“Less than 10% of strategies effectively formulated are effectively executed,” reports Fortune Magazine. Numerous authorities have opined that the reasons are lack of executive leadership and involvement, good metrics, and aligned compensation. Interestingly, little has been written about the essential task of interpreting strategy documents. It may be boring, but it is certainly not trivial.
Here is a short statement of the issue:
Executives formulate strategy and record it in some type of document, and then hand it off to an implementation team. The team must interpret those strategy documents, and transform vision into concrete results. If they interpret wrongly, the organization will not achieve the strategic intent.
The reasons for poor interpretation of strategy include:
- Strategy documents are typically crafted for presentations. Often there is a master set of templates for each functional area in the organization chart, with the purpose being consistency.
- Implementation is seen as a detail. The authors often assume that brilliant strategy is the heavy lifting. There is no “strategic readiness assessment” nor a project kickoff for managing the transition.
- The implementation team often has not participated in strategy formulation.
- The individual reader brings bias to their interpretation of the documents.
You can use this four-step process to improve the understanding of strategy, and hence its adoption. In this article, I introduce some useful practices for Step 1 and illustrate with an example.
Case Study: Interpreting a Strategy Document
The merchandising function of a large North American specialty retail company (45,000 employees at 1300 locations, publicly traded) had developed a strategy covering the period from 2010 to 2013. The “Plan” was a summary 13-page document of PowerPoint presentation slides showing proposed activities year by year. In reviewing the document, I could tell that the authors had put a lot of time and thought into identifying a set of activities that would improve company’s ability to execute merchandising activities.
As is often the case, it was sent to the implementation team without much supporting direction other than “write a strategic initiative.” In this case – and it is typical of strategy implementation –the implementation team included people who normally work with well-defined tasks with clear deliverables; e.g., technical backgrounds like IT. One senior manager observed the challenge of interpretation in this way,
“It is hard for the team to mentally reframe from detail/precision to ambiguity. It shocks their comfort zone.”
Three Useful Practices for Interpreting Strategy Documents
As the strategic initiative leader, your first step is one of analysis to gain an understanding of the document’s author(s). Here are three practices that I used in this situation:
- Key Words/Glossary – The team identified 9 key words in the document, and developed a glossary for any terms that might be misinterpreted. This is a useful practice for assuring that the strategy implementation team understood the intentions of the strategy formulation team.
- Metrics – Metrics give us insight to priorities, and new metrics suggest points of change. In this case, there were few metrics listed. Thus, we knew that we would need to ask more questions about how the executives would evaluate the success of this strategy.
- Concept Map – I developed a concept map for the team, and encouraged their critical thinking about its validity. This is a really interesting tool, so read on!
More How Concept Maps Can Help with Strategy Interpretation
Here is the concept map, developed with CMap Tools (freeware- check out the link). The concept map shows the hierarchical structuring of knowledge related to the Focus Question, which was: What are the main elements of merchandising strategy contained in the PowerPoint file?
You read a concept map from top to bottom. Each node-to-linking-phrase-to-node is called a “proposition,” and the higher-order propositions are the basic answer the focus questions. The lower-order propositions (towards the bottom) help to explain the higher order: much easier to comprehend compared to thousands of words spread across a PowerPoint file!
Through this initial analysis, the implementation team could gain some perspective about high-level abstract concepts, and their relationship to the details:
If this is the strategy, what does it imply for implementation?
Notice that the concept map presents three individual merchandising elements: promotions, pricing, space and assortment. Stated differently, a retail manager needs to price and promote merchandise, and assure that there is an appropriate amount of shelf space and assortment. These are core to the textbook duties of a merchandising functional group.
This concept map clarified the “structure” of the strategy, but it also raised an important question:
Where are the Opportunities for Synergy?
The interesting parts of this strategy might be found in the two non-merchandising elements on the top level of the concept map. Notice the presence of processes (shown as process, standards, and tools on the concept map) and training (shown as training associates, grow talent, create happy associates, capable with strong expertise). These improvement elements offer two points of synergy:
- They probably overlap with other functional strategies for this company. Combining resources may create more efficiency and strategic impact.
- There may be the famous “white space” opportunities. White space is jargon for finding needs for that “fall between the cracks” in the company’s current business model.
Run the Business and Change the Business
I learned from HSBC Bank this simple rule that I apply when reviewing any strategy portfolio: everything that a manager does supports either 1) running the business, or 2) changing the business. Since strategic initiatives are transformative, we need to identify and understand the nature of the change: is it incremental change of a continuous improvement nature? Or is it radical change that requires strong leadership and committed resources?
How do you create insights and strategic perspective?
- Growth as a Strategic Initiative (leadingstrategicinitiatives.wordpress.com)
- Strategic Thinking (Part 1): A Fight with Ambiguity (leadingstrategicinitiatives.wordpress.com)
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