The most difficult challenges facing most firms involve strategy and change. In my experience as a senior executive and coach, these two areas, along with innovation, are among the most frequently cited developmental gaps for leaders. CEOs often decry the lack of strategic thinking and the ability to manage change as the biggest restrainers of success in their organizations. A closer examination provides a ready explanation.
Strategy and change are inextricably interwoven. To be adept in either requires expertise in both. But most leaders do not appreciate this nuance and therein lies the heart of the matter. There can be no effective strategy without change, and change without strategic underpinning is nothing but a costly distraction. Allow me to digress so as to elaborate.
Numerous tomes have been dedicated to strategy, and many high-end consulting firms have made strategy their stock-in-trade. The lack of confidence that BODs and CEOs feel about the strategic capability of their leaders has put many an S-class Mercedes in the driveway of high-end consultants. After all, the thinking goes, my people do not all possess an MBA from an elite B-school and we don’t employ a cadre of newly minted associates dumpster diving in the trash bins of competitors, so we cannot be very good at strategy. Ah, but if we pay a couple of hundred grand to a high end consulting shop, all of our strategic questions will be answered. Not only is this thinking often off the mark, it is also potentially dangerous.
I think back to the Fortune 500 organization in a declining product category that turned to the elite strategy consultants to help re-vector their revenue swoon. The expert answer was to consolidate, by half, the distribution network to create scale and efficiency in the survivors. The internal P & L managers were terrified by this recommendation, but executive leadership pushed ahead nonetheless. The resulting 50% decline in revenue put S-class Mercedes in the driveways of their consultants AND competitors. Ouch.
So at the risk of over-simplification, allow me to provide this definition of strategy- To apply your offering in a way that out positions your competitors to exploit market opportunities. It is certainly not complicated. Plus it reinforces the importance of your own people who understand your offering, competitors and markets better than anyone else. But there is a challenge, which brings me back to the linkage of strategy and change.
To exploit market opportunities requires that your firm and its leaders be agile, deft and change-able. Markets do not stand still. They constantly evolve to adapt to a changing world. You need look no further than the current shift from PCs to mobile devices to see this phenomenon at work. But if your leaders and organization are slow to change, then no amount of strategic planning and meeting will make a difference. I believe that this is the factor which causes so many leaders in firms to see strategic planning as a waste of time. In these circumstances, it is.
Likewise, change without strategic direction, is even more destructive. Such change is costly and takes significant energy out of the organization. Even more insidiously, it provides the illusion of moving forward, when it is simply change for change’s sake.
The moral of the story is clear. Strategy without change, or change without strategy, are at best a waste of time and at worst a catastrophic mistake. Except maybe for your competitors with a hankering for an S-class.