Most organisations would claim they have a business strategy, but is it a living, breathing guide for decision making or a piece of paper no-one looks at? If it is a guide for decision-making, is it used by the senior management team, or does it permeate down to those who actually do the work? Is there strategic alignment?
What is Business Strategy?
I have seen many different business strategy definitions over the years. They range from simple one liners, “create and capture value,” to lengthy paragraphs. One example says that “a business strategy is the means by which it sets out to achieve its desired ends (objectives). It can simply be described as long-term business planning. Typically, a business strategy will cover a period of about 3-5 years (sometimes even longer).”
In all instances, an organisation’s strategy will be supported by operational plans. These will detail how a team or department will contribute to the achievement of the organisation’s strategic goals. With constant changing market conditions, any operational plans should be changed to react but the overall vision and strategy should be longer term and more embedded. That said, it’s important to note that strategy is not static. It should be flexed to meet long-term goals as they change and strenuous efforts need to be made to secure the continued strategic alignment of the organisation.
“If the plan doesn’t work, change the plan but never the goal.”
In sport, players and teams often go into matches with a clear plan of how to neutralise the opposition and to target their weaknesses. However, good players and teams in all sports are well prepared to be flexible enough to cope with whatever the opposition throws at them.
Mohammed Ali’s “Rumble in the Jungle” with George Foreman in 1974 is a great example of this. During the opening round, Ali used his usual fighting style, but George was too big. So, in the second round Ali changed his tactics and attempted to tire George. His new ‘rope-a-dope’ tactic allowed him to realise his overall goal of a knockout in round eight.
To find out more read our paper, Facing into Organisational Change.
Why does Business Strategy matter?
It may seem obvious, but if you don’t know where you are going you are unlikely to get there. Having a strategic plan is important to any organisation’s success.
“The reason why having a strategy is so important is because it gives business time to get a sense of how they are performing, what their capabilities are, and if these capabilities are able to help them grow.”
Back in the 1990s Blockbuster was a successful video rental business. The company gave customers the chance to rent films from their local shop to watch at home. By extending their strategy they used franchising and acquisitions to accelerate the growth of their business, including entering the UK market. Their core strategy remained unchanged when they switched to supplying DVDs.
In 1997, Netflix entered the market as a small online retailer with a new business model. Customers paid a monthly subscription, selected the films they wanted to borrow and waited for them to be delivered to them at home. They also no longer faced fines for returning films late.
Blockbuster missed the chance to own Netflix when executives turned down the offer to buy the company for a widely-quoted figure of $50m. Netflix approached Blockbuster on more than one occasion, but according to some reports, Blockbuster chiefs laughed at the idea. Blockbuster was too slow to adapt its strategy based on the changing market. It didn’t have the vision to see the film rental market was changing.
Why does a great strategy fail to deliver?
There are many reasons why a good strategy fails to deliver the benefits that were expected. Some of the most widely mentioned reasons include poor leadership, poor communication, lack of employee engagement, lack of clarity, not thinking about all the contributing factors and not moving quickly enough. I would sum this all up as a failure to secure strategic alignment and critically the failure of an organisations to engage and harness the power of its middle managers.
Role of middle managers in implementing the strategy
Typically, middle managers are told what they need to achieve but without the business context of why it is important to their organisation’s long-term strategy and vision. However, they understand the environment they work in and if briefed on the strategy can be instrumental in building better plans while also developing their own capacity for strategic thinking.
The Middle Manager Lifeline Report (CIM 2016) says that “middle managers make an organisation’s strategic purpose a reality on the ground. They play a central role in managing and guiding its people. They shape the development of the next generation’s potential. They are, in short, the lifeblood of an organisation.” This highlights how important this group of people are in ensuring strategic alignment within the organisation.
The same report also found that while “two-thirds (66%) of middle managers feel they have the ability to engage and inspire their reports when briefing them on organisational strategy, only 31% feel very confident communicating this information to their reports.” Instead of being a vital artery pumping information around the business, this layer of management is actually creating a blockage. That blockage has a huge impact on the ability to build trust within the organisation. 64% of respondents said lack of information from the top of the business prevented them from building trust, which is a serious problem when trust is believed to be critical for organisational performance.
Business Strategy Games: Developing middle managers so they can deliver
Many managers are pragmatic and action orientated. To feel what they are learning is relevant they need to do something rather than being told something. Experiential learning has been proven to be more successful than traditional classroom teaching methods. Read our whitepaper to find out more.
Our business strategy games help managers to develop their strategic thinking and to see the company as a whole rather than just one function. Whilst managers are looking for additional communication skills strategic thinking is the top skill that managers need.
Participants can experience, test and challenge some of the reasons that implementation fails in a safe environment. They can see how good leadership, great communication, strong employee engagement, clear goals and thinking about all the contributing factors can positively influence an organisation’s success. It allows them to learn about the relationships between actions and outcomes and evaluate the pros and cons of their choices.
When used as part of an activity communicating the corporate strategy a business game helps develop an understanding of why decisions are made, the trade-offs required and why not everyone gets what they want from the corporate strategy. Greater understanding on behalf of middle management will result in greater confidence, an ability to communicate the overall strategy so the expected outcomes are realised, and real strategic alignment.