We Call It Honest Strategy

Strategy

In our work with clients across all sectors, and with organisations of all sizes, we see two common failings in most strategic plans:

1.  they fail to address the real issues, i.e. the strategic challenges and opportunities confronting the organisation over the planning horizon; and,

2.  they only document business-as-usual activities, rather than key strategies to grow and win in competitive markets.

The first issue is the most critical and problematic if the organisation is to prosper into the future. However, many management teams and some boards are unwilling or unable to get to the nub of and confront the real issues. This may be because doing so will highlight shortfalls in the current strategy, or weaknesses in management, or it may just be a general reluctance to face the truth. It can also arise through a lack of a defined approach to problem identification. Note this is not problem solving; it is the step that precedes problem solving. Yet the tendency is to rush to a solution rather than first identifying the issue. That is, to start thinking of strategies as solutions rather than defining the root cause problems. We often see this in strategic planning workshops with executives and boards. This approach, which is a natural human tendency, can consume an organisation’s scarce resources and management’s scarce time on tinkering with symptoms, rather than hunting down and acting upon the underlying problem.

The Argenti System of Strategic Planning defines the Strategic Issues, known as Strategic Elephants, in a measured and highly analytical way that will directly and positively impact the organisation’s Purpose.

But what we see in the absence of Argenti is a reluctance to be honest about the true strategic state of the company. It is only through honesty and candour that effective strategies can be conceived. In a recent interview in the Australian Financial Review (Boss Magazine, Feb-14), Cameron Clyne, Chief Executive National Australia Bank, discussed the way in which the Bank uses Argenti to confront and deal with the real issues. “We’ve dealt with them, we’ve taken our medicine, we’ve fronted up, we’ve explained the issue, we’ve got on with it”, he says. As the article states, Argenti “encourages managers to face up to ‘elephants’, or big strategic issues, and logically define an organisation’s objectives”.

As Clyne says, this requires managers to front up and sometimes take some bad medicine, but in doing so it brings a laser like focus to the deployment of resources into those areas that will make a significant difference to the outcomes expected by the owners of the organisation. Those owners might be shareholders or, in the case of a non-profit, the members. In the non-profit case, the members may be the legal owners but there are also moral owners, being the government, sponsors and community that fund the organisation and expect results. Either way, the Strategic Elephants are those issues or opportunities that are going to significantly impact on the results expected by the beneficiaries.

This is the cornerstone of effective strategy conception. It is honest strategy. Without being totally candid about the most significant issues and opportunities, management are at risk of developing strategies that will dilute, or at best diffuse, the efforts to make a difference.

The full AFR interview may be read here, including comments by Cameron Clyne and Chairman, Michael Chaney AO.

For more information, please feel free to email me at john.barrington@barrington.com.au.

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