“Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.” — Sun Tzu
The three steps to delivering your strategy
- Decide on your company’s goal; this is your purpose
- Determine the steps that lead towards your goal and communicate it clearly; this is your strategy
- Prioritise the work that you do remorselessly to align with your strategy
I have been privileged to work with a number of exceptional companies in a variety of industries over my career. From recruitment to media, to FinTechs and EdTechs, regardless of their industry and their customer there is a common thread that frustrates the leadership of all of these firms: why are we not going faster?
Invariably, the answer to that question is that they are trying to do too much and their teams are unclear about how they contribute to the big picture.
The importance of purpose
If a common thread through many businesses is the frustration that they are not delivering fast enough, an equally common observation is just how poorly strategy is considered and executed in those same businesses.
Strategy is one of the things I find most compelling and most frustrating when working with founders and executive teams. Despite the number of MBAs, the panoply of Harvard Business Review articles, the corporate training workshops and quotes from long dead Chinese generals, strategy is still something most often relegated to an annual executive away day.
It’s become a well worn executive belief that a sense of purpose differentiates organisations. It’s a feel good, positive message that allows us to create a message that our businesses exist for more than just profit. Purpose leads to positivity and happy staff are more productive. A purpose will transform our business when compared with our tactical and analytical competitors.
Wrong. Purpose does not improve your business; only a combination of purpose and clarity will give you the transformation you’re looking for, and fortunately there’s evidence to back those bold claims up.
Claudine Gartenberg (Wharton), and George Serafeim (Harvard) have delivered the most complete analysis of the financial impact of purpose in a study which analysed self-reported feelings of purpose and alignment from employees surveyed in the Great Places to Work report.
“High purpose firms come in two forms: Firms that are characterized by high camaraderie between workers, and firms that are characterized by high clarity from management.”
The initial work compared the feeling of purpose against financial performance to find no significant correlation. It was only when the pair studied organisations that combined purpose and clarity that they formed a remarkable conclusion.
“Firms exhibiting both high purpose and clarity have systematically higher future accounting and stock market performance”
How systematic was this performance improvement? Gartenberg claims that “a portfolio of high Purpose-Clarity firms earns significant positive risk-adjusted stock returns in the future, up to 7.6% annually”. This performance difference is particularly apparent when the purpose is clearly understood from the bottom of the organisation up and includes the ‘lost middle’ of the company employees.
Defining our purpose is the first step towards defining our strategy.
The ‘why’ of strategy
Every executive will acknowledge the importance of having a strategy, but argumentative executive strategy sessions invariably end in an opinionated discussion over the difference between mission and vision statements.
Stop.
Let’s break down the reason that we have strategy. A good strategy describes the necessary steps to achieve our biggest goal; our purpose as an organisation. It exists for two critical reasons: to unify the efforts of our team, and to guide us when prioritising sometimes (often?) conflicting tactical decisions.
After yet another workshop arguing about vision statements (Nike’s is the best, by the way), I took a walk across London, frustrated again at the amount of time wasted on semantics in the boardroom. The walk gave me an opportunity to reflect and break down this mission/vision nonsense into familiar terms that we’ve grown up understanding; a fairy tale.
This, then is how it works — our purpose is our ‘happily ever after’. Suddenly, we have a context and a far-reaching vision of what could be. In order to live happily ever after, we first need to save the prince (or princess) from the dragon; our mission.
To rescue our royal friend, we need some clear high level steps — leaving home, making it safely through the haunted woods and finally peacefully re-homing the misunderstood lizard. That, dear readers, is our strategy.
Sound stupid to you? Forgive me if it sounds like I’m trivialising the importance of those MBA lectures on strategy and consulting engagements (which I don’t intend to), but consider this; how many companies have you worked in that get strategy right? In part, this poor performance is because we conflate the importance of strategy with complexity.
The fairy tale approach to strategy
Strategy is not a slide deck to be revisited once a year. Strategy must respond to business reality, and it should be reflected continuously into meaningful direction for everyone in the business. It is simply not good enough for strategy to stop at the boardroom door.
In order to align individual performance with the most important goals of the organisation we must break the strategic steps down into actionable and achievable goals for the entire business.
A simple way to do this is to start by considering the tectonic steps required to move towards our overall purpose for the next 3–5 years. This should consider a phasing of effort, focusing on initial beachhead markets, but ensuring that we keep our eyes elevated to the horizon.
I like to do this in a variation of Jake Knapp’s design sprint, working with executive teams to think about their 1,2,3 and 5 year goals which allows us to describe the sequencing of success and the big goal that we’re heading towards:
With these annual phases as a roadmap for our future success, we can then further consider our most critical goals and objectives across the entire business for the next year, and the next quarter.
Fortunately, Intel and Google have already popularised an approach to breaking these goals down — Objectives and Key Results (OKRs).
I won’t stretch this article to discuss OKRs in detail, but do take some time to familiarise yourselves with them. The key thing to understand is that OKRs present a simple, effective and well described way to reflect strategy into action.
To extend our fairy tale analogy, our OKRs describe the immediate, metricised steps which will demonstrate clear progress towards our smaller annual and quarterly goals. Most importantly, OKRs describe these steps in a meaningful way to everyone in the organisation.
Gartenberg and Serafeim called out an important point that was demonstrated in their research, namely that “diffusing a sense of purpose in lower levels of the organization has not been successful in many firms” (Graham et al. 2015; Oxford University and Ernst and Young 2016). The OKR process is a well documented and proven approach to ensuring that there is a mechanism to extend purpose to all levels of the company.
Let’s recall the critical “why” of strategy. It’s not a way to impress investors, or a PowerPoint burden to rehash once a year in an executive off-site. Our strategy lays out the steps to achieve our purpose. It serves as the north star to which we align activities throughout the organisation. The adoption of OKRs is the process by which we communicate our purpose and measure or progress towards it.
Once our purpose and strategy have been agreed and communicated throughout the business, the next step is to ruthlessly prioritise how we expend our finite time and effort to achieve these goals. For me it is the quality of prioritisation and deciding what not to do that distinguishes great companies.
In the next article, I’ll discuss a process to manage prioritisation of our strategic bets and how to balance innovation and execution throughout the organisation.
To be continued…
This story is published in The Startup, Medium’s largest entrepreneurship publication followed by + 382,862 people.
Subscribe to receive our top stories here.
