Holistic Cycle of Strategic Planning & Execution
A good plan is nothing without execution. And both strategy and execution have to be anchored in organizational culture. How do all these pieces fit together? Here is a useful map of the strategy cycle that shows how all the major pieces fit together.
This map shows how customer priorities determine strategy; strategy then determines desired culture; culture determines organizational design; and finally, design supports execution.
Take a look at the map first, and then I will discuss how to read it for both setting and executing strategy.
This is how it works from the perspective of strategic planning (strategy formulation):
The market realities determine the strategy the firm chooses. The most important market reality is customer buying criteria—technically, customer needs, expectations, and buying criteria. Other key considerations include the needs of all of your key stakeholder groups, technological innovation in your industry (and beyond), your competitors, regulatory issues, and so on.
The strategy then determines the kind of competencies and culture that are required. That is, the strategy determines the levels of performance, the kinds of skills, and the kinds of core values (employee attitudes and behavior) that will be necessary to drive, reinforce, and sustain the mission, vision, and strategy.
Finally, the required performance, skills, and values determine how the organization must be designed. The organizational levers are designed and deployed to help the organization execute the strategy and achieve the vision. In other words, after developing a great strategy, you must design the organization to give your leaders the support they need to execute it. Set up the system to support success; put the weight of the organization behind your leaders and employees.
From the perspective of execution, we use the same map but we read it in reverse (from bottom to top). Develop exactly those management systems & practices that create the culture that enables you to execute the strategy that responds to market realities and customer needs.
Ongoing, rigorous analysis of successes and failures helps companies continually adjust efforts to stay on track. It also helps provide invaluable information for the next cycle of strategic planning, i.e., it drives organizational learning. Great generic format for debriefing in this blog.
Story to Illustrate:
Imagine a small software company competing against Microsoft. They know that in addition to creating good software, to stay in business over the long term, while competing against the giant Microsoft, they also have to live four core business values: speed, flexibility, innovation, and risk taking.
Once they make that decision, once they identify their core values, it is going to make a huge difference to how they run their entire organization. If speed, flexibility, innovation, and risk taking are really important to achieving their vision and strategy, they will have to:
- hire for it: use these as criteria when hiring and promoting
- orient for it: confirm the importance of these values in orientation & on-boarding
- train, coach, and mentor people for it
- have clear metrics around it: clear definitions and expectations around these values
- evaluate people on it: hold employees accountable for living those values
- recognize and reward it: show some kind of appreciation for living the values
- structure jobs and teams to enable and facilitate that kind of behavior
- ensure leaders at all levels are leading by example: walking the talk
The first big lesson from this story is that we have to anchor our core values in culture by building them into our organization’s systems, policies, and structures. Run your company to get what you want—to get the employee attitudes and behavior you want. Tagline: “Design the organization to support the employees in their pursuit of the vision and strategy.”
There is a second important lesson here. While speed, flexibility, innovation, and risk taking might be ideal values for this small software company, those very same values might be a total disaster for running a nuclear power plant. In other words, your values have to be aligned with and relevant to your organization’s vision and strategy. If you do not proactively align your culture with your vision and strategy, employee behavior will be ineffective, counter-productive, and obviously, not aligned with your strategy.
Strategic culture management means this: lead in such a way that employee attitudes and behavior drive, reinforce, and support your vision and strategy, and thereby become a strategic asset for your organization.
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