At its basic level, business strategy is the art of planning and directing the overall operations and movements within an organization in order to achieve specific goals and objectives. Business Strategy is often contrasted with tactics, and, at some extremes, even separated from strategy by a large gap.
Sometimes, day-to-day operations have no relation to the organizational strategy, or worse, are working at cross purposes to the business strategy. Rather than think of business strategy and tactics as “separated” activities, these should be thought as two sides of the same coin. Ultimately, strategy is what leaders use to drive organizational effectiveness and performance.
At the risk of oversimplifying, leaders have two major strategic roles in today’s organizations. The first is strategy articulation, where the leader defines the organization’s strategy. The second is strategy realization. This is where leaders work through the many phases of implementing the business strategy.
Leaders are responsible for defining the organizational strategy.
This initial step, often referred to as strategy articulation, is critical and sets not only the direction, but the tone of the organization. “If you do not know yourself, it is difficult to judge what you should become. If you do not know where you are, it is difficult to decide where to go and how. If you do not know what you are really good at, it is tough to know what to do” (Zook, 2004, pp. 165-166).
Whether a leader is a seasoned practitioner of strategy articulation or not, Osterwalder and Pigneur’s (2009) Business Model Generation is an excellent tool. This useful resource will help leaders understand their business model. Many organizational leaders, whether for-profit or non-profit, are using this and other strategy development tools to innovate their current strategies.
Innovation and Management
A good guide for leaders looking to create innovative business models is Johnson’s (2010) Seizing the White Space. Johnson encourages leaders concerned with developing customer value, to “stop trying to figure out what kinds of products people are trying to buy and instead work out what they are trying to get done in their lives in a given circumstance” (Johnson, 2010, p. 26).
While difficult for leaders in established industries, “business model innovation is about challenging orthodoxies to design original models that meet unsatisfied, new, or hidden customer needs” (Osterwalder & Pigneur, 2009, p.136).
Deming was correct when he said, “a system must be managed. It will not manage itself” (Deming, 1993). Strategy realization is best thought about systematically. Leaders must be concerned with strategy alignment, communication, change management, and the ongoing calibration and fine-tuning of strategy in a turbulent organizational climate.
Another adage attributed to Deming that applies to strategy realization is, “you can expect what you inspect” (Paton, n.d.). What this means for leaders is that business strategy is not simply what happens at a retreat center, but is an ongoing process whereby leaders inspire those around them by planning and directing the overall operations and movements within their organization in order to achieve a specific organizational purpose.
A Balanced Approach
Leaders are responsible for implementing the organizational strategy.
Many will be familiar with the classic Kaplan and Norton work The Balanced Scorecard (1996). This work is an important resource for leaders seeking a balanced approach to strategy implementation. Equally important for leaders who are serious about implementing the strategies they have worked hard to create are the other, maybe less known works in the four-part series: The Strategy-Focused Organization (2000), Strategy Maps (2004), and Alignment (2006).
The Strategy-Focused Organization (2000) is the second in a four part series on strategy development and management. Kaplan and Norton do an excellent job of describing the nuances of creating a strategy-focused organization. Kaplan and Norton assert that the creation process for strategy and corporate scorecards “should articulate the theory of the corporation” (p. 169). They maintain that effective leaders of strategy understand the tension between strategy formulation as “art” and description of strategy as “science” (p. 104).
Priorities and Outcomes
Leaders of organizations or organizational functions who manage less tangible outcomes will benefit from Strategy Maps (2004). In this work, the third in the series, Kaplan and Norton show the practical application of converting intangible assets into tangible outcomes, especially learning and organizational development leaders.
“Intangible assets should not be measured by how much money was spent to develop them, nor should their value be determined by independent appraisals of the capabilities and value of HR and IT assets.
The value of intangible assets comes from how well they align the strategic priorities of the enterprise, not by how much it costs to create them or how much they are worth on a freestanding basis” (Kaplan & Norton, 2004, p. 211).
Effective leaders will be concerned that there is a cascading effect of strategy from the highest levels, through core operations, and continuing to supporting functions throughout the organization. “If employees don’t understand the strategy or are not motivated to achieve it, the enterprise’s strategy is bound to fail” (Kaplan & Norton, 2006, pg. 261).
Alignment (2006) is the fourth book in the series by Kaplan and Norton and is focused on creating alignment throughout the organization from the executive team, through operational and supporting units, and ultimately to the frontline employee. “An outstanding corporate strategy is not a random collection of individual building blocks (or mini-strategies) but a carefully constructed system of interdependent parts…aligned with one another” (Kaplan & Norton, 2006, pg. 40).
There is some debate as to what role, if any, frontline or middle managers have in organizational strategy. While it may be ideal to have senior leaders at the highest levels lead strategy development, there are some circumstances where this is not possible.
Wooldridge (2000) suggests that middle managers possess the organizational knowledge and relationships critical to strategy success. This includes participation at all levels of the strategic planning and development process.
For those who find themselves in organizations that are resistant to strategy development, rather than become frustrated, they should look at this as the ultimate test of leadership–leading within the span and scope of one’s influence while in difficult circumstances.
When thinking about the leader’s role in strategy, especially in today’s turbulent climate, it is important that leaders understand the need to articulate a clear strategy to all levels in the organization. Equally important, leaders must put in place the necessary systems and structures to ensure the strategy can be realized.
What is the Leader’s Role in Business Strategy?
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