Conceived in this way, the cascading process becomes a dialogue-based choice-making process in which different levels of the cascade are proactively involved in framing and making choices. Furthermore, the cascade from corporate level will be inspired by feedback flowing from the levels involved in more concrete operational choices. The point is that everyone in this system is involved in making choices – and no one is viewed as a passive recipient of strategy.
Does this approach require an effort in large organisations? Surely! But considering the negative side effects of traditionally managed topdown implementation of strategy, the advantages of cascading strategic choices are obvious. Consider this in the light of Harvard Business School Professor Robert Kaplan’s findings revealing that a mere 7% of employees fully understand their company’s business strategies, and what is expected of them.
Another core practice of clarifying strategy is to define measurable impact targets that will help the organisation keep track of the strategic transformation. This is hardly a surprise. But the devil is in the detail. The type and quality of impact targets are really important. In some cases, strategy targets are reduced to a set of longterm financial ambition levels. In our experience, the most effective targets are quite the opposite. They are concerned with decomposing longterm ambitions into really tangible targets that combine both leading and lagging indicators of progress.
More importantly, we need to dig deeper than business performance measures in order to reveal the real drivers of change. As mentioned, strategies do not accomplish anything. People do. Therefore, the key is to engage the organisation in defining the behavioural changes required by the new strategy. Observable behavioural change is one of the best indicators of strategy implementation done right. And if no behavioural change can be observed during implementation, corrective actions must be taken promptly.
Clarifying strategy at Coloplast
The global medtech leader Coloplast makes life easier for people within diverse areas such as ostomy, urology and continence care. Over the last six years, the management has successfully turned around the company and delivered strong results. To support the strategic transformation, one of the key tools leveraged has been the so-called Agenda. While corporate strategy lays out the long-term plan, and business area strategies define the market actions, the Agenda is a strong vehicle for communicating the top 10 priorities in the organisation. The Agenda is short and sharp; it is about what happens right now and first and foremost about the priorities that all employees must be able to refer their strategic work to. The Agenda is updated yearly and launched broadly supported by frequent status updates.
Tips for clarifying strategy
- Clarify major strategic choices and craft a few must-win battles to focus efforts on the key value drivers
- Design an ambitious, but realistic transformation map to navigate the strategic transformation
- Tell a compelling and meaningful strategy story to create a shared context across the organisation
- Create a strategic choice-making cascade to empower and engage employees at all levels of the organisation to make distinct choices
- Strive for early symbolic wins to build momentum by putting theory into action
- Define behavioural and business impact targets for strategic initiatives to monitor progress towards goals
Principle #2 - Unify leaders
Build unity in the leadership team, establish clear accountability and define non-negotiable leadership behaviours.
Often, strategy turns into a simple two-step process. Firstly, let us fix the problem and get the strategy straight. Secondly, tell the organisation what to do and execute. Described in this simplistic manner, it is almost selfevident what is wrong. Making strategy is separated from executing strategy. The creative and analytical process of solving problems is separated from the social and emotional process of making sense of a new direction. In the twostep process, we end up facing severe challenges in terms of “selling” the strategy. We must put all efforts into persuasive power talks and beg that the extended leadership team, middle management and employees are getting motivated and “bought in.”
Consider the iconic “burning platform memo” written by former Nokia CEO Steven Elop. In the memo, Elop desperately tries to engage all employees in, metaphorically speaking, jumping from a burning oil platform into freezing waters. By adhering to conventional wisdom, we unintentionally activate all human social domains that control actions to release a whirlwind of negative feelings and resistance among large groups in the organisation. They were not important enough to be listened to. They felt quite uncertain about what to do as they were only told a short roadshow version of the strategy, and any sense of personal control over events in their lives was steamrolled. They just had to stick to the plan. Please jump into freezing waters!
To resolve the quite obvious issues, it is essential to discard the traditional twostep model. We have to work under the assumption that agreement about strategic choices needs to be rooted deeply in the extended management team. Empowering leaders to challenge each other and aligning views about the desired direction is one of the strongest tools for creating leadership unity and making strategy work. Implementation starts from day one in the strategy process and is founded on creating an atmosphere of mutual trust in the leadership team.
