Most businesses today have become accustomed to formulating their strategies over an extended period of time. The process, as it were, is typically held at a luxurious retreat, spending anywhere from three to even five days to begrudgingly wade through the multi-phase process of reformulating their vision, mission and strategic focus areas. The process is then most commonly continued once back at the office, where senior management champions delegate responsibility to action planning to mid-level management.
The entire process takes too long, is often too broad and results in, as we all know, less than stellar results. There are several reasons for this less-than-lean approach; here are three:
- A significant amount of time is spent reviewing, and often re-envisioning, the direction of the organization. Consider GE’s vision to be No. 1 or 2 in its chosen markets. Not a small feat; and definitely something that requires more than three years to accomplish. A vision defines what the business will become and, as such, if done appropriately should only be reviewed every three years, with a more in-depth examination every five years to seven years.
- The strategic focus areas, or strategic goals, are too “pie in the sky” to result in any meaningful actions during the implementation phase. The resulting gap is often misinterpreted relative to intent, leading to misdirected allocation of resources and capital. Consider that a golfer can think about the perfect swing all he wants, but if a putter is used to make a drive, the results will be less than optimal.
- Input to the process remains strictly at a high level. During the analysis phase of strategy, my clients often find themselves discussing tactical issues. When they realize this, and if they haven’t worked with me before, they will often make a vocal attempt to move the discussions to a higher level. This is the wrong approach, and here’s why. Strategy must provide value to the customer first and the organization second. If the issues are not clearly understood during the analysis or assessment phase of the formulation, decisions relative to strategic objectives are misinformed.
So, what does all of this have to do with lean? Well, lean has two fundamental focus areas: first, value to the customer; second, reduction of waste. With changes to the strategic formulation process, we can create a process that requires less time to complete, ensures that the organization does not frequently defer from its intended direction and provides an outcome that is more achievable relative to implementation. Who wouldn’t want this?
Building on my article from last month, integrating lean into strategy formulation is something that “SKINNY” companies are pursuing. To demonstrate some of the key differences, let me provide you with the framework of a lean strategy approach.
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| Diagram 1. |
Now, I recognize that diehard strategy-formulation experts will argue with my approach, and that’s fine. My focus is on providing value to the customer. Results are more important than philosophy. But consider how our global marketplace is evolving. Change is, of course, the “new norm” and its pace only continues to increase. It is simply no longer possible to wait and perform a strategy session every three or four years. Two years is the maximum duration because of the pace of change.
If you agree, then consider that to review strategy every two years, the approach and resulting focus areas must be more condensed and more powerful. Look at companies such as Apple and Amazon. Do you think they wait three or four years before they sit down and review their strategic directions, or do they make a concerted effort to revisit their directions and reconsider their strategic focus areas on a more frequent basis?
By leaning out the formulation of strategy in this manner, we can complete the process in less time while retaining a consistent vision of our future. We are able to accommodate the degree of change and necessary shifts in our strategic focus areas to achieve that vision.
Obviously the process is more complex than what I am able to lay out here; but I hope that this has provided some insights into how lean can be integrated beyond strategy implementation, providing a more valuable and efficient process for determining the future direction of the organization. That is, after all, the desired outcome of strategy, isn’t it?
