Business or personal strategy: which dominates your board?
What is it with our obsession with strategy? We are respectful of words like profit and loss but somehow treat strategy differently.
After 15 years consulting and nearly 20 years in corporate life, it is the word which stands out for me as the most abused because it appears to mean wholly different things to different people.
Conversations, which tend to be liberally peppered with it, bear this out: “I’m hiring someone to do the day to day stuff, so that I can concentrate on strategic stuff” or “We have just hired an awesome Head of Strategy” or “Frankly, and strictly between you and me, the problem with Joe Bloggs is that he’s not very strategic”.
Worse is when strategy is confused with purpose and execution as in “we intend to be the best in the world by hiring good people”.
Being the best in the world, if you mean it, is a business objective and is not a strategy. Hiring good people is as basic a leadership behaviour as breathing. Strategy, it ain’t.
But why the confusion? Strategy means how your board achieves its purpose. That’s it.
It should be decided once and, while it may change, it should stay fixed for a reasonable period to allow for its implementation.
Therefore there should be no need to use the word strategy in any context other than “since our agreed strategy is X then we are doing y or we should do z”. Or not, if those actions are not congruent with your strategy.
For example, Ryanair’s objective was, it appears, to be the best and most profitable no frills airline in the world – or words to that effect.
Its strategy appears to have been to train the market to expect nothing but a safe and cheap flight. Its execution behaviour – love it or loath it – was to do everything to lower market expectations of airline service which had been raised over a generation which believed flying was for a certain “class” of person. Ryanair broke that myth.
Proof that its poor treatment of customers was “strategic” is the manner in which it reacted almost overnight to the introduction of a business class product by rival Easyjet. Suddenly, Ryanair became user friendly, introduced its own business class product and sales went up by c 20%.
That’s a story of a simple purpose, sophisticated strategy and clean execution behaviour in action. There was no confusion whatsoever about the meaning of those words. The results bear this out.
The problem on many boards however is that there isn’t a shared business purpose nor, in addition, are the directors upfront about their personal purpose.
If your business purpose is not shared by your colleagues on your board and if your and their personal purpose is also not clear then it’s not surprising that your business strategy will be weak, at best.
Some clients “push back” on this by saying that “our purpose is to make money, everything else is strategy”. To which I reply “it’s no wonder you all have a different spin on strategy since making money is, again, as essential as breathing. It is a collateral benefit, not a purpose.”
The reason purpose and strategy are problematic is because they are difficult to get right. It is a truly challenging task in complex markets to get your purpose statement right and then to follow through with choosing the right strategy to implement it.
But, and perhaps surprisingly, this can be made much easier if your directors are upfront about their personal purposes.
After all, the purpose of any organisation is inter dependent with the purposes of each of the people working in it and, particularly, with the members of its board.
Initially I find this a hard sell. Directors find it difficult to accept that they constitute the business. They speak of the business in the abstract, as if it were a third party. But it isn’t.
It is the sum of their individual purposes brought to bear on a market need. But often the personal purpose of one or two individuals can dominate or skew business objectives and therefore strategy.
Once I get a board to address the matter of their shared business purpose in the light of their personal objectives, I find that business purpose and strategy can be reframed much more cogently.
Your CEO is key to the success of this reframing process. If he or she is willing to share their personal purpose and strategy honestly and openly they will be a catalyst for the others to do the same. This is called leadership.
There are three steps to harmonising business and personal strategy on your board:
First ask each director to articulate their personal financial and fulfilment needs and objectives and how these fit with their understanding of business purpose and strategy.
Second, in the light of these shared insights your board should work on the precise wording of business objectives and which all directors are happy to sign.
In my experiences this process can be difficult and can surface deep and painful disagreements. But it’s worth the pain because future disagreements will be more easily resolved by reference back to agreed objectives.
Finally when, and only when, there is absolute shared clarity on business purpose and one that fits with the articulated personal objectives of each director, can you move on to addressing strategy.
Then, often to everyone’s pleasant surprise, agreeing a good and robust strategy becomes relatively straight forward. Are you surprised?