In the course of the strategy process, the hard operational work of implementation will gradually play a more significant role. At this point, it is vital to make strategy stick on top of the management agenda. Best practice includes making sure that accountability for implementation is anchored at the very top. Sponsorship of key strategic initiatives should be agreed by the top management to ensure organisational traction, sufficient resources and efficient removal of obstacles. Furthermore, the leadership team should agree on role modelling behaviours and a mutual commitment to “walking the talk”. The phrase “show, don’t tell” still holds true. A recent survey found that 86% of senior leaders believed that they incarnated the new strategy. However, only 53% of direct observers believed that senior leaders embodied the change. Walking the talk is hard in practice.
While all of the above practices are key to creating a unified leadership team aligned on persistently implementing strategy, there is also a more delicate side to creating leadership unity. In some cases, leaders simply are not up to the job, and the only way out is to make adjustments to the team composition.
In other cases, the leaders do not have the required capabilities for managing change and strategic initiatives. Change of strategic direction inevitably requires big organisational changes, and obviously all leaders responsible for delivering on strategy need to understand the dynamics of successful changes to cope with actions and reactions across the organisation. How do I handle resistance and involve stakeholders appropriately? How do I manage large-scale strategic initiatives in a sponsor or initiative owner role? How do I align horizontally and vertically to ensure firmness and flexibility of direction? These and similar questions are not unique and tend to pop up during most strategy implementations. Therefore, strategy leaders should build on the vast body of knowledge within managing changes to avoid classic traps and accelerate realising the benefits of great strategies.
Principle #3 - Build engagement
Mobilise stakeholders through co-creation and communication, enable sensemaking at the individual level and build capabilities for new ways of working.
The best strategies communicate on many different levels ranging from the vivid and crisp strategy story that instantly makes sense to precise underlying reasoning and detailed road maps that support implementation. When to use what communication vehicle should be detailed in a systematic engagement plan that segments key stakeholder groups and defines appropriate communication actions using the full palette of communication channels and media. In the process of making the plan, it is vital to think about not only traditional oneto- many communication vehicles, but also to stage strategy conversations at large-scale events, embed peer-to-peer strategy dialogues in daily routines and apply strategy games stimulating thinking about making good strategic choices in different situations. The aim of the broad-based communication efforts is to build importance and understanding of the strategy across the organisation.
At the individual level, it is key to recognise the role of the leader. According to recent research by Gallup, less than one third of Americans are engaged in their jobs. In fact, the surprisingly low number of employees who declare themselves involved in and enthusiastic about their work has remained consistent for more than 15 years. Looking closer at the numbers, leadership practices account for at least 70% of the difference in employee engagement scores.
Highly engaged leaders, who frequently talk with employees about their responsibilities as well as help set work priorities and performance goals, are more likely to build engagement. Moreover, leaders who are approachable, focused on nurturing employee strengths and engaged in frequent face-to-face conversations have a strong positive impact on engagement levels. Conversations should not be about the manager telling the employee what to do. Rather, conversations should be about the manager helping the employee make his/her own choices and define priorities building on the strengths of the employee.
Supporting evidence for this approach can be found in scientific research of the drivers of motivation. Firstly, establishing an inner sense of importance is supported when allowing the employee to make sense of the strategy from his or her own perspective. Why is it meaningful to me? What choices must I make to support the strategy? Secondly, building on strengths is a superior approach to pointing out weaknesses as the inner feeling of confidence grows when the employee feels competent and capable. How can I contribute? How might I leverage my competences? Put together, raising the inner feelings of importance and confidence builds motivation and engagement. Therefore, the job of the leader is first and foremost to be a facilitator of individual sense-making – and not to be a heroic visionary who enthusiastically tells about what to do and what not to do.
Obviously, change of strategic direction sometimes calls for building entirely new capabilities. In those situations, evoking a feeling of confidence is enabled by well-crafted capabilitybuilding programmes. But ultimately, implementing strategy and building broad-based engagement must happen through sense-making and choice-making processes at the individual level. Extrinsic motivators such as compensation, rewards, recognition and fear of failure may drive engagement to some degree. But as multiple sources of research tell us, there is abundant evidence that strategy will only come to life when employees and leaders alike are deeply engaged and motivated, because they find the strategic journey involving, exciting, important and personally challenging.