key success factors - strategy

Strategic Focus – Key Success Factor 1

Over the years we have devoted countless hours to exploring answers to the question, “What are the most important success factors that enable one organization to succeed while others stumble or fail?” For at least the past 20 years, specifically since Tom Peters’ In Search of Excellence in the early ’80s, thousands of other authors and consultants have attempted to answer that question, too. The challenge, of course, is to identify success factors that really make a difference and that will stand the test of time – not be the fad of the moment.

Over this and the next four posts, we would like to share with you what we consider, after 33 years of experience with many organizations, to be the most important, reliable, powerful success factors of all time – at least the “current era” since World War II. These posts will run a little longer than the others, but this is very important stuff, so please bear with me.

The 5 Key Success Factors we have identified are so interdependent that it is almost impossible to say one is more important than others, but I would like to begin this series with the Success Factor that makes all the others hang together: Strategic Focus.

Strategic Focus has the following components:

1. A defining vision. A vision is a “word picture” of the desired future state for an organization, typically stated in the present tense as if it were already achieved. Although the first President Bush and others have made light of “the vision thing,” when properly understood, it is the main thing. As the saying goes, “The main thing is to make the main thing the main thing.” It’s easy to get sidetracked. The best vision statement:

  • Represents the thoughts, feeling and aspirations of the entire organization, not just leaders
  • Very concisely, in a paragraph, paints a word picture of the desired future situation
  • Is strongly influenced by market realities, especially what customers value most
  • Challenges the organization to stretch and work hard but is by no means impossible.
  • Distinguishes the organization from its competition in a way that is real and achievable.

This final element, what I call the defining element, is most often missing from well-intended vision statements that sound so much alike, as in , “We are the leader in our markets by providing our customers with superior products and services, our employees with meaningful work and competitive compensation, and our shareholders with an exceptional return on investment.” Yeah, yeah, isn’t everybody.

To be truly defining, a vision must say, in effect, we will be at the top of this mountain. It’s what marketers call positioning. For example: “We are the leading health-care architect in the Carolinas specializing in wellness centers.” Or this: “We are the leading manufacturer of lithium compounds and products in the world.” In other words, define your expertise and then narrow your scope to an area small enough that you can actually dominate it. That is truly defining your vision, and because it is realistic and achievable, your people will find it believable.

2. A challenging mission. Many organizations consider vision and mission interchangeable. We prefer the distinction that a vision states “what we want to become” and a mission states “what we must do to achieve the vision.” With a little thought, certain logically necessary courses of action follow from the commitment to a defining vision. For example, if you want to be the leading health-care architect in the Carolinas specializing in wellness centers, your mission might consist of things like:

  • Continuously educating our people on innovations and best practices in wellness centers worldwide.
  • Attracting, retaining and developing architects who are committed to wellness center design and highly talented at doing that.
  • Monitoring competitors in the Carolinas, including out-of-state firms seeking to do business here, so that we know what type of work they are doing and can make sure we stay ahead.
  • Attending or presenting seminars on wellness, the principles behind it, and how that translates into good facility design.
  • Seeking news media coverage highlighting our expertise in wellness centers, and engaging in other promotions such as direct mail to potential clients.

Again it is great to get a high degree of participation from throughout the organization in developing the mission statements, but the list should be short, typically between 4 and 8 action items.

3. A few challenging but achievable goals. We like the SMART goal concept: a goal should be Specific, Measurable, Achievable, Realistic and Timed. Many people set goals such as “Increase our revenues” or “hire more people” that are in the right direction but are not really SMART. One author calls these vague goals “fuzzies.” An example of a SMART goal (depending on the organization) would be: “Increase revenues by 10% in the next 12 months.” Or “Hire at least two new professionals within six months.”

Too many goals can lead to analysis paralysis. This is actually fairly common when organizations try to do their own planning. To make sure there is something for everybody, small organizations create pages and pages of goals which are really no more than wish lists, because they cannot all be achieved. In today’s intense, busy, fast-changing workplace, it is far better to have a few key goals to help people focus their improvement efforts. The more those efforts are spread thin, the less progress you’ll see a year from now.

Even some large organizations have only about three key goals a year so they can really focus on making them happen. That is so important. They must be challenging, but if they are not achieved, it will be an emotional downer for the whole company, and hard to get them excited about other goals anytime soon.

