throughout the organisation in creation of strategy. This is for two reasons:
The intention or plan is of much higher quality â€“ since there will be lots of
knowledge held throughout the organisation that is not known by the few
people creating the strategy; and
Human nature is such that people tend to buy in and understand changes
that they have had some involvement in creating, hence implementation is
often a lot easier if staff have been consulted during the planning stage.
The third part of the strategy process is to actually implement the plan. Again,
this is all about ensuring that every person in the organisation has the knowl-
edge, the skills and desire to reach the intentions. In reality companies rarely
end up where they intended. Senior managers can sometimes think that they
have control over an organisation because they have a title that says so, but the
reality is much more complex. Every decision taken in every meeting and
every action that each person in the organisation makes can either be a posi-
tive force, towards helping the company reach its desired future state of being,
or a negative force, creating inertia, or even pulling it in a different direction.
An interesting way of thinking about this is that the direction that the com-
pany actually moves in is the sum of all the forces around the company. This
is why strategy is so difficult to implement. How do you change the behaviour
of every single person in the organisation from what they are doing today, to
what they need to do to implement the strategy? Even if everybody in the
organisation is positively motivated towards the intention, if the strategy is
not understood by them in a very clear way, that is meaningful in the context
of their own particular role, then the strategy will not get implemented.
Motivating staff is far too big a topic to cover here (see also Chapter 14).
However, it is worth just pointing out something about the janitor in NASA.
In his case, it is quite possible that he didnâ€™t actually need to know what the
mission was in order to do the tasks required for his job, but knowing the
mission clearly gave him a massive sense of pride and motivation, resulting
in him doing his job far better.
The fourth part of the strategy process is reviewing whether the company is
actually moving in the right direction. This is frequently forgotten in organi-
sations. If, six months or a year down the road, the company hasnâ€™t been mak-
ing progress then it needs to ask itself why. The company may have been
unrealistic in its original intentions. Alternatively, new information may
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have come to light or an unexpected change in the market, requiring the
implementation plan or even the strategic intention to be modified. In todayâ€™s
changing market, few organisations are likely to create and implement a three
year plan without any change in between.
The term â€˜aligning strategyâ€™ is often used; for example, you may hear the term
â€˜aligning IT strategy and business strategyâ€™. But what does â€˜aligning strategyâ€™
mean? Well, the best way to explain it is to give a bad example! A local shop
used to have a sign up that said â€˜The friendliest store in townâ€™. Admittedly,
there were some friendly staff, but frequently when I went up to pay with a
friendly smile on my face and a warm greeting, I would get nothing in response.
No friendliness, just a grunt. So, this is an example of a misaligned strategy.
The marketing people are operating on the basis that customers want friendly
staff and that the store are supplying them. However, the human resources
department and/or the line management clearly are not following this strategy.
Most likely they are more driven by a cost-based strategy of recruiting
So, an aligned strategy is one where each function in the organisation (mar-
keting, sales, IT, product/service delivery) is trying to achieve the same ulti-
mate goal. In complex and changing areas of business, such as IT, the business
and functional strategy need to be created together â€“ they inform each other.
Amazon is a good example of where new technical capabilities enabled an
organisation to create a new and different business model.
Good strategy, well communicated throughout the organisation, permeates
the organisation and ultimately informs every single member of staff what they
should be doing in their job. If a supermarketâ€™s strategy is based around â€˜pile it
high, sell it cheapâ€™, then it needs to be communicated right through the organi-
sation, so that the staff in the shop know that their main job is to focus on pil-
ing it high and keeping costs down. Another supermarket, meanwhile, might
decide that customer service is the name of the game. In this supermarket the
supermarket employs more staff and encourages employees to take time to help
customers to find the products on shelves when they ask.
Why is strategy important for your organisation?
Why is strategy important to an organisation? Well, maybe itâ€™s not. Strategy is
not important if:
The shareholders, the management and the staff are happy with current per-
formance and want to continue in exactly the same way for a number of
There is absolutely no change going on in your industry which might threaten
the current business â€“ e.g. no new competitors, no new regulation or legal
implications, no change in customer attitudes, no economic change; and
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The shareholders, the management and the staff are willing for the company
and income to slowly decline â€“ there is much evidence that organisations
without ambitious goals tend to shrink.
