Six tips for creating great business strategy
The responsibility for prolific business execution lies with the leader's ability to define and communicate strategy. Most business leaders can devise a business strategy that will set the course for execution (point the business in the desired direction). However, great leaders take the time to state and communicate their strategy in order to ‘enable' execution. There is a fine but important line between stating objectives and enabling the desired execution.
What are strategic objectives? Your strategic objectives cover the areas in which your effort will be directed to drive your mission, vision and strategic competence. They are a statement of the business's top ambitions and aspirations. As such, the development of these critical objectives should not be taken lightly or rushed over.
To demonstrate the challenge in creating strategic objectives that enable execution, consider these guidelines:
• Prioritize - Limit the number of strategic objectives for your business. There should only be a few strategic objectives - the challenge is to be able to count them on one hand.
• Balance - Many business leaders put too much emphasis on financial objectives. While financial objectives are essential, strategic objectives are more meaningful to the organization especially when they take into account customers, internal operations and employees in addition to financial performance.
• Quantify - Strategic objectives must be quantified. Simply put, you've got to be able to measure your objective to figure out whether or not you've succeeded.
• Orchestrate - Strategic objectives must be kept in concert. This simply means that the set of objectives can be tackled simultaneously and don't clash.
• Challenge - All objectives should be challenging but attainable. To enable execution, goal pressure is only effective if the goal is within the reach of the organization.
• Well-written - Strategic objectives should be detailed in well-focused statements that provide clarity and avoid uncertainty in communicating the chosen business direction. Also, make sure each objective focuses on a single theme as to avoid ambiguity.
As if this list isn't long enough, there is more to consider.
As part of the planning cycle where strategic objectives are set, business's leaders should evaluate existing projects, programs and other activities with respect to their contribution to the business. A ‘Stop List' communicates work activity that no longer supports the strategic objectives and should be stopped or phased out over time. Stated in the negative, not making and communicating these decisions and continuing to act on them will dilute the organizations resources and hinder strategy-execution alignment. The stop list will comprised of items that are:
• No long core to the strategy of the business, or
• On-going activities that the business leaders have considered less important and therefore outside the current-business focus.
One of the biggest questions surrounding objective setting is selecting the time horizon to be addressed. The time frame will not only influence the objectives, but will also dictate the business rhythm that should be established in order to evaluate progress. Here are some suggestions on how to adequately steer the business and enable execution:
• More mature and profitable businesses should consider a 3 to 5 year horizon for their objectives (depending on the dynamics of their specific market. This will dictate an annual, rolling-planning cycle with business and objective reviews on a quarterly basis.
• For new businesses and those struggling to succeed, a shorter time horizon is necessary. A one-year time horizon or less may be required due to the dynamic nature of the environment. With a shorter time horizon, business and objective reviews should be more frequent as well - monthly would be appropriate.
In all cases, it is good to regularly communicate the business status relative to the strategic objectives with the organization. This will reinforce the importance of the strategic objectives as well as providing insights into how well the business is progressing.
Companies that continue to experience difficulties executing should revisit their strategic objectives. If this applies to your business, make changes to your objectives by dong one of the following:
• Reduce the number of objectives (i.e. consider only the top three)
• Apply more focus on existing objectives (i.e. limit products, limit market segments, limit geographies)
• Rewrite the objectives with more clarity to eliminate misunderstanding.
• Review the objectives and business status more frequently
Once the organization has attained better execution capabilities, then the number of objectives and/or the frequency of business reviews can be adjusted accordingly.
Strategic objectives can be a significant factor in motivating the organization and enabling execution. Done well, they will reinforce your vision while acknowledging the organizations competencies and limitations. Enable execution in your organization with a good set of strategic objectives.
One more thing - make sure your list of strategic objectives is shorter than this list of guidelines.