5 Structural Elements of Strategy
Strategies fail over and over again for the same reason: businesses ignore the 5 key structural elements of strategy. Miss one and your strategy is doomed to fail.
By Nilofer Merchant, CEO of Rubicon Consulting
How many times have you seen this situation: The strategy-owner in your business unit develops a plan, holds meetings, and achieves alignment. Yet during the execution phase, the strategy falls apart.
During the inevitable review process, the causes are all too familiar: No defined key players. No consideration of the decision-making process. Too many ideas generated, too few were killed. A laborious process or no process at all. The wrong people engaged or poor team collaboration.
There's a reason that the causes of failure repeat. It's because strategy has a unique structure, and if you overlook one of the five key elements of that structure , you'll fail. Add elements that don't support that structure and you'll fail. And the failure will look familiar every time.
Element 1: Power Distribution
Power distribution dictates who's involved, how much information each individual can access, and the decision-making process.
It's crucial to know who you're working from their track record on complex strategy projects to basic strengths and weaknesses. Talk to other people in the organization who have worked with them to gain more information. Vet people to avoid surprises and to understand the best ways to support and motivate team members.
How much of your strategy is confidential? What can -- or should -- be shared with other groups? Set the boundaries and share them so that everyone agrees and has the same expectations.
Make sure that the inner working of the group matches the culture and values of the parent organization. If your company is as free-flowing as Google, don't bind people with conservative rules that eliminate communal sharing of ideas or the development innovative solutions.
Element 2: Decision Making
The way that decisions are made in organizations determines how ideas are generated and which ideas are considered. The way decisions are made influences how these ideas are carried out later.
Does decision making in your organization flow top-down or bottom-up? Who are the holders of the power to decide which ideas advance and which are eliminated? If ideas are valued in your culture, there's a strong likelihood that it might not matter who generates the ideas.
Element 3: Idea Generation
How ideas are generated affects the quantity and quality of these ideas, which directly affects the number of viable strategy options.
A company that has an annual strategy meeting with a brainstorming component that encompasses input from many directions within the company uses one type of idea generation. The Google model involves having employees use 20% of their time for innovation. They test and grow projects. Some projects are nurtured and provide the company with revenue. Others are killed off. It's even possible that original projects may mutate into something different.
Element 4: Process
Process is the way that ideas are handled and consumed within organizations. Process defines the way that agreements and commitments are made and managed, and how well people understand what is happening and what to do.
The process-driven organization avoids wasting employee time and energy. People in this type of company reach agreement that an action is valuable, develop a process around it, and set it in motion.
Process may be communicated to a team in writing, by word of mouth or in other ways. Agreement is critical to the understanding of process within an organization.
Element 5: People
In an organization of any size, people bring their domain knowledge, talents, and perspectives to strategy creation. Often people are viewed as the first point of strategy failure, but they are actually the last point of failure in a long series of cascading interactions.
Put another way, very bright, creative, motivated people can fail if they are embedded in a strategy creation structure process where power, decision making, idea generation, or process are broken.
Each of the five elements is critical to the strength, balance, and practicality of the proposed strategy. Tighten up around these five and watch your team's next strategy succeed beyond your plans.
Nilofer Merchant, CEO of Rubicon Consulting, is a global high-tech industry thought leader and trusted strategic adviser for companies such as Adobe, Symantec, and VMware. She publishes and speaks frequently on strategy, innovation, and leadership.