We have written quite a bit about strategy implementation both on this blog and elsewhere. Those articles and books make the assumption that a good strategy is already in place. The topic of effective strategy development can (and has) benefit from book length treatment. However, it only takes a few minutes to get a solid grasp of the most important aspect of good strategy – namely, having a well understood and agreed upon strategic direction.
"Strategic direction" sounds like fluent consultant-speak and it probably is (guilty as charged). That said, research underscores the point that having a clear direction is critical to sustained business success. In fact, if you have a well understood direction, coupled with strong implementation, the odds are overwhelming that your organization will survive and prosper. All the other details surrounding strategy development are secondary to strategic direction and good implementation.
So, what does strategic direction mean? There are three fundamental components – vision; shared values; and primary goals.
A great deal has been written about vision (and vision statements), often dismissing it as superficial or confusing it with a marketing tagline. Without a doubt, it is difficult to craft a short, compelling vision for an organization's future – particularly if you intend to have it stand alone as the only reference point for the organization's direction.
Ideally, your vision should be short and inspirational. It should not, however, be expected to stand alone as the sole definition of your organization's strategic direction. Rather, treat it like a destination on the map – the end state you aspire to reach. Then, discuss the vision in the context of enduring values and the primary goals of the organization.
The most enduring element in a strong organization is its culture – a reflection of the shared values held by stakeholders within the firm. At most firms, shared values can be articulated though a half dozen or fewer words – sometimes with a phrase or sentence expanding on what each means at the firm.
Collins and Porras discussed the enduring nature of purpose and values in the context of what they termed "corporate ideology" (Built to Last). The key point to take away from their research: a set of shared values is like an organizational North Star – a constant in a sea of constant change. We discussed ways for maintaining a positive culture here.
Visions change as markets change and goals are achieved. But values endure through changes in leadership, markets, product/service offerings, et cetera. The only reasonable exception to this basic rule of thumb is in cases where the organization's culture is so dysfunctional that everything – and especially the current values – needs to change.
The final element in a well-articulated strategic direction is identifying and articulating a limited number of primary goals. Those goals serve as the focal point for the prioritization of investment and implementation efforts. Fewer goals are better than more generally speaking. Three is better than five – and more than five goals is resource dissipating and will erode most organizations' ability to maintain focus and professional discipline.
The best primary goals reflect an intersection of market/client needs with the firm's ability to deliver excellence in that realm. That intersection of market need and organizational excellence usually manifests itself in one of the following ways.
First, it can lead to the development of core capabilities that enable the firm to perform at a level required to remain competitive. Achieving these goals does not differentiate the firm, but it does enable the organization to stay in the game. Examples include having low cost operations in the aluminum industry, solid product quality in the automotive industry, and talented people in professional services. You simply cannot compete without these core capabilities.
Second, it can lead to the development of core competencies – a competitive strength that transcends products, services, and markets and one that genuinely distinguishes the firm from others in the market. Examples include Apple's excellence in product design, 3M's ability to continuously innovate and develop new adhesives and coatings, and Axiom's ability to deliver highly experienced legal talent at a low cost.
Taken together – vision, shared values and primary goals – define strategic direction. It highlights where the organization is going, provides a "north star" for navigation, and identifies a limited number of goals to focus the allocation of resources to guide the strategic choices the organization will need to make to achieve its vision.
As always, we welcome your input and feedback in comments, via email (jsterling@sterlingstrat.com), and over the phone (312) 543-6616.
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