Align strategy to organisation

All companies fall into line along an axis where at one extreme clear strategy is developed and at the other end no semblance of strategy can be found.  The first reaction is usually that it’s better to be at the end with a clear strategy.  Makes sense right?  Get all your brightest people together and thrash out that differentiating, revenue winning, cost effective, visionary, IP-rich all-in-all-damn-good-strategy.

I’m pretty sure this isn’t the whole answer.  There must be organisations everywhere doing this – boardrooms stuffed with execs ‘strategising’.  So what is more important than the strategy?  You know the answer – The Strategy is worth nothing but hot air unless it can be executed.  And who executes the strategy?  The organisation.  Every single person.  If every person within that organisation doesn’t have a explicit link to the company strategy, then you don’t have control.  Consider this: you have this company with six departments.  Each department has a head and a bunch of staff – imagine a road-cone.  It should be just like a real cone – you pick it up by the top and the rest of it comes up as well in unison.  You move it across 1m and cunningly, the whole cone moves.  An executive team are those that set the strategy and should be able to pick up all six departmental cones with ease and move them in the direction of The Strategy.  The reason moving these cones about is easy has nothing to do with the strategy, but all to do with the fact that from the top down, each department is explicitly linked to whatever the strategic line is.  Each head of department has a grasp on their people such that when the company strategy shifts, the entire department can shift with it, just like the cone.

So what holds the department together – what is the glue?  Basically it’s the roles, responsibilities and objectives you give people.  But that’s nothing new.  Everyone does that.  The trick to achieving the cone is, again, obvious:  the role, responsibility and objective of that department must first be defined at the topmost level, before breaking into more detailed chunks and cascaded downwards through the ranks until every person in that department has their little piece to focus on.  This nugget of strategy holds great importance – it demonstrates clearly to the employee what their role is in the company, which particular strand of strategy they are contributing to and a ‘thing’ by which to measure their performance.  If that person performs and meets their objectives (of course the company does everything it can to incentivise them to do so), then that is one small step on the way to executing the overall strategy in a controlled and predictable manner.  In this model every manager in the department has objectives that are the sum of their subordinates’ objectives – all the way to the top, giving rise to this inexorable pressure pushing upwards to ensure that all objectives are fulfilled and hence, doing it’s job in executing strategy.

All companies would do well to be responsive and reactive to shifts in their industry or new ideas such that the executive team can bring about change quickly and as painlessly as possible.  This cascade method of distributing strategy is one way to achieve that.  Tweak a bit of the strategy at the top, and let the changes cascade downwards.  Focus automatically shifts, and the organisation understands what is going on.  I’ve been working on a model like this, and time will tell whether it is successful or not, but as I recall from one Harvard Business Review paper I read once, it isn’t so much the strategy that matters, it is whether you can execute that strategy effectively.  As soon as you can execute a strategy you have the tools to take any strategy and execute it – the glorious things about strategies is that you can dream them up in one afternoon – getting it done is an entirely different thing, and on another scale of difficulty entirely.