Saturday Essay: The Art Of Strategic Planning: The Good Governance Guide To StrategySue Lawrence, Chartered Director, Fellow of the IoD, founder of Independent Directors and Trustees Limited and series editor for The Chartered Governance Institute UK & Ireland’s ‘Good Governance Guide’ series, lifts the lid on strategy.
Image by Gerd Altmann
All organisations have a strategy, whether they’re aware of it or not, and whether they clearly communicate it or not. Without this forward focus the future health and growth of the organisation is in jeopardy and there is the risk that the organisation will, at the least, plateau and drift, if not fail or fall into the hands of others seeking to acquire or asset strip.
This can be set alongside the competitive markets in which most businesses work, or the wider impact that all organisations can have on society, the environment and their broad range of stakeholders.
So when looking across any organisation, including commercial businesses, charities, and the public sector, having a clear strategy is imperative in delivering against purpose, and creating and maintaining an organisation for the future. Clearly setting goals and objectives, highlighting priorities whilst simultaneously being able to adjust and adapt as internal and external influences are seen.
The current Covid crisis has been a case in point. We can all no doubt identify examples of organisations that have thrived, have potentially pivoted to changing requirements or conversely have drifted, and in some cases failed. These outcomes may not have been enhanced or avoided by having a good strategy, but decisions could have been pro-actively taken from a position of strength having reviewed, discussed and identified strategic aims and actions in previous times. Having been through the process before, pivoting as a result of a significant impact such as Covid, is still not simple but it can be easier.
In simpler times, commercial businesses in particular seek to thrive in often very competitive markets. In doing so they seek to increase the value of their business so that they can ensure its continued existence. The retail sector is a case in point, competitive within itself, with online propositions creating even greater competition.
In the modern world, and with increasing challenge and expectations, businesses are also expected to make a positive impact on society, protect the environment in which they operate and deliver against the needs of a broad range of stakeholders, not just their shareholders. Whether they succeed or not is often determined by the effectiveness of the strategy that the business follows – the plan that helps guide decisions and allows managers to use resources effectively to achieve key objectives.
Image by Gerd Altmann
Indeed Jack Welch, the American business executive who led General Electric through two decades of remarkable corporate prosperity, said that “Strategy is simply resource allocation. When you strip away all the noise, that’s what it comes down to. Strategy means making clear cut choices about how to compete. You cannot be everything to everybody, no matter what the size of your business or how deep its pockets.”
It sounds simple, but undoubtedly it is not. Many businesses have tried and failed and often this is down to having the wrong strategy, not knowing how to set one properly in the first place, refusing to adapt a strategy once it is in place or failing to implement it effectively. Take the well-known example of Kodak, which was synonymous with photography. Their print processing methods were global and technologically they were ahead of the competition, having invented the digital camera in 1975.
Yet despite having produced a report on predicted future trends in the market, management decided that the technology would not disrupt the market and failed to capitalise on their insight to introduce strategic change.
As American economist Michael E Porter proclaimed, “The essence of strategy is choosing what not to do”. In this instance choosing to do nothing was as great an error as backing the wrong horse. Failure to change strategy saw Kodak lose 75% of its value and the fact that it filed for bankruptcy in 2012 brings to mind another often quoted phrase from Sir Winston Churchill who advised that “However beautiful the strategy, you should occasionally look at the results.”
Image by Wokandapix from Pixabay
Strategy focusses on the future but it starts from the ‘today’. Given that the starting point of ‘today’ is constantly moving, the journey to the ‘future’ state will take a number of twists and turns resulting from both internal and external forces. Recognising that impacts, changes and influences have an impact from today onwards should be a key part of any strategic discussion as the end position from the implementation of a strategy is unlikely to be exactly as planned.
Planning strategy can seem overwhelming to anyone unfamiliar with the terminology or the numerous models that there are to choose from. Anyone seeking practical support in setting, documenting, reviewing and implementing a strategic plan for their organisation could do worse than to refer to new book The Good Governance Guide to Strategy
, which provides a beneficial explanation of the terms and models used in considering strategy and making strategic discussions.