If, however, the organisation wants to change and grow in the next two years or
there is any potential change to the status quo, then strategy is important.
Organisations are far more likely to survive and thrive if they have a clear inten-
tion of where they want to get to and they start taking actions today which will
take the organisation towards its vision.
How to create and implement strategy in organisations
Creation and implementation of strategy is a large topic, indeed it is the subject
of many text books, so it cannot be done justice here. However, here are some
Strategy does not have to be a 60 page business plan that takes months to
write. Lengthy business plans are appropriate in some circumstances â€“ for
organisations wanting funding, for example. If a company is writing a business
plan, then it is extremely important to understand why they are writing it â€“ is
it to clarify their own business thinking, to create an action plan for the coming
year or to give to an external audience? One document will not necessarily
serve all purposes.
As has been stated a number of times in this chapter, strategy is about hav-
ing a clear, shared intention of the desired future state of being and of what the
organisation needs to do to get there. In some cases, it can even be done and
stored in the leaderâ€™s head. I have met a few leaders who are extremely clear
about where they want the organisation to get to and who will drive the whole
organisation using the vision in their head. However, in my opinion, this is an
ability that not everyone has and the majority of managers will be far more
effective if they use more formal strategy processes.
There are three reasons for writing down the strategy in some form or other:
First, the process of writing is an important part of clarifying the thought
process and communicating, helping members of the strategy team to think
through all the issues;
Second, having a written plan gives the organisation something to drive its
actions next week, next month and next year; and
Third, how will the organisation know in, say, six monthsâ€™ time how much
progress it has made if there is no written record?
So, a short written plan is highly desirable â€“ maybe just a few pages outlining
the strategic intention and the key action points. The advantage of a short plan
is that it is easier to update as the environment changes (as it inevitably will).
Companies tend to create strategy in two ways:
Where do we want to go next? This is the default way of creating strategy. This
happens daily in organisations, where decisions are taken one at a time; and
Where do we want to be in, say, three yearsâ€™ time?
Part C â€“ Overview of the Social Aspects of Business Risks
The second option is far more powerful than the first. The first is much more
likely to take organisations down a dead end and does not open up the mind to
long-term possibilities. Imagine if you were a supplier of steam engines in the
1950s. It wouldnâ€™t have been much use having a strategy that was about build-
ing bigger and better steam engines. Instead, it would be better to look forward
and say â€“ in ten yearsâ€™ time the steam industry will have declined, so we want
to be a manufacturer of diesel or electric trains. How do we start to put in place
the changes needed to make this transition?
To answer the question â€˜where do we want to be in three yearsâ€™ time?â€™ it
helps to answer the following first:
Where are we now?
What are we good at? What skills do we have? What resources and contacts
do we have? Often, the true strengths of a company will not be the obvious
ones and it can take some unpacking to find a companyâ€™s true source of
competitive advantage or potential competitive advantage; and
What resources, skills and contacts do we lack? What are we poor at?
What is going on around us that could influence our choice of course: com-
petitors, regulation, economics, opportunities, threats, etc.?
The management team might delegate some investigative work to collect this
information to one member of the management team, to a consultant or a strat-
egy department. However, we believe that the answer to the question â€˜Where do
we want to be in three yearsâ€™ time?â€™ is far more likely to be acted on if all of the
key management team have involvement in shaping the answer. Only this way
will all the organisational issues really surface and buy-in really achieved
for all key players. A strategic intention that is created by one member of the
management and presented to the rest for comment is much less likely to get
Once the organisation has decided its strategic intent, the next step is to
create a plan to achieve those intentions. The plan needs to cover all aspects of
the business from a high level:
Attracting and retaining appropriate customers;
Attracting and retaining appropriately skilled staff;
Product or service delivery; and
Legal planning, etc.
Often, at this stage the company may not have all the answers that it needs. For
example, what sort of skills do we need to enter the Chinese market? The
important point is that the plan includes an action to find out what skills are
needed to enter the Chinese market.
