Strategy development and setting targets you can influence
I am fortunate to work with senior managers from all over the world. On our course last week, we had 5 managers from the Gulf Region, one of whom works for a major utility company in Saudi Arabia. We were discussing the development of business and IT strategy. My question to the group was “Which processes do you use for the development of strategy?” Mosab replied that his company uses a combination of the Balanced Scorecard (as described by Kaplan & Norton in their book the Strategy Focused Organization) and 4DX (the 4 Disciplines of (strategy) eXecution)
When I worked in the Netherlands, we used the Balanced Scorecard process and were able to make massive positive changes as a result. The process is clean and sharp. Even so, we had to work out how to make the transition from developing the strategy to execution ourselves. The 4DX method would have saved us a lot of time had it existed at the time. 4DX is a method pioneered by Franklin Covey for putting strategy into practice. I took the opportunity to read the book, “The 4 Disciplines of Execution” by Chris McChesney and Sean Covey. I found the ideas quite gripping, and in fact, within a couple of days of reading the book had already started to think about how I could use it for my own organization.
One of the core principles of the book is that you have to identify just a couple of stand-out objectives (what the authors call Wildly Important Goals). These have to be goals that are separate from the mania of your day-to-day work (again, what the authors call the whirlwind). When it comes to IT strategy, I think this is a key point. When companies put together their business strategy, they have to think of many permutations of products and markets. The more serious the competitive situation, the more radical the ideas may need to be.
There are a lot of analogies between the strategy and the art of war and business strategy. In other words, when companies set top level business strategy, it very much incorporates all activities. You wouldn’t leave out your air force when you put together your battle plan. But when it comes to IT strategy, maybe we can do ourselves a big favour by leaving out those aspects that can be handled in the day-to-day. For the sake of completeness, we may want to list them, not least because they will still need budgeting for. To re-iterate, then, if we can identify 60 to 70% of our work as being day-to-day, we can really focus our efforts on the strategic.
A company that plans ahead is less likely to have to start from scratch. Jim Collins in his book, “From Good to Great,” talks about the flywheel effect. This is basically the idea that applying a small but consistent force to a heavy task will deliver small but consistent gains. But that increase in speed is banked, and the next set of work keeps on increasing the speed bit by bit.
To make the analogy with strategy, as time goes on, you create a barrier to entry to your competition, because it is not possible for your competition to instantly get the metaphorical flywheel up to speed. Now in some unfortunate markets, where there has been massive disruption, the advantage you have gained through hard work over a long period of time can be eroded very quickly. Nonetheless, what Jim Collins found in his sample of great companies, was that they were less prone to jumping around chasing new markets. They would focus on what they did well, and look to build in a reliable and consistent way.
In IT, although it feels like everything is changing all at once, the situation is actually very similar. In truth, nearly all of the systems you have implemented will be there next year. So, yes, you may be upgrading them, and improving the infrastructure and so on, but it is unlikely you will have to start from scratch. So you can concentrate on the delta, the new things you need to do. And that takes us back to the 4DX principles. Simplicity and focus are the foundations of strategy. Anyone who tries to do too much will end up being a “busy fool” and doing nothing much of anything.
The first step then is to identify 2 or 3 key objectives that will really move us forward. We will still set some day-to-day operational objectives, so it is not that this is all we are doing. But by being really clear on the (wildly important) strategic goals, we can apply really focused energy. That is very helpful, I think we would agree, but the real insight for me was the recognition that we should focus on LEAD measures.
The authors made a distinction between lead and lag measures. I will use their example, because I can’t think of a better one. If we want to lose weight, we might set our objective as wanting to lose 16 pounds in 3 months. We will probably weigh ourselves every day. But the truth is, weighing ourselves doesn’t actually help us lose weight. If we weigh ourselves and find out that we have unfortunately put on a pound, it is too late. For this reason, weighing ourselves would be defined as a LAG measure. In other words, it tells us after the fact, what progress we have made. To really make progress, we need something that we can focus on ahead of time, that will in turn cause us to lose weight. This would typically be calories consumed and the amount of physical activity we have done.
Knowing this has transformed the way I am now looking at my business. Yes, it is true that you cannot always be sure up front that working on a lead measure will definitely deliver a change in the LAG measure, but if you set up the system, you will find out in due course. One of the huge advantages of moving from reactive LAG measures to pro-active LEAD measures is that it gamifies the process. This in turns raises energy levels significantly. You know that you have done what you set out to do, even exceeded it. Obviously, if there is no knock-on benefit to the LAG measure you will need to look for alternative and hopefully better LEAD measures.
Fired up with enthusiasm for the method, I then went through all the aspects of the business that I could be measuring. It will come as no surprise, though, to learn that I found ten areas of performance I wanted to measure. I found lead and lag measures in all of them. But now things have calmed a bit, I have identified a couple that I hope will make a difference. This will help me to answer the age-old question, which aspects of my marketing are the most effective. I have now chosen a handful of metrics that I can actually influence on a day-to-day basis. I’ll let you know how I get on – but the fact that you are reading this, suggests that there is some progress.