It’s tough for people to implement what they don’t understand. Communicating priorities to the frontline, especially sales people, is highly correlated with business performance. Conversely, this ‘middle ground’ is where strategy execution often breaks down. Yet, many executives resist making strategy explicit.
The most common reason is fear that this information will get to competitors. As a consequence, the organisation tends to become a ‘global mediocrity’: Good at many things, but not very good at any particular thing. And the essence of strategy is being excellent at things your customers value and competitors find hard to imitate.
Related: Questions to Help Open Up the Sale
First, let’s address the issue of competitors ‘stealing’ your strategy. The strategies of successful firms are usually well publicised.
How many books, blogs, and case studies get written about Apple, IKEA, Nike, Southwest Airlines, and others? For decades, Toyota has allowed outsiders to study its factories on-site.
This may increase knowledge of operations (which is not the same thing as strategy). More often, as a four-year study of Toyota’s production system concluded, ‘observers confuse the tools and practices they see on their plant visits with the system itself.’
In a world with a global infrastructure of consulting firms and others paid to disseminate information, confidentiality as a reason not to articulate and communicate strategy is both myopic (the information is just not that hard to acquire) and often beside the point (you have bigger things to worry about than competitors reading your strategy documents if your people don’t know your strategy and therefore can’t execute it well).
Avoid hit-and-miss alignment
Business strategy is about the choices a company makes in its attempts to compete in a market. Some choices are explicit. They’re put in a plan or discussed at meetings. But many are implicit in the decisions made, often without thinking of them as strategic, in the flow of running the business or on a project-by-project basis.
This includes the hurdle rates used to evaluate capital requests and the questions you’re expected to ask and answer when you propose an R&D, marketing, operations, or sales initiative.
Any budget — big or small — involves choices about what gets more or less money, time, and other resources. Most people in a firm focus most of the time on near-term operating issues.
The aggregate of those decisions determines what are the real priorities, opportunities, threats, and behavioural values in the firm.
Nothing wrong with that. But there is no ‘ignorance is bliss’ dimension to this aspect of business. Without clarity about priorities, people can only pick up random, disconnected cues about strategy, and alignment is then hit-and-miss.
A costly mistake
Not communicating strategy also incurs longer-term and more insidious costs.
A vague strategy cannot be tested and contested as market conditions change. People talk in abstractions while daily resource-allocation decisions incrementally fall prey to the sunk-cost fallacy: Throwing good money after bad. And if the strategy is implicit in the intuition of a gifted leader, then, at best, it’s only as strong as that leader’s reach and, more often, as weak as the weakest link in the organisation.
Years ago, Kenneth Andrews emphasised that “To cover in empty phrases an absence of analysis… conveys the illusion of a commitment where none has been made. A strategy must be explicit to be effective.”
Clear and concise communication
My point here is not to oversell the power of words. Business is a performance art. Saying is not the same as doing. I’m sure you can cite, from your own experience, examples of finely articulated strategies that were poorly implemented, and elaborate strategy banners that were ultimately just wall hangings in branch offices.
Related: 3 Steps to a High-Performance Culture
Alignment is a process — a pattern of choices over time — not a one-shot deal. Even clear statements are not a substitute for behaviours. But I guarantee that, whatever else your people are good at, they are not good mind readers. If you can’t say it, clearly and concisely, then they will have more trouble understanding and executing it.
© 2015 New York Times News Service.