal processof strategic thinking. As a result, even when they do want tospend some time at the “mountaintop retreat” to think through“where we are going as a company,” they usually do not have aprocess to “think strategically” and quickly revert back to whatthey do best - operational issues!Some companies have attempted to stitch together somestrategic and some operational concepts into a “process,”making the exercise laborious and confusing. Our suggestion isthat the processes are different and must be separated. Thefactors and elements studied and evaluated in the StrategicThinking Process are not the same as those in the operationalplanning system. For this reason, different time slots should beallocated to each process. Lesson 5: Planning does not a strategy make. Sin 6: Meaningless Mission Statements These days, almost every organization has a mission orvision statement constructed to articulate the business’s raisond’être. Unfortunately, the efforts expended are usually nothelpful because they lack a structured process that could helpthem in their discussions. As a result, they end up withstatements that are so “motherhood” in tone that everyone canagree with them, but are useless as guides to help people makeintelligent decisions on behalf of the group. Over time, thestatement is quietly discarded. Lesson 6: A strategy statement must serve as a filter fordecisions. Sin 7: No Crisis, No Strategy  Good times are another obstacle that impedes strategicthinking. When the numbers are good and all the charts arepointing upward, who needs to think about where they aregoing? The need to think about strategy and direction usuallysurfaces after a crisis. Our view is that strategic thinking shouldoccur during good times as well as bad times because, if youwait until the bad times, it obviously becomes more difficult.Bill Gates, one of the business world’s foremost strategicthinkers, is of this opinion as well: My success in business has largely been the resultof my ability to focus on long-term goals andignore short-term distractions. Taking a long-termview does not require brilliance but it does requirededication. When your business is healthy, it isdifficult to behave as if you are in a crisis. That iswhy one of the toughest parts of managing,especially in a high-tech business, is to recognizethe need for change and make it while you stillhave a chance. Lesson 7: Strategizing should occur during good times aswell as bad. Sin 8: The Critical Issues Are Not Identified One aspect of strategy is its formulation. Another is thinkingthrough its implications. Most strategic planning systems wehave seen used in organizations don’t encourage people to thinkthrough the implications of their strategy. As a result, they endup reacting to events as they are encountered and many peoplestart losing faith in the strategy.Every strategy, especially if it represents a change of direction, has implications. A good strategic process should helpmanagement identify, anticipate, and effectively manage thestrategy’s implications on the company’s products, markets,customers, organization structure, systems, processes, personnel,and culture. Lesson 8: Thinking through a strategy’s implications is keyto its success.  Although most companies have very sophisticated operational planning systems, they do not have a formal  process of strategic thinking.      © 2009 DECISION PROCESSES INTERNATIONAL ASIA PRIVATE LIMITED Address : 1 Sophia, #04-16 Peace Centre, Singapore 228149 Tel : 6235 1733 Fax: 6336 8022 Email :enquiries@dpi-asia.com Asian Site :www.dpi-asia.com Asian Blog : dpi-asia.blogspot.com Global Site : www.decisionprocesses.com Sin 9: Not Understanding The Different BetweenProcess And Content  In every strategy session that we facilitate, there are alwaystwo dynamics at work, namely process and content. Content isinformation or knowledge that is company or industry specific.Telephone company executives know a lot about cables, switchgears, exchanges, routing, analog or digital devices,transmission, and so on. They know all this “content” becausethey were “brought up” in the industry and that is the contentthat is specific to that industry. It is part and parcel of theirlexicon.In order to climb up the ladder in most companies one needsto be a “content expert.” This is necessary in order to be able tomanage your way through the day-to-day “content-laden”operational issues. Most executives get to the top of theirrespective silos because of their content expertise, and rightly so.At the strategic level, which is above the silos, contentexpertise alone is not sufficient. In fact, too much contentknowledge may be a major impediment to good strategicthinking. This is because strategic thinking is process basedrather than content based.Operational management requiresthe skill of analysis while strategicmanagement requires the skill of synthesis. These are very differentskills.Analysis is the ability to studycontent and put it into logicalquantitative pieces. Synthesis is theability to make rational decisionsbased on highly subjective, sometimes ambiguous orincomplete, pieces of data. Synthesis is highly qualitative innature. Strategic thinking falls into this category. It is the abilityto take subjective data and opinions and bring these into anobjective forum where rational decisions about the future of theenterprise can be made. In order to achieve this outcome, a CEOmust have a “process of strategic thinking” that enables the CEOand the management team to assemble all available information,put it into perspective, separate pertinent from nonpertinentinformation, and draw out rational conclusions.This approach works especially well for groups of decisionmakers in that it organizes information, separates fact from myth,and enables groups to reach consensus decisions objectively.Strategic thinking is, essentially, applied common sense, and iseasy for anyone to understand once the methodology isavailable. Lesson 9: Good strategic thinkers separate process fromcontent Sin 10: Using A Content Consultant  A CEO who elects to seek outside assistance to help decidethe future direction of the company is faced with having tochoose between two very different types of consultants.One is the “content” consultant. This is the traditional type of firm such as McKinsey, Bain, Boston Consulting Group, andMonitor. These consultants’ claim to fame is that they have“industry experts” who know their industry better than the clientdoes. Their objective is to formulate a strategy for you since yourpeople are not as knowledgeable as their “experts.” In otherwords, they do it for you, or to you.In our view, this form of consulting may be appropriate inregards to operational issues, but it is not appropriate to strategicand strategic direction. These firms are “content” consultantsand they are selling content.Unfortunately, they sell the same content to all their clientsin that industry. The best result is a me-too strategy that does notset you apart from your competitors and will never bringsupremacy over them. You are, in our humble opinion,outsourcing your thinking.A better service to a CEO and the management team, in ourview, is to bring them a criticalthinking process and guide themthrough that process. It is theircontent going into the processand it is their content comingout. When the strategy has beenconstructed by the people whohave the best content to offerand who also have a vital stakein the outcome, such a strategygets implemented much more quickly and much moresuccessfully than one that is imposed on them by an outsidethird party.Laurie Dippenaar, CEO of FirstRand, one of South Africa’slargest financial services firms, agreed after the company usedour process. “What’s affected us more than anything else is thefact that is systematically extracts the thinking andideas from the executives’ heads, rather thanimposing the consultant’s thinking. I think it almostforces it out of their heads. That obviously leads tothe strategy being owned by the company, ratherthan by the consultant. I’m not just repeating whatDPI says, it actually works that way.” Lesson 10: Process assistance speeds up strategyimplementation.   The Strategic Thinker SM is produced by DPI Asia, the Asian operations of Decision Processes International, a global management consulting and humancapital development firm specializing in critical thinking processes that help organizations transform the way they conduct their business.It is an insightful series of articles that take a PURE & SIMPLE SM look at the essential aspects, concepts and process of strategic thinking that separate winnersfrom the rest.To obtain more articles register for our blog at www.dpi-asia.com or dpi-asia.blogspot.com   Every strategy, especially if it representsa change of direction, hasimplications… on the company’s products, markets, customers,organization structure, systems, processes, personnel, and culture.  
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