A good orchestra is one with a good strategy, well executed by all its musicians, to achieve their mission of good music enjoyed by the audience. The orchestra is led by its conductor, who develops and oversees the execution of his vision and strategy together with his musicians. Who, having listened to Beethoven’s fifth symphony played beautifully by a full orchestra, could question the importance of good strategy well executed? And why should corporate strategy be viewed any differently?
Office of strategy management
Who in your organisation makes sure that your strategy is well developed and executed? The answer to this shouldn’t be difficult; it’s your C-suite and all your employees. But, who is the conductor that will not only make sure your strategy is well developed, but also executed effectively and efficiently? It seems that the answer to this question is less straightforward.
Every day more organisations start appointing a team that is responsible for the strategic development and execution process. Management gurus Kaplan and Norton, call this an Office of Strategy Management (OSM). While different organisations have different names for these OSM teams, for example strategy team, integration team or transformation team, the mandate of this team is to make sure that the developed strategy is THE agenda of management meetings, not just ON the agenda.
The reason organisations appoint an OSM is that over 70 percent of organisations fail in executing their strategy. Lack of ownership followed by insufficient guidance and direction are the main pitfalls leading to failure.
The OSM has four main areas of responsibilities, namely: The strategy development process; The strategic execution process; Alignment of strategy throughout the entire organisation; and Governance and oversight of the organisation’s strategic framework.
Strategy development process
The OSM is the architect of your strategic framework, the conductor that draws the melody from all the different players. This means that they facilitate the development and validation of the strategy on a periodic basis. Strategy is a continuous process that builds progressively on the strategies that came before it, not a one-off activity recurring once every 3-5 years.
The OSM will facilitate the C-suite in developing the strategy using market insights and analysis; identify key strategic gaps and initiatives; advise on new direction for strategy and business models; and periodically validate the organisation’s strategy.
Strategic execution process
The execution of your strategy is the responsibility of each and every individual throughout the entire organisation. The OSM can help execute your strategy more effectively and efficiently by making sure that everyone has the same strategic focus throughout the organisation. This is done through the use of strategy maps – a visualisation of the organisation’s strategy, objectives and key value drivers for strategic execution.
A strategy map can be used to communicate your strategy; As a table of content for your business plan and (annual) planning and budgeting; To validate initiatives adding value to the strategy; As a guide for prioritising investment proposals; As a guide for determining the information needed and as a starting point for reporting; and As an employee appraisal and remuneration framework.
Alignment of strategy throughout your organisation
Organisations can only achieve their fullest potential if each individual understands how to contribute value to the organisation’s strategy. It starts with aligning your strategy by having strategy maps at the corporate level, which are then cascaded down through the business units, departments and individuals. This doesn’t mean pushing the strategy downwards, but rather getting individuals involved and empowering them with a sense of ownership and passion.
In addition, you need to adjust your organisational structure, processes, technology and data into alignment with your strategy. Let’s assume that you’ve changed your strategy from being a cost leader in banking in Vietnam, to becoming a bank that provides its clients with the best customer service in the entire region, and not only in Vietnam. This means your operating model will have to change greatly. A shift will take place from monitoring product margins to monitoring customer service quality of different products in different areas within your region.
You’ll need to align your organisational structure with your strategy; Adjust your processes towards your new organisational structure; Enable your technology to support your processes; and Manage the quality of your data to be able to make the right strategic and operational decisions.
Governance of the strategy framework
Clear roles and responsibilities need to be defined to make sure your strategy will be developed and executed effectively and efficiently. Kaplan and Norton define key responsibilities (owner and supportive) for the OSM, which are to:
1. Define the strategy framework;
2. Design the strategy development and execution process;
3. Plan and develop the strategy;
4. Align the organisation;
5. Review and adapt the strategy;
6. Link operational planning/budgeting;
7. Link to key operating processes like HR, IT and other internal organisational support functions;
8. Communicate the strategy throughout the organisation;
9. Manage strategic initiatives; and
10. Share best practices.
In conclusion, it’s clear that the word ‘strategy’ has far reaching implications. It needs proper stewardship and close monitoring. The OSM, or conductor of the whole strategy development and process, must make sure that there is harmony in the music it plays.
So, who’s the conductor of our organisation’s strategic development and execution?
Stephen Gaskill - Bart Ziemerink
(*) Gaskill is a partner and Ziemerink is a manager in the Advisory Practice of PwC Vietnam. Both have extensive working experiences in advising organisations globally.
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