The Purpose of a Strategic Initiative is Closing a Performance Gap

An illustration of a performance gap

Strategic initiatives are tools for closing performance gaps. As a leader, you need to help your organization “map the gap” and close the gap.

Performance Gaps Illustrated

The nearby graphic shows a simple depiction of a performance gap. The X axis is time and the Y axis is an organizational performance metric. The metrics could be for improving the revenue stream (in that case, we typically would look for an increase over baseline) or the cost structure (we would look for a declining trend) or something else.

Notice the two trend lines showing the forecast performance (what will happen if we do nothing) and the potential performance (what we desire). The performance gap involves a tension between the current state and a desired future state.

Hint:  Draw a generic diagram (similar to the above) and challenge your organization to label the lines.  It will stimulate some thoughtful discussion on strategy!

Clarifying the Performance Gaps

The performance gap can be quantified. My earlier article, Use the As-Is-&-To-Be Table to Clarify Strategic Initiative Vision, provides some useful advice.  In addition, here are two questions that I find useful:

  • What is the performance gap that is the most painful or visible?
  • What do you want to be different 3 years from now?

These questions help to reveal metrics. The lagging indicators will typically be the quantitative results that are of interest to the Board of Directors, investors, and bankers. As important is to leading indicators that can provide you early feedback on your benefits realization. You can find more detail in my article, How to Energize Strategic Initiatives with Outcomes.

Analytics and Strategic Initiatives

Many companies have now institutionalized use of “analytics” as part of their strategic scanning processes and assigning responsibility for analytics to strategic initiative groups.  The new jargon includes “big data” which intends to discover big issues (opportunities) that can be brought to the strategic formulation process and “core insights” which are undiscovered data relationships that provide competitive opportunities.

The point: The strategic initiative leader needs to have a drive to compete, complemented with some competency in analytics. The leader needs to an understanding of competitive advantage, data storage, and emerging analytics tools.

Knowledge of Performance Gaps Facilitates Strategic Alignment

Many organizations have a cluster of semi-related goals, projects, activities, and initiatives. They often lack a “big picture” and synergy. They benefit from a higher-order structuring, and this straightforward rule will lead to better strategic alignment:

Identify a single performance gap and charter a strategic initiative.

This rule causes management to think deeply about the core challenges and prioritization.

The next step is to invest the right resources and provide leadership. Program management is the “how” that provides structure to the strategic initiative team.

Have you ever seen a strategic initiative that did not know its performance gap?  What was the result?

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About Greg Githens

Vice President of Strategic Initiatives. a.k.a., The Strategic Thinking Coach. I'm a hands-on strategy & execution consultant with experience in driving change in Fortune 500 and mid-size companies through strategic initiatives and business transformation. I'm available for extended or short-term engagements. For an introduction to pragmatic tools that turns vision into results, attend my popular seminar, "Leading Strategic Initiatives (Program Management)."
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