By V. Shankar
Chartered Accountant
Every business, every entity designs and pursues a strategy or multiple strategies to deliver its purpose. Crafting and, more importantly, successfully executing strategies is at the heart of running and growing great businesses. Strategy is the path to winning. In this two-part series, I will share some key approaches and methods which helped me over the years in accomplishing this critical aspect of a CEO’s role and mission, i.e., delivering sustainable long-term value for all stakeholders.
The broad elements of establishing a successful enterprise are depicted below (Figure 1):
At the core is setting the Vision and Strategy. The delivery mechanism is enabled through a robust process framework. This will need to encompass many critical dimensions such as being customer-driven, innovation-led, focusing on environment, health and safety, as well as upholding sustainability. A customer-focused entity strives to understand and meet the current and future needs. While delighting customers is the goal, the business should also endeavour not to dissatisfy patrons. Innovation can come through new technologies on products or in processes or people-oriented or even in the business model. The organisation will need to embed a culture of continuously improving all its activities challenging the status quo relentlessly. Sustainability and EHS should feature at the centre of all its actions. Above all, these are made possible by the people and hence talent management is important.
Each of these is an important subject in its own right. In this article I will explore some key elements pertaining to the two critical components of strategy, (i) Strategy Planning, and (ii) Strategy Deployment, and share some points on the planning dimension.
Any enterprise is guided by its Vision, Mission and Values (VMV). The first crucial framework which needs to be in place is this VMV which the enterprise stands for and lives by. VMV is articulated and communicated extensively so that not only are the employees clear about the direction of the organisation, but all the external stakeholders also know the fundamental purpose of the enterprise that they are engaging with.
Setting the VMV:
The Vision and Mission convey the raison d’être or the purpose of the enterprise. The Values are the fundamental tenets around which the enterprise conducts its affairs and are expected to be upheld at all times. While evaluating core partnerships or even acquisitions, VMV, therefore, is often the first parameter to be assessed in terms of compatibility between the conducting units. In Figure 2, a method of creating the VMV is depicted in a self-explanatory manner:
Some of the advantages that I have experienced in adopting this process are as follows:
(1) Seeking inputs from all stakeholders gives different perspectives about their views of the business as well as expectations from the enterprise. Not only does this give a 360-degree view but also helps in eliminating blind spots which can be there in an internal exercise;
(2) Doing a brainstorming session with the senior leadership team as well as middle management is a valuable exercise. In such intense sessions, often there is introspection of the opportunities and competencies of the enterprise which gives leads on the direction to take. Seeking external expert assistance to hold such sessions is fruitful to make the discussions even more extensive;
(3) Sharing the initial output across the units in a capsulated form can engage the team from across the enterprise. Inputs received can be evaluated at the centre and necessary modifications can be made enhancing the quality of the output. This also has immense value in making the VMV a co-created exercise;
(4) Finally, once the VMV is approved by the Board, a detailed communication programme is essential. Every word in the VMV is explained and the whole thrust of the organisation is shared and clarified to every team member.
The VMV once set may not change frequently, but it is not cast in stone. Such a comprehensive exercise is undertaken periodically, say once in three or four years, to incorporate the dynamic nature of business.
Strategy Planning Process:
Flowing from the VMV will be the next critical task of setting the Strategic Goal or Target, and crafting the Strategy. The strategy planning process (SPP) can be with both short and long-term perspectives. In the short term this is also aligned to the year’s business and operating plan or budget. The elements in building the SPP are diagrammatically represented in Figure 3 (right).
A word on each of the key steps:
a) The approach is to blend both the outside-in and the inside-out outlooks of the business. So inputs are sought from the various stakeholders on the different aspects of the business as well as their needs and expectations of performance;
b) Environment scanning using PESTLE dimensions of political, economic, social, technological, legal and environmental outlooks is performed to judge the context for the strategy;
c) Coupled with this is the internal assessment of SWOT in terms of strengths, weaknesses, opportunities and threats. The enterprise also judges its core competencies so as to play from a position of power;
d) Put together, the above leads to a definition of the opportunity and throws up both strategic challenges and strategic advantages as well. A good way is to encapsulate the strategic target in terms of a quantified crisp goal or an inspiring statement. This helps immensely in communicating the strategic objective to the team and for a common engagement to go for an aligned purpose. For example, the call for a ‘5 trillion economy by 25’, ‘India Shining’, etc.
e) At this juncture, it is also important to specify the customer segments or markets which are targeted. The analysis of SWOT, core competencies and competitive positions will also lead to what would be the offering or the customer value proposition which brings about a differentiation in the marketplace. This is at the crux of strategy planning – the decision of what we want to be and equally what we do not want to be. Strategy is all about making a choice;
f) Thereafter strategic initiatives are thought out clubbing two of these elements. For example, SO – how do we leverage our strengths to tap into the opportunities, etc. (vide Figure 4; next page);
g) From these lists the next step would be to prioritise the ones to be taken up in terms of time dimensions and ease of execution;
h) These can be woven into the four perspectives to form a balanced scorecard;
i) A Strategy Map1 can be prepared which encapsulates the entire strategy flow across the perspectives and highlights the strategic actions as well;
j) This will lead to individual projects both at the company level as also at individual or functional levels2.
Creating the connect:
For any strategy or plan to succeed, the most critical element is to get across the connect with people. It is important that every team member not only knows his or her work plan but also is clear on how this connects with the larger goal of the function / department as well as that of the enterprise. This is fundamental to get a high engagement of each employee who will approach work with great interest as the significance of the tasks becomes clear.
A great way to bring in a structured connect is by using the Strategy Deployment Matrix (SDM). A pictorial representation of SDM is given in Figure 5 (at right). The SDM provides a link between the enterprise priorities and the individual department’s goals or actions. Furthermore,it brings together the department goals with thedifferent projects planned to deliver those goals. Alongside, the projects are connected with the team members who are part of the different projects. This also facilitates the time planning for each team member who is associated with the projects. With these, the SDM provides a fine alignment of the individual’s tasks / time with the projects designed to deliver departmental goals which itself is aligned to the enterprise priorities. So the SDM in a single matrix provides a clear picture of how all of it is well aligned to move in an integrated, coordinated manner.
Strategy, the dominant success factor:
A strategic approach is essential for a structured delivery of growth in business. It is important that the strategy flows from the larger aspirations of the enterprise and is also carved out in time dimensions of short and long term. While a strategy construct emanates from having a normal view of things, the environment now is volatile and ever changing. A number of disruptors, too, can emerge in a short span of time3. It is therefore necessary that strategies are also prepared to meet different contexts. A scenario planning exercise with appropriate strategies is also necessary.
The strategic plan is created to seize opportunities and its execution is important as well. This equation is pictorially represented in Figure 6.
Finally, a good Strategy is the heart of running and changing a winning business.
References
- Strategy Maps: Robert S. Kaplan and David P. Norton
- Excel in what you do: Pg. 20,BCAJ, August, 2020
- Governance & Internal Controls: The Touchstone of Sustainable Business – Part II: Disruptions Pg. 13,BCAJ, June, 2020