Goals should challenge people to stretch, to do their best, but not create unbearable pressure and add to their stress. A balance between easy and impossible must be carefully struck by the goal-setting process.

4. A specific strategy for each goal. Just as the mission explains how the organization will achieve the vision, strategies explain how the organization will achieve the goals. That rhythm of “pick a target, figure how to get there” can resonate all the way through objectives and tactics, but increasingly companies are leaving those details to departments and not trying to set them in stone at the corporate level.

One of the main reasons many organizations’ plans fail is because the goals are not backed by realistic how-to strategies. Current thinking is for upper management to set the goals, bounce them off the responsible people to make sure they will be supported, then let those responsible for implementation work out the strategies, again bouncing them back up the line to make sure executives approve. Strategies should include four key elements:

  • Actions to be taken, stated in broad terms but adequately specific to give direction.
  • Responsibilities for those actions
  • Timing – when they will occur
  • Budget – where the money is coming from, and how much.

Another check to be sure you’ve got a full strategy is to ask the old newspaper questions, Who, What, When, Where, Why, How and (one I always add) How Much. The best strategies are worked out in authentic brainstorming sessions. Participants create alternative solutions in a free-wheeling, no-criticism creative process. (It is forbidden to judge or criticize someone else’s ideas in the creative session.) Then they step back and choose the best strategy, or combine several elements into a new one.

5. A real-time guidance system. Other reasons most strategic plans fail are because they are thick documents that (a) people can’t keep in their heads and (b) can only be changed once a year — when in reality some kind of change happens weekly if not daily to many organizations.

In the 21st Century organizations are increasingly measuring their progress toward a few key goals all the time. Many companies have adopted The Balanced Scorecard* system which emphasizes measuring four key areas of progress: Learning & Growth (human resource development, employee satisfaction, information systems etc.), Internal Business Processes (quality control, cycle time etc.), Customers (satisfaction, market share etc.) and Financial (income, profits etc.).

The point is: If you are only measuring financial results, you are using past-performance data and driving by looking in the rear-view mirror. Financial results are lagging indicators of progress. The other three mentioned above are leading indicators – they come before the profits roll in (or not).

The idea is you need an “instrument panel” of key measurements that are constantly updated to let you know how you are doing. This system is by definition objective, and it should be open to all key personnel. Even if you don’t want to share all financial details, you can share a few key numbers like sales and profits for the month. But even more important is to measure other dimensions of performance that better enable you to predict the future rather than reflect the past.

6. Putting it all together: The Learning Organization. Strategic focus is not complete until it is all interconnected into a true system, with interdependent parts acting as a whole. Peter Senge influenced thousands of people with his classic best-seller, The Fifth Discipline, which is about systems thinking. When an organization works as a united system, and understands systems thinking (which is not the same as logical thinking!), it constantly learns from its experiences and shares that learning throughout the organization. Like a whole body, if the hand gets burned by the hot stove, it is not necessary for the face to learn the same lesson the hard way. Larger organizations are particularly vulnerable to this fragmented, learn it over-and-over cycle. But even smaller ones generally do a poor job of sharing knowledge.

One of the most common complaints in all employee surveys we’ve done over the years is that internal communication is poor. Leaders don’t tell the people what’s going on, and how things are connected. So people operate in a vacuum and make needless mistakes, which often waste time and money, and may even cause the company to lose customers. As a general rule, the people DO NOT KNOW nearly as much as the leaders think they know. Human communication is so difficult, the only way to avoid costly mistakes is to over-communicate, especially on critical projects or processes. A central shared database, password-protected, is one of the best ways to do that. But the higher the possibility of misunderstanding, the more important face-to-face communication becomes.

So, to summarize, Strategic Focus has several key components which, united into a system, keep the organization on track, keep everyone singing off the same page, keep customers happy, keep competitors in the dust, keep the money rolling in, keep the profits up. Guess that’s why I felt Strategic Focus is the No. 1 Key Success Factor of All Time.


 

References*:

The 5 Key Success Factors: A Powerful System For Total Business Success:
http://www.amazon.com/Key-Success-Factors-Powerful-Business/dp/1257156543/

The Balanced Scorecard: Translating Strategy Into Action: http://www.amazon.com/exec/obidos/ASIN/0875846513/wwwlciwebcom

The Fifth Discipline: The Art and Practice of the Learning Organization:
http://www.amazon.com/exec/obidos/ASIN/0385260954/wwwlciwebcom

*Amazon affiliate links

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