My first job out of college more than thirty years ago was in sales and I was fortunate enough to have a company car. Unfortunately, it was a nine-year old white Ford Taurus with a burgundy, coffee-stained cloth interior. Not being a “car guy,” I remember dreading taking it in for service. “Well, it looks like you need new brake pads, rotors, a timing belt, filters, and four tires special ordered from Egypt.” The guy could have told me I needed the invisible, underbody magic sealant treatment to prevent termites and I probably would have forked over the extra $49.99. It was pathetic.
The real issue was lack of a transparent diagnostic so I could verify what the service attendant was telling me. In business, strategy can present a similar challenge. Research has shown that there are 91 different definitions of strategy floating around out there. Since strategy is abstract, like leadership or love, it can be difficult for leadership teams to get a good handle on.
When leaders send us a “Contact Us” form asking for support in providing their organization with a common language, toolkit and process for thinking and planning strategically, we’ll first send out a short, seven-question diagnostic to help them see the real issues. I wanted to share those seven questions with you so that you can better understand how your team is doing with regards to strategy.
1) Does your business have clear strategic direction in writing that aligns everyone’s activities? Research by Gallup over the past 30 years with more than 10 million managers found only 22 percent of employees strongly agreed that the leaders of their organization have set clear direction for the business. Additionally, research by Kouzes & Posner shows that people are 40 percent more committed to executing strategies when they believe their leadership team can set good strategic direction.
2) Does your business currently have differentiating competitive advantage that positions you as the market leader? Harvard Business School professor Michael Porter found that 32 percent of variation in profit across firms is from competitive position, which was twice as important as the industry. McKinsey and Company’s study of 1,600 businesses echoed Porter’s findings as it discovered that having a clear foundation of competitive advantage is an absolute requirement of profitable growth.
3) Does your organization have a common language for and understanding of strategy? My research with 400 talent management leaders found that less than half of their organizations (46%) have a common language and understanding of strategy. Think about how much time and energy is wasted in meetings where people don’t have a common language for strategy and they never get around to talking about and addressing the real business issues.
4) Does your team consistently have strategic-level conversations that stay out of the tactical and operational weeds of the business and lead to organizational improvements and market-winning strategies? Only 42 percent of managers say they are consistently having strategy conversations with their counterparts in other functional areas. When I was leading a three-hour virtual workshop on strategic thinking and planning capabilities this month, one of the top issues the group cited was the fact that conversations with other teams often devolve into firefighting issues that go down tactical rabbit holes, tanking the whole meeting. Having even one or two non-strategic people in a meeting often results in wasted time.
5) Have you updated and evolved your business model in the past year to create innovation in your market? When I work with leadership teams to refresh their business model, we work through how they create, deliver, and capture value today and then go through several exercises to explore how they can evolve. The challenge is most leadership teams are so busy working on the current state of the business that they are not investing enough time thinking about the future state of the business. How much time does your team spend thinking about and planning for the future state of the business?
6) Would you describe your team’s behavior as primarily proactive and strategic versus reactive and tactical? According to a survey of 400 leaders by Human Capital Media Research, 72 percent of managers say they spend more time firefighting than on strategic tasks. Firefighting is when we overreact to urgent but unimportant issues and then invest time, attention, and people to attend to them. However, if you have strategies in place, they should serve as a filter on what to work on and what to delegate or ignore.
7) Does your team have a consistent process and practical tools for strategic thinking and planning? According to Human Capital Media Research, a meager 17 percent of managers believe they have the right tools and process to think and plan strategically. In my experience, companies either firehouse people with too many templates and a long, drawn-out process or they don’t provide any real guidance on how they expect their teams to think and plan.
Share these seven questions with your teams. How many people score fewer than four “Yeses”? If you see your people running on tactical treadmills every day and not using strategy to guide their activities, then watch out for business performance that looks like my Ford Taurus.