Setting Corporate Strategy

With all the innovations in technology over the last many years, including whole new ways to manage the development process, there seems to remain at least one bastion where experience still rules — setting corporate strategy. The first challenge typically comes from what the word ‘strategy’ actually means to an organization — by definition it is a ‘plan of action designed to achieve a particular goal’. It’s a military term which essentially means lots of structure, discipline and focus.  I rarely meet a young company that has this kind of strategy in place — or said more properly, the people who work for the company know about the strategy that is in place, let alone operate with structure, discipline and focus.  When I was running PlateSpin, we had a detailed strategy in place along with a more detailed operational plan — it was well communicated and available to everyone, but mostly nobody seemed to be able to articulate what it was — except those in the immediate circle of the leadership team. Somehow we had structure, discipline and focus. I suppose this is all common place, human nature, meant to be — i don’t think technology is going to change this aspect of human behavior, or should i say misbehavior.

Anyway, my point is meant to focus more on how a corporate strategy is set. Does it come from a consensus event? Does it come from one person’s vision? Where do you start in creating a strategy for your company? It may be something you think you have a handle on but for the most part, a typical leadership team is largely incapable of sorting through the issues in an efficient way to create a strategy for themselves. It often falls to an outsider to facilitate the discussions, ask challenging questions and flesh out the salient points for the team to consider. It’s a thinking process, one that requires clarity of thought, logic and often broad experiences to make sure the relevant issues are reviewed.

The first place to start is usually the end — what do you want your company to look like 3-5 years out (any further is usually too magical to treat as a serious goal)? Many first responses include gargantuan revenue numbers, or to have been sold, or to be world-wide leaders bigger than Google and Apple combined. Did I say strategy is synonymous with dreaming? I like working back from an overall positioning statement. It forces everyone to start creating a path in their head from where the company is today to where it wants to be in the future. It can be revenue oriented but often some details underneath a revenue number need to be explored as well — like how many deals would be needed to get to the 5 year number? Is it an achievable number or so much higher than the current deal flow, no realistic operating plan could get you there.

Working back and forth between today and the future is a good way to iron out the details of a strategic plan. Integrate true corporate strengths as you go (your DNA). For each key point about the future, you should have some statements that order how you would get there, include some measures whenever you can. Once a few of these paths are drawn, they start to tie together other issues all by themselves, like people and skill requirements, perhaps new ways to get to market, strategic partnership needs, funding needs, etc. It’s a bit like knitting a sweater, you have to start with a pattern, know how many stitches fit each row adding and dropping as appropriate, switch tactics as the stitches change to make certain patterns, etc.  Soon pattens start to emerge without doing anything other than following the plan. You have to have and follow a plan of attack before taking up knitting a sweater or you wind up with tangled yarn.

The best strategies can normally be articulated in a single PPT slide. The best companies live and breath their strategies. The best teams focus on the goals at hand, have the right measures to tell them if they are on track or not, and also have some decisions already made if things do not go well. Setting a corporate strategy is important — but only useful if set in the right way.

Any comments would be appreciated.

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3 Responses to Setting Corporate Strategy

  1. Adam White says:

    You mention that the strategy was well communicated but nobody outside the immediate leadership seemed to be able to articulate it. This a contradiction that begs the question – what was the failure in the communication? Where did the disconnect come from? Why did it happen?

    What things did you do at PlateSpin to attempt to fix the situation? What would you do differently in a future venture?

    Do you think there are points in the game where it isn’t important for everyone to understand the strategy and operational plan at the same level as the senior leadership team and instead fall in line behind the senior team? Is it even feasible to have a team of 50 or 100 be on the same page all the time?

    You said “somehow we had structure, discipline and focus.” Certainly this didn’t happen by chance or by magic – there was something in the environment, or in the people, that caused this to happen. Any thoughts deeper than “it was human nature?”

    • admin says:

      Adam — thanks for the follow up questions.

      The issue at PlateSpin was a common one — no matter how many ways something is communicated, most people fail to receive the message as they are not paying attention — in many respects, they don’t need to pay attention (they think) from a job perspective, so the message does not get absorbed. It’s not a unique situation by any means — i see it everywhere I have worked including before and since PlateSpin. It provided a reminder of how important it was and is to find different ways to communicate and re-enforce important elements of your business plan so people don’t stray off plan. As you know, we held team-wide meetings annually and monthly (for the most part :), posted materials on internal web sites, even hung important things in the kitchen — but when we would survey people about how they felt working at the company, one of the top items to complain about was that there was little communication. As I say though, a common problem that is just part of the human condition. We never did give up trying to communicate, maintaining open doors on company direction, reporting as best we could on progress against key objectives, etc — where it seems to go off track at other companies is when the leadership team stops trying to communicate, i don’t we ever stopped trying.

      In terms of being on the same page, i think this really talks to both of the last points in your comment — the company culture helped direct everyone in the right direction. This is important to establish early on — people who worked for PlateSpin generally new what we were about, it permeated the atmosphere just like it does when you walk into places like Google, Apple and Microsoft. We were fortunate to have a talented team, young, filled with energy to succeed operating in a market situation where success was possible and visible around us. This does help for sure. I could take some personal credit for that, but it would not have been what it became without many people feeling the urge to row in a common direction.

  2. Jason Dea says:

    Just a general comment. I really enjoy reading your insights on business and leadership. You should add a twitter gadget to your site to make it a bit easier for others to spread your wisdom by re-tweeting your posts.

    I found this entry particularly insightful (especially your response to Adam), and it’s the type of message that should be (or could be) distributed quite broadly.

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