Leading the Way: Defining Strategy

Understanding the External Environment in Devising a Strategy

How much time should organisations devote to strategy?

How effectively can one operate without having a clear destination and purpose?

Just the other day, there was a debate led by the BBC’s In Business correspondent, Tanya Beckett, about the time managers spend in meetings. This raised the question, what are meetings for? If they are to exchange information, then it is questionable if they are the most time and cost effective means for information exchange. If they offer a chance to bring the right people together for problem solving and decision making, then how effectively do the attendees make use of the opportunity? One comment, which struck me, was that those organisations that use meetings most effectively for making decisions are also those that are most productive and decisive. Otherwise, it is easy to use meetings to procrastinate, delay decisions and slow down actions.

To develop a strategy, top management – executive and non-executive- must be clear about the aspirations and dreams of what the organisation can or should achieve in the long-term. Usually known as the Vision, it may not be very clearly
defined but the concept should be understood and shared by the senior decision makers and subsequently all staff. The process of transforming a fuzzy view of the future into specific, measurable and achievable objectives, including financial results,
helps to concentrate minds. The next challenge is to select the best ways of achieving said objectives, as there is never just one way of doing this. The process of defining different options and then selecting the one considered to be ‘best’ is the
process of strategizing and leads to the development of corporate strategy.

In a multi-product, multi-region and/or multi-service organisation, the corporate strategy can then be broken down by business unit, region, or products/services to define objectives at a more local level. There are many challenges in aligning the lower level objectives, as they may lead to conflicts of interest or fights over access to resources.

Even if top management are clear about their desired destination, they must also assess how the external environment may either help or hinder the journey. No management team has the benefit of a crystal ball – no one can predict the future. So, the process involves making educated guesses, assessing risk, trying to anticipate ‘black swans’ and then determining what is most likely to transpire and affect the achievement of desired outcomes. Business schools and consultancies offer analytical tools to help management teams consider a range of potential risk factors. Tools are used most effectively when the team challenges current thinking, recognizes potential psychological bias, and supports open exchange of ideas.

Which brings us back to meetings. Those organisations with a clear purpose, with roles and responsibilities that have been defined, are also likely to make best use of meetings for decision-making. Where there is a fuzzy view of what the priorities are, managers are more likely to avoid decisions in case they make ‘mistakes’. This encourages a culture of procrastination and prevents effectively implementing the agreed strategy. Senior management lead the way in describing the future, clarifying the chosen path, whilst constantly monitoring the external environment.

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