“The Board and executive need to be having strategic discussions more often,” is the common response I get from chairs, directors and senior executives when questioned about what is stifling organisational performance.
Yet as we embark on the new financial year it is these very individuals and their organisations that are frantically preparing for the annual two-day retreat to discuss strategy and set the direction for the next three to five years
As you read this, background research is being furiously collated by thousands of businesses across Australia and vast amounts of data distilled into graphs and PowerPoint slides.
Dates are being studiously blocked out in senior executives’ diaries, facilitators engaged and offsite facilities booked.
Directors, senior executives and other key staff will then head off to some remote location where the business’s current operating environment will be subject to intense scrutiny, the previous strategic plan critiqued, new ‘winning’ strategies developed and aspirational goals set.
Conversations will be engaging and insightful, leaving participants excited, invigorated and with a strong sense of direction and purpose.
Back at the office, management will turn those gems of wisdom and fresh ideas into well-rounded strategies and tactics designed to move the organisation forward.
In the first few months there will be some quick and easy wins. In many instances these will be as result of tactics management already had underway prior to the retreat.
Not surprisingly, reports to the Board will look positive and progress assured.
Then things will begin to slow down. Fresh challenges will arise, effort and resources will get directed elsewhere and the energy and enthusiasm from the pilgrimage will begin to fade.
Slowly but surely ‘business as usual’ will prevail and those aspirational goals will become secondary to the day-to-day urgencies.
Eventually comments like ‘we need to set a new direction at our next strategy retreat’ and ‘let’s leave further discussion of the strategy for our next retreat’ will become commonplace around the board-room table.
After twelve months, the entire process will begin again … most likely kicking off with a review of why the previous strategic plan did not work.
Sadly little will have changed.
Strategy and the challenges of the modern world
As the world becomes more interconnected, the amount of data produced astronomical, and political, social and economic change more frequent; the modern business environment is increasingly characterised by rapid and unanticipated change and greater levels of uncertainty.
We can almost be guaranteed that the world will have changed in the next twelve months and will be significantly different in five years.
However, while we acknowledge that change will happen, we cannot predict what it will look like.
Neither can we overlook the fact that it will impact and require rapid response from all areas of an organisation.
So … waiting six to twelve months for the next two-day strategic planning retreat to determine an effective response, will no longer work.
What will work is ensuring strategy happens 365 days a year and that it ‘emerges’ from all areas of an organisation rather than be imposed top down.
The emergent strategy
What I mean by an emergent strategy is that the ideas and the application of these ideas come from people on the ground or at coalface. After all, they are the ones who are across their areas, they know how to respond and can do so quickly.
That said, emergent strategy development needs to be managed in line with the capabilities, risk appetite and purpose of the organisation.
To create a successful emergent approach:
- Set a framework and allow strategy to emerge. While the Board and senior executives should set the core framework and critical elements such as purpose, mission and values, they should allow the details to emerge from across all areas of the organisation. The board sets the boundaries, however individuals throughout the organisation have the ability to try what works within those boundaries.
- Develop a more inquisitive culture. It is important that boards and executives foster an environment where a degree of experimentation and testing is encouraged and where it is okay to fail.
- Create collaborative management structures. Establish structures that allow people to collaborate across teams without the need for restrictive bureaucracy. This will allow cross functional teams to develop and people to work together to solve problems, not just undertake tasks.
- Have flexible resourcing. As successful strategies begin emerging from the collaborative and inquisitive structure, the organisation needs to be able to quickly deploy resources to scale this development.
- Take risk where appropriate. An emergent approach to strategy will mean that at times there will be failure and risk management within organisations needs to allow for these without catastrophic consequences.
- Be perceptive in the approach to governance. The board and senior executives need to consider the macro changes to the business environment and respond quickly to strategies as they emerge. Strategic conversations should happen at every board meeting and emerging strategies with the greatest potential, quickly identified.
- Key capabilities need to be aligned. For an emergent strategy to work, it will be essential that key systems and capabilities (processes, people, resourcing, culture, governance and risk) be aligned to the new approach.
So in answer to the question I posed at the start …. No, don’t bury the annual strategy planning retreat just yet.
Just do it differently.