Mechanisms for driving the strategy throughout the organisation need to be
put in place. One of the most difficult things to do that the action plan needs to
address is getting buy-in throughout the organisation, especially if it requires a
significant change to staff or if people are demotivated to begin with. One of the
most powerful ways to get buy-in is to get the people who are going to do the
work involved in decision making for the action plan.
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When it comes to implementing strategy, the strategic intent needs to be
highly visible to all in the organisation. People need to be aware of it as they go
about their daily work â€“ making decisions, producing product and communi-
cating with clients, colleagues and suppliers. Regular management team meet-
ings need to be largely focused on driving the strategy through, rather than
focusing on a constant stream of fire fighting as happens in many organisations.
It is highly likely that at some point something in the company or market will
change, maybe a new opportunity or a new threat. The strategy may need to be
reviewed on an ad hoc basis. The management meeting is a forum for bringing
up new information so that the management team can review the situation and
make a decision. The outcome may be that the change is not significant enough
to warrant a change in strategy and a decision is taken to carry on with the
existing strategy. Alternatively, it may warrant a change.
A formal mechanism for reviewing strategy on an ad hoc basis is desirable
since it prevents the situation where a company de facto diverts from its strat-
egy, as typically happens when 60 page strategy documents are written then
consigned to the bottom drawer.
Strategy is about having a clear intention about what you want to achieve
and then setting out to achieve it. If you have ambitions for your business
then you need a strategy.
It has already been clearly shown above that the success or failure of a business
depends very much on the quality of the decisions it makes. Decisions are
made by everyone within the organisation at all levels and range from those
involving strategic direction, major investments or acquisitions to those evi-
dently simple tactical judgements made on the shop floor of the business. It has
already been seen also that a brand is more than a product â€“ it is a promise. No
matter how globally aware consumers become they will always want to carry
out business with brands they know and trust â€“ brands that fulfil an actual or
implicit promise made by the company. The key to the promise is the most
powerful word in branding today: trust. Building and nurturing brand trust
have never been more important than now in the climate of suspicion of corpo-
rate behaviour. In addition, with competing marketing messages, brand pollu-
tion and consumerâ€™s propensity to shop around for the best price mean that
familiarity and brand awareness are ever more precious. They are critical to
building and maintaining sustainable success. The approach to all of this
reflects the culture of the business.
Part C â€“ Overview of the Social Aspects of Business Risks
Decisions and risk management
All decisions present different levels of risk: sometimes the risk will be obvious
and the decision maker will consider the risk formally or intuitively. At other
times the risk will not be so evident and therefore will not be taken into account
or prioritised. Clearly in the context of cultural due diligence, one challenge is
how to get risk management integrated within the decision-making process so
that risk is considered as a normal part of business and its internal due dili-
gence. In this discussion of cultural due diligence it is intended to focus on the
importance of risk management being part of that culture to enable successful
business alliances. Creating a culture with the objective of â€˜no surprisesâ€™ does
not mean that the company becomes risk averse. Rather, it is free to take risky
decisions with comprehensive and intelligent knowledge of what the risks are.
According to many risk managers a managed risk culture can be defined as
creating an environment that:
Enables people to take more effective decisions;
Allows risks to be fully understood so that calculated risks can be taken; and
Encourages employees to consider the consequences of decisions and actions
that they take.
It is true to say that such a risk management culture can be positive for the gen-
erally perceived culture of the business, as well as its brand/s and its reputation.
As has been discussed when considering reputation in Chapter 6, a risk
management tool is of particular use to the director of corporate communica-
tions because it provides a comprehensive and scientific basis on which to
argue for increased focus on reputation management strategies. Given the con-
stituent parts of the overall reputation story â€“ brand, vision, values, media,
public affairs and public policy, compliance, governance, regulation, corporate
responsibility â€“ a framework for improved coordination of the reputation man-
agement strategy is important. The tool is also valuable to the risk director since
it provides hard data for inclusion in the company risk register, where it is pos-
sible that no entries have been made before, either in terms of categorisation or
value. It will also become vital to the company secretary for reasons referred to
in Chapter 21.