Strategy as a driver of real change and effect

Strategic capability is a key driver of long-term performance

The world has become more dynamic, complex, and globally connected, and organisations are becoming more and more knowledge-intensive. This makes strategic capability a key driver of long-term performance and value creation.

Strategy as a driver of real change and effect

Only around 30 percent of companies manage to fully achieve their strategies. Therefore, a new way to approach strategy and strategic transformation is much needed.

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For a strategy to result in real change and effect, it turns out, it must embody five essential elements:

  1. Engage hearts and minds
  2. Challenge who you are
  3. Bring clarity to complexity
  4. Be firm and flexible
  5. Change conversations

To drive long-term value creation, it’s necessary to think and act strategically. As a result, the companies that perform best are the ones that manage to keep a strong strategic focus as they craft and implement their strategies.

This observation is also borne out by a recent survey we conducted among six hundred companies across Europe. Results show that the top companies are much more sensitive to market developments and more strategically flexible than the lower-performing ones. However, various other surveys show that it is still only around 30 percent of companies that manage to fully realise their strategies.

This leads us to believe that many organisations today have a vast unrealised strategic potential. But simple awareness that this potential exists is not enough to release it. As the world changes and becomes more dynamic, complex, and globally integrated, realising an organisation’s potential requires a new way of thinking about strategy and strategic transformation.

At Implement Consulting Group we set out to help unleash and facilitate strategic transformation in the organisations we work with, rather than just figuring out what their ‘right strategy’ should be. We approach the task with humility and without claiming to have all the right answers, but from the feedback we get from organisations we’ve worked with, we can tell that our approach to strategy and our way of working do result in real change and in lasting impact.

When it comes to succeeding with strategic transformation, these are some important things to keep in mind:

Today’s organisations are not isolated islands

More than ever, they are deeply intertwined in networks with suppliers, key customers, and strategic alliance partners. This calls for strategies that challenge the view of ‘the organisation’ and strategy processes that take the complexity and uncertainty of the environment into account. Anyone who aims at foreseeing and controlling everything has a good chance of ending up being severely disappointed. Strategies must be both firm and flexible.

The opportunities and challenges that organisations face are many and interrelated

Sometimes they drive a company in opposite directions, andoften they are fast moving and come from new, unpredictable directions. Paradigms change, and so must strategies. Strategy processes must dare to challenge who you are and bring clarity to complexity.

The organisational pyramid has turned upside down

Most organisations need to perceive themselves as highly knowledge-intensive, with employees holding opinions, viewpoints, and insights valuable for the strategy as well as playing a key role in its implementation. This calls for strategy processes that involve people throughout the organisation and for strategies with the power to engage each individual in order to ensure a successful implementation.

Strategy is often disconnected from the organisation

Consequently, organisations are not aligned with the intents of the strategy they claim to follow. Processes like budgeting, planning, reporting, and appraisals often focus too much on operations. Management focus and ways of working do not clearly distinguish between ‘running the business’ and ‘changing the business’, which in many organisations means spending too little effort on changing the business. To succeed, the strategy must change the conversations taking place in the organisation.

In this article, we elaborate on these challenges and present what we regard as the five essential elements of dealing with them. We hope you will find some practical ideas and principles to apply in your own approach to strategy.

Michael Braagaard
Michael Braagaard
+45 2338 0010
Lars Kirkegård
Lars Kirkegård
+45 2338 0011

Strategy and Its Pitfalls

Understanding strategy and its pitfalls sets the stage for the whole implementation effort. It makes it possible to plan how to succeed at formulating a value-creating strategy that drives change and creates the effects you want.

Strategy is about creating value

The purpose of a strategy is to translate the vision of an organisation into actions which will enable people in the organisation to create value for its stakeholders. It is only through the actions of individuals that value is created. How value is defined will depend on the type of organisation and its stakeholders.

This link to value makes the term strategy applicable well beyond the military or business contexts where it is most commonly used. In our experience, the concept of strategy can also be useful in public sector or third sector institutions that have a vision (purpose, values, and long-term goals) to fulfil. It is of course necessary to adapt some of the terminology of strategy to suit these organisations’ needs, but the general concepts are still applicable and useful.

Strategy is about answering key questions

For business organisations it often makes sense to distinguish between corporate strategy and business strategy. The aim of corporate strategy is to set the direction for a portfolio of businesses. As a result, it is necessary to focus on answering the following questions:

  • Which businesses are we in and what is the rationale for this portfolio?
  • Which corporate structure should we use to manage our businesses?
  • What are the possible synergies among the businesses and between each business and the corporate centre?
  • What should our capital structure be?
  • How do we allocate resources between businesses?

Business strategy, on the other hand, aims at providing the answers to four basic questions of any organisation:

  • Who are our customers?
  • What  do we deliver to them?
  • How do we deliver it to them?
  • What is the speed and sequence of the strategic moves which have to be made?

Taken together, the two levels of strategy provide the answer to how the vision is to be translated into action. Not all organisations have a structure where this distinction is relevant, and in such situations a combination of the two can be used.

Strategy is about people

Organisational change and transformation are central to strategy development and implementation. Which actions are most relevant and create the most value? (that is, which actions are most likely to ensure the realisation of the vision?). The answer always depends on the given circumstances — and when the circumstances change, so must the strategy.

However, since strategies are created through interactions among people within the organisation, finding the best value-creating strategy is not just a question of clear and logical analysis. Strategies are rather determined as much by what creates meaning and energy for the people in the organisation as by analysis and facts. Both of these perspectives are essential to creating a successful strategy.

Beware of pitfalls on the road to a successful strategy

To create value is to do ‘the right thing’ well—even as challenges, opportunities, and ambitions change. For an organisation to stay competitive and deliver sustainable value creation over time, it must therefore constantly transform itself and its strategy. Unfortunately, this type of strategic management is not an easy task, and several potential pitfalls lurk along the way.

Strategy as decoration

The first pitfall is the idea that a strategy is something you have rather than something you do. This can delay discovery of the need to change and thus cause you to move too late. This delay puts the strategy process under pressure, making it a crisis rather than an orderly response.

Delay is especially likely when strategy is seen as a yearly event (or one that
happens every two or three years) rather than as a dynamic process. In that kind of environment, which is quite common, no one is following up from day to day and month to month to review the realisation of the current strategy and its critical external preconditions.

In addition, the mental maps of people in the organisation influence the way they perceive the world and whether they see a need for change. Seeing strategy development and implementation as separate activities will increase the risk of not being aware of the need for change.

When implementation results and experience are regarded as stand-alone data and not fed into the strategy review process, the strategy can be fatally weakened.

The above text is an extract – go to the top of this page to download the entire article.