In our first newsletter we pointed out that merely knowing what makes your company valuable and having a good strategy for enhancing that value aren’t enough. You also need to adopt habits that advance your strategy, enable you to achieve your objectives, and make your vision a reality. And, you have to see to it that all your people do the same. How do you do this?
This is the hard part: taking your grand vision and translating it into tangible actions -- the incremental steps that will close the gap between what you know and expect and what you actually need to do to carry out your strategy. You can’t just describe where you want to go and then leave it to your lieutenants to figure out all the steps to get there. Do it and you’ll wind up like the company that proudly touts itself as a leader in client relations, when in reality it has no clear idea what it is that clients want or if their needs and expectations are being met. Why? The top management never bothered to set up mechanisms for gathering and analyzing client requirements, nor did they figure out how to provide them.
If you don’t want to wind up like this company, it’s up to you not only to set the strategy, but also to translate it into specific steps, capabilities, and processes. Then you have to communicate those steps in a language understood by those who must execute it, and motivate them to do it.
Case Study: 3M aligns tactics with strategy  One company that has done this is 3M. According to an article in "Leader to Leader" by James C. Collins, what made 3M valuable was innovation. The management adopted a strategy consistent with this value, aiming, for instance, to increase revenue through product innovation. But the reason this strategy worked was that the management also translated it into practical mechanisms designed to encourage and exploit innovation. They allowed 3M scientists to spend up to 15 percent of their time on whatever interested them and to continue doing research without sacrificing the chance to gain the types of promotions and raises that some companies reserve only for managers. Also, they required each product division to generate 30 percent of its revenue from new products introduced in the past four years.
These mechanisms and others like them aligned 3M’s tactics and strategies to meet its objectives, thus delivering value. |
Consider Your Strengths
Let’s take a company that makes high-tech products for consumers and businesses. If the company is an innovator whose value lies in its ability to develop fresh, attractive gadgets and get them to market first, then the management must adopt capabilities consistent with this strategy. This would include greasing the development process. One way to encourage everyone to focus on this is by routinely measuring idea-to-introduction time and revenue (or better yet, profits) from new products.
But these measures wouldn’t work as well at another company in the same industry whose fortune depends on its reputation as a low-cost producer. What this company needs instead is the ability to optimize input costs and focus on ongoing process improvement to obtain the lowest possible cost. Setting up mechanisms for the real-time tracking of production costs and costs per unit of output will help insure this.
Neither approach would suit a third company in the same industry whose fortune depends on its ability to be a virtual partner in its clients’ businesses. Such a company must focus chiefly on managing client relationships and understanding their needs. Assessing the strength of these relationships can be measured by really understanding how much value they have created for the client and by looking at the growth in the services that the client is using.
3 Steps: Turning Vision into Action
The message will vary from one company to another, but the approach is the same. Here are three steps to help your company translate a strategic vision into action:
Say it straight. Clearly communicate what makes your company valuable and your vision for delivering on this. Make your objectives known. Spell out what your company must focus on to create the greatest value. Create mechanisms - carrots and sticks - that encourage everyone to adopt the value-creating actions you want.
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This may sound obvious, but ask yourself: Have I actually taken all three steps and do my people truly understand how what they do contributes to the value of the company?
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