Holistic Cycle of Strategic Planning & ExecutionAugust 23, 2016 . .
A good plan is nothing without execution. How do planning and execution fit together? Here is a useful map of the strategy cycle that shows how all the major pieces fit together.
I find the map to be especially helpful in clarifying where culture fits into the big picture—how important culture is both to planning and execution.
In brief, the map shows how customer priorities determine strategy; strategy determines desired culture; culture determines organizational design; and finally, design and culture feed execution.
This is how it works from the perspective of strategic planning (strategy formulation)—reading the above diagram from top to bottom:
The market realities—and most importantly, customer buying criteria—determine the strategy the firm chooses. What customer needs are we going to serve and how do we fit into or transcend the competitive landscape?
The strategy then determines the kind of competencies and culture that are required. In other words, the strategy determines the levels of performance, the kinds of skills, and the kinds of values that will be necessary for the business to compete and win in its chosen marketplace. What targets do we need to hit, and what skills and values do we need to execute our strategy and achieve our vision?
And finally, the required performance, skills, and values determine how the organization must be designed. The organization must be designed and deployed to help the organization execute the strategy and achieve the vision. In other words, design and run your business to give your leaders the support they need to execute the strategy. Put the weight of the organization behind your leaders and employees.
From the perspective of execution, we read the map from the bottom to the top: Develop exactly those management systems & practices that create the culture that enables you to execute the strategy that responds to market realities and customer needs. Run the business in a way that helps you get what you want. Policies, systems, structures, processes, goals, training, etc., should all be designed and deployed to help employees achieve their business goals and to help the business win.
Helping employees achieve their personal development goals makes them more valuable to the organization (more skilled) and also enhances employee engagement and retention.
Ongoing, rigorous analysis of your successes and failures will (i) help your company continually adjust efforts to stay on track and also (ii) provide invaluable information for the next cycle of strategic planning, i.e., enable organizational learning.
Story to Illustrate:
It is usually the culture piece that people have the most problem understanding. Here is a story that makes the culture management piece clear and concrete:
Imagine a small software company competing against Microsoft. They know that in addition to creating good software, to stay in business over the long term while competing against the giant Microsoft, they also have to live four core business values: speed, flexibility, innovation, and risk taking.
Once they make that decision, once they identify their core values, it is going to make a huge difference to how they run their business. If speed, flexibility, innovation, and risk taking are really important to achieving their vision and strategy, they will have to:
- hire for it: use these as criteria when hiring and promoting.
- orient for it: confirm the importance of these values in orientation & on-boarding.
- develop it: train, coach, and mentor people for it.
- have clear metrics around it: clear definitions and expectations around these values.
- evaluate people on it: hold employees accountable for living those values.
- recognize and reward it: show appreciation for living the values (effort & achievement).
- systematize it: structure jobs and teams to enable and facilitate that kind of behaviour.
- Lead it: ensure leaders at all levels are leading by example — walking the talk.
The first big lesson from this story is that we have to anchor our core values in culture by building them into our organization’s systems, policies, and structures. Run your company to get what you want—to drive, reinforce, and support the employee behaviour required by your vision and strategy. Tagline: “Design the organization to support the employees in their pursuit of the vision and strategy.”
There is a second important lesson here. While speed, flexibility, innovation, and risk taking might be ideal values for this small software company, those very same values: “speed, flexibility, innovation, and risk taking,” might be a total disaster for running a nuclear power plant. In other words, your values have to be aligned with and relevant to your organization’s unique vision and strategy. If you do not proactively align your culture with your vision and strategy, employee behaviour will be ineffective, counter-productive, and unfocused (random / irrelevant)—not driving your strategic agenda forward.
Strategic culture management means this: lead your firm in such a way that employee attitudes and behaviour drive, reinforce, and support your vision and strategy, and thereby become a strategic asset for your organization.
Drucker is famous for saying that culture eats strategy for breakfast. What he means by this is that no matter how good your strategy is, if you can’t anchor it in your culture, if it is rejected by your culture, then you won’t be able to execute—and your strategy will be useless to you.
Copyright © 2016 Joel Shapiro, Ph.D., all rights reserved.
Joel Shapiro is a leadership educator and culture guru with Incrementa Consulting in Calgary, Canada. Joel is passionate about developing leadership capacity, making employees part of the solution, and finding the perfect blend of humanity and business performance. You can read more of Joel’s thoughts on the Incrementa website and on Twitter.