It also provides useful tools and measures to aid the implementation of strategic initiatives. Written by business consultant Mark Wearden, it tackles the broad topic of business strategy from both an academic and practical perspective, building on the nature of different organisations, the theoretical tools for setting strategy and the implementation of strategy. UK and international examples from across sectors, including retail and charities, are used to evidence how strategy can be applied within an organisation.
Set out over six sections, that are easy to dip in and out of, the layout of the book covers everything from theoretical strategy models such as Porters 5 Forces, the characteristics of strategic choices, the development of strategy and a strategic plan, to the organisational impact of strategic choices. Readers will be able to reflect on implementing strategy in various organisational structures, whether traditional top down, emerging or entrepreneurial. Plus there are chapters on the organisational impact of implementing change, as well as the change process itself and the impact on employees.
The purpose of an organisation, its environment and its stakeholders and how these can influence strategy setting are all covered. This is particularly important given the current focus on purpose globally. Social injustice, environmental concerns, the ethics of new technologies, such considerations all have a huge and growing impact on organisational purpose, particularly seem through the prism of the coronavirus pandemic which has laid bare numerous societal disparities that business is expected to help solve.
In many organisations, strategy is a misunderstood word, often linked to formal documented plans that take time to structure, time that is taken away from leading a business or driving for success. Whether there is already a strategy in place and documented, or an underpinning undocumented organisational philosophy, this book will provide areas for consideration in further developing plans for a business.
Image by Gerd Altmann
"There is nothing so useless as doing efficiently that which should not be done at all." — Peter Drucker
The expectation is that if the strategic goals are identified, the priorities to deliver those goals can be at the forefront of the minds of those involved, thus enabling a better chance to deliver both in the initiatives but also in the aligned growth for the company.
By taking the time to use The Good Governance Guide to Strategy, short term goals, budgets, sales targets, market knowledge, sector and competitor awareness and the plethora of knowledge already within the business (or in the mind of its leader) can be harnessed into something tangible for the future, effectively, its strategic plan. The framework from this book supports a more focussed approach, joining the dots and enabling better prioritisation and target setting.
Reading the book won’t create the strategy or deliver success in and of itself, but it will provide a useful guide for those interested in understanding more about what it is and how to apply it.
The Good Governance Guide to Strategy
is one of a series of three good governance guides published by The Chartered Governance Institute and edited by Sue Lawrence. The series also includes The Good Governance Guide to Boardroom Dynamics
and The Good Governance Guide to Risk Management.
Each of these books started life as formal study texts but have been updated and remodelled to provide useful texts for the practitioner. They keep the theoretical knowledge, but overlay practical application for use within a business context. Each can be read in isolation to provide foundational knowledge on the topic, but are most useful when also used to support practical application.
The books cover three of the most topical areas for any business seeking to benefit the most from having focussed and effective leadership. This book on strategy seeks to increase understanding of what strategy could be in any organisation and how, when applied in a logical and methodical way, utilising theoretical models, it can support further future growth.
The Good Governance Guide to Boardroom Dynamics,
recognises that, the leadership of any organisation is made up of individuals with individual strengths, abilities, experience and capabilities. By harnessing these to create a collective team, drawing on strengths to work well together, both the organisation, and the individuals themselves will be better positioned for success.
The third book in the series reflects on risk management, which, given the current circumstances is a hot topic. Not only does this book introduce risk in general, it also walks through frameworks for risk management within organisations and explains what Enterprise Risk Management, ERM as a recent hot risk phrase, entails.
Do you need to buy all three books? No, they all stand independently within their subject. But if you’re interested in these wider governance topics, the way these are presented, combining theory and practical application, could support your business knowledge and enable you to connect the dots between these topics.
All three books in this series are available to purchase as a download or printed book via https://www.cgi.org.uk/
Ian Garner will be reviewing the last two book in the series over the next few weeks.