Don’t Have a Strategy Function? Maybe You Should

Don’t Have a Strategy Function? Maybe You Should

I’m always a bit surprised to encounter relatively mature companies that don’t have a formal strategy function.  It’s a bit like bumping into a nearsighted friend who refuses to wear glasses.  There’s no law that says you to have them, but most people eventually decide they’re useful.

Nonetheless, there are holdouts.  Why does this happen?

Of all the major C-suite functions, it’s possible that strategy has come to seem old-fashioned or even non-essential. More luxury good than staple. No one ever argues about whether you need a CFO or head of HR, but strategy often seems to come from everywhere and nowhere at once – a product of the collective mind that usually takes care of itself.  (Younger executives in high-growth industries seem disproportionately inclined toward this view.)

A stronger version of this theory argues that “strategy is dead” – you don’t need it anymore because any business challenge be solved in real time through a combination of A/B testing and agile software development.  These things are important, no doubt.  But they’re different solutions to different problems – great for driving growth through efficiency and optimization, less great for identifying radically new and different opportunity areas, evaluating major shifts that require big bets, or making tough tradeoffs with long-term implications that test the fundamental values and aspirations of the organization.

A third, more prosaic explanation is that strategy as a function has become too closely associated with banal frameworks most people ignore, and/or painful processes most people prefer to avoid.  “Strategic planning” is still too often a horrific death march that starts in August and ends in February (if you’re lucky), sucking time and energy away from day-to-day operations.  If this is strategy, maybe it’s better off dead.

But bad strategy usually arises from too little focus – not too much.   And given the pace and complexity of change in the marketplace, annual planning is probably no longer the right cadence or context for strategy development, if it ever was.

The unique contribution of strategy as a functional department isn’t (or shouldn’t be) process enforcement – or even quantitative analysis.  These things are critical but non-differentiating, as we like to say in the biz.

The value of a robust strategy function lies in its ability to continually assess the total market landscape, separating signal from noise.  As a business discipline, it’s somewhat akin to the personal practice of mindfulness.  Its virtue lies in paying close attention to what’s happening in the present moment, letting go of preconceptions, and using that attention and openness to create useful new focus.

Without this discipline, you might be optimizing and multitasking like crazy, but you run a greater risk of missing out on the bigger picture – especially if and when that picture shifts.

Is this a vague and tortured metaphor?  Probably.  (But what did you expect from a strategist?)  To be somewhat more specific, here are five practical tasks that should form the core remit of your strategy function:

1. Look further into the future than the current quarter, fiscal year, or next release cycle. What will the marketplace look like in 3, 5, 10, or 20 years?  How will customers have changed?  How will technology evolve?  Will we all be wearing giant cardboard VR headsets, talking to chatbots through wristphones tethered to our self-driving cars?*  And if so, what should we do now to prepare for this bright future?

2. Scan further outside the company than day-to-day operations typically require. To consider not just customers and competitors, but also about broader cultural trends, future technologies, shifts in capital flows, seemingly unrelated industries which may present opportunity (or threat), changes in public policy or regulation – and the disruption that may arise from any of these factors alone or in combination.

3. Align strategy across business units and other corporate functions – keeping everyone aligned with shared strategic objectives, sharing insights and best practices, and coordinating resource allocation and investment. In its bridging role, the strategy function helps keep the company honest, ensuring that the sum of all activity actually aligns with strategy – and, when it doesn’t, forcing a sometimes-tough conversation about whether strategy or operations need to change, and why.

4. Sponsor “strategic projects” that don’t fit neatly (or would be disruptive) inside day-to-day operating units. These can include innovation initiatives (new business incubation, product/service/brand innovation, new partnerships, etc.), M&A activity, and large change efforts (reorganizations, divestitures, etc.).

5. Serve as lead storyteller and evangelist – distilling the company’s strategic vision into compelling stories that can be shared easily throughout the organization – and beyond. After all, employees can’t deliver on strategy if they don’t know what it is.  Can you say what your strategy is?  Can you say it in pictures?  Infographics?  Animated explainer videos? Witty coffee mug slogans?  Augmented reality?  Vines?  Emojis?  If not, why not?  A strategy organization worth its salt should be able to figure out which storytelling formats work best for your organization.

One last, frequent objection is that “strategy is the CEO’s responsibility”.  Well of course it is.  Isn’t everything?  But your CEO is busy.  She doesn’t have time to do all the analytical heavy lifting AND creative storytelling good strategy really requires.  A decent strategy function should provide a continual stream of useful input to her own thought process, and serve as a regular sounding board and sparring partner to help refine and sharpen her thinking.**

My own view – not surprisingly – is that strategy is neither dead nor doomed to stodgy irrelevance.  But in most cases it does need to work differently.  Greater external vs. internal focus.  Broader focus, shorter work cycles.  Less process obsession; more flexibility, collaboration, and creativity.  Fewer slides, more emojis 🙂

If you’re a CEO or other operational leader, hopefully you’ve got a strong team in place to help shape and sharpen your strategic vision.

If not, have you considered glasses?

-Tim P.

* Elon Musk, we understand you may be doing this already.

** Note to strategists: As with wookies, it’s usually good policy to let the CEO win in the end. At least sometimes.