Reviewing a strategic plan with the CEO of a new client recently, I was struck by the extent it included divisional strategies and business-as-usual activity. It was meant to be the company’s overarching growth plan. But it included lower-level tactics and operating details that were not strategically relevant from a whole-of-company perspective.
It highlighted that what may be strategic at divisional level may only be tactical at corporate level.
When the highest-level plan is chock full of divisional initiatives, prioritisation is threatened because there are too many strategies to be pursued. The resulting confusion makes it difficult for a CEO to adequately determine where scarce time should be spent.
This is not to say divisional initiatives are not important. They may well be, but not for the CEO other than in a monitoring sense. They are important at a lower level within the organisation, so lower-level managers should focus on them and take responsibility for delivery.
Confusion of priorities naturally leads to a dilution of effectiveness. This is akin to the difference between a fluorescent light and a laser beam. Fluorescent tubes are effective in lighting a room but if you want cut-through you need to deploy the focused light of a laser. Dilution of strategic effort can result in a lot of activity but little cut-through.
All this activity can mean significant opportunity cost. We all have limited time and organisations have scarce, or limited, resources. Deploying the wrong level of resources on the wrong activity means the right stuff doesn’t get done.
Knowing what’s important
How do you decide what is divisional and what is corporate?
Think about the outcomes intended to be delivered. This should be clear from the organisation’s purpose and its highest level of corporate performance indicator. It follows that the higher the level of the plan, the greater the outcomes to be delivered. The threshold quantum of contribution to the corporate goal will be greater the higher you rise within the company.
Business-as-usual activity is not strategic. It might have been once but over time it becomes a normal part of operating activity. We can consider this using the 3 Horizons model, as shown below.
The company is always operating in Horizon 1 (H1) while concurrently planning for Horizons 2 and 3. Strategies in H2 and H3 ultimately become H1 strategies until eventually they are embedded as normal operating activity. That is, they move to the left of the H1 curve to an area not normally shown on the chart, as seen below.
When thinking about what is strategic and what is tactical, consider the question both vertically and horizontally. Vertically from the perspective of the level within the hierarchy of the organisation – the higher up, the greater the impact. And horizontally using the 3 Horizons model – what is strategic at one point in time becomes business-as-usual at a later point.
- John Barrington is a leading strategy and governance expert, and founder of Barrington Consulting Group. For more information, email email@example.com