It’s easier to be busy than strategic

There’s that old truism that any path will do if you don’t know where you’re going and sadly, it’s a maxim that rings true in too many companies and on too many boards when it comes to strategy.

For if there’s one thing I’ve learned over my long career, it’s that strategy without quantified measures of outcomes is, as Henry Ford would have said, bunk.

I recall talking to the managing director of a large Sydney-based company whose key responsibility was taking care of a philanthropic fund bequeathed to it and each year deciding which of the many worthy causes applying for a grant from an annual allocation of some $150-million would be successful.

I remember saying to the MD how extraordinarily difficult it must be, when faced with applications from so many well-meaning charities all of whom are doing great work, to decide who receives a grant and who misses out.

I was impressed and enlightened by his incisive response:

“It’s not that complicated, Kate,” he said, “as we look for just three things.”

“Firstly, they must be very clear and focused about their purpose and the single-minded reason for their existence rather than attempt to be all things to all people.

“Secondly, they must prove that their strategy carries measured outcomes and they can show that what they’re doing is working.

“And finally, we look at the calibre of the board and senior executives.”

It’s his second point that deserves further attention for while many companies would display clarity in describing why they existed and have good people, far fewer were able to explain how they would measure their performance against the said goal.

They’d revert to generalisations like “ah, we do a big annual fundraiser” or “we host a very successful sponsored bike ride”, and go on to explain how busy they were.

In short, they’d describe a series of inputs without actually measuring outputs.

A really good strategy, by definition, contains quantified measures of outcome, both financial and non-financial. Let’s assume one of the financial goals is to grow revenue and achieve alternative sources of income. That requires us to be specific, documenting what revenue we’re aiming to achieve and spelling out what percentage of the total we wish to derive from sources that didn’t exist at the outset.

A non-financial goal might be to create an engaged and worthwhile relationship with major stakeholders. Again, it’s a nebulous exercise unless there are measures in place to determine its success or otherwise.

To be worthwhile, we’ll need to agree who qualifies as a major stakeholder and conduct initial research to establish their current satisfaction with the relationship, after which we’ll agree on a range of communication initiatives to implement to improve the satisfaction rating and again conduct research at the end of the 12-month period that highlights the new rating against the base measure.

My experience is that boards are reticent to engage in hard measures of outcomes, perhaps because they may not have the mechanisms in place to take a base measure and you need one if you’re to project where you want to be.

Perhaps it’s because there’s a fear of failure.

Or perhaps it’s just that it is easier to be busy than strategic.

Until next time,
Kate.

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