9:48 AM Tuesday January 18, 2011
by Tony Golsby-Smith |
A friend of mine who had taken over running a major government department noticed right away how abused the word "strategy" was. "Everything has to be a strategy in order to get noticed," he told me. "You practically need a strategy for visiting the restroom."
The second thing he noticed was that nobody was actually thinking strategically. The more the word was used, he said, the less meaningful it became. It was as if "strategy" was synonymous with a long-drawn-out, badly managed budgeting process.
Ideally, developing a strategy should be exciting: strategy making is about creating a future for your organization, and engaging your people in that process. But all too often, the budget-planning monster weighs an organization down with endless inputs and bureaucracy and rules. The monster does not create coherence. It does not create energy. It does not excite people. No wonder companies have trouble inventing new products, services, and futures.
So how can strategy free itself from the budget-planning monster?
Reframe strategy as a story. Strategy is not about streamlining or improving present operations or organizational structures. It is not about a budget, a yearly plan, or solving a specific problem. It is a compelling story about discovering the firm's unrealized possibilities. It's also about imagining a big, bold goal and designing ways to reach that goal.
Separate the strategic planning process from the budgeting process. Every leader has two jobs: to run the operation as it exists today, and to rethink the organization so that it can survive and thrive into the future. These are two distinct jobs. The budgetary and business planning system helps the organization manage today's operations; it also extrapolates into the near future. The strategic system, on the other hand, confronts an uncertain, further-off future and imagines a desired future state. When the two activities are conflated, the strong, data-driven budgeting process can overwhelm the more fragile (but equally important) strategy-making process.
I suggest setting up two separate systems — one for strategy, and one for the budget. The strategy-making system should focus on building the company's "argument" — its reason for being, its value statement, its goals and ambitions for the future. This system has longer time horizons, and its budget should be taken from an investment fund dedicated to that purpose. The budgeting system, by contrast, should be built around key performance indicators with shorter time horizons.
Set aside time and space for strategy. Too often, the very people who should be charting the future get so sucked into the operational quagmire that they have no time to think about where the firm should be going. I recommend setting aside one to two days every quarter when you pull together your best thinkers from across the company to have an offsite strategic conversation about the firm. The discussion should focus on three big, essential, questions:
- What have we been so far?
- Dreaming big, what do we want to be?
- And finally, what is our path for getting there?