Strategy is the path a business chooses to realize its vision, often marked out by milestones set out in a Medium Term Plan (MTP) over three to five years. Our environment changes so rapidly, it would be futile to project any further ahead.
And yet the execution of the strategy remains a difficulty for most businesses.
In reality, the difficulty does not reside in the implementation of actions arising from strategic thinking. Most organizations have a strategy that breaks down into a series of strategic objectives that, in turn, cascade down through the business and transform into a series of action plans. In most cases, the budget is the detailed iteration of the first year of the strategic plan.
The difficulty stems from the fact that this strategy, and the accompanying budget, were drawn up at a given moment in the year, and hence in a particular competitive environment and based on a certain number of hypotheses. The more time goes by, the more the competitive environment will change (and it is increasingly clear that the pace of this change is accelerating), and the more these hypotheses risk proving to be, at least partially, unfounded.
This difficulty was neatly summed up by Jack Welch in the 90s: “Strategy is not a lengthy action plan. It is the evolution of a central idea through continually changing circumstances. That’s why strategy has to be dynamic and anticipatory”.
Steering execution of the strategy thus becomes essential in order to be able to change, to adapt our actions to the new environment whilst bearing in mind the need to achieve our MTP.
Businesses come up against two major barriers to steering execution of the strategy.
1st barrier: focusing solely on short-term annual objectives and ignoring the medium-term objectives of the MTP
In focusing solely on budget targets, i.e. on the short-term annual objective, businesses confine themselves to steering execution of the strategy as initially defined. We have seen, however, that if the environment changes, the strategy must be able to evolve while still adhering to the medium-term objective. Which means that the annual objective can/must be reconsidered if this guarantees achieving the objective of the MTP. Focusing exclusively on the annual horizon can, in fact, be counterproductive; it can actually jeopardize achieving the objective of the MTP.
2nd barrier: operating in silos, often to the detriment of cross-functional management
When you seek to modify your actions to support the evolution of your strategy, any modification must be implemented in a coordinated fashion across the board of all those concerned. If the modification affects only one silo (one department or one division), coordination generally takes place fairly naturally. If the modification cuts across different functions, however, coordination becomes much more difficult (even impossible, in some cases), because the fact of operating in silos will act as a major barrier. In most cases, this coordination will be crucial to successful implementation of the modification.
Dynamic, anticipatory strategy
If it to remove these two barriers, the business must take into account its medium-term objectives at regular intervals, as and when the environment evolves, and must ensure, when reaching cross-functional decisions, proper coordination in implementing any new actions.
This is why we created the SteerVision Center, the GPS for your business.
This is a dedicated space where your management team can meet regularly (monthly) to steer the execution of the strategy, facilitate cross-functional coordination and thereby guarantee a dynamic, anticipatory strategy.