Bridging the gap Part 2: Effective transition from strategy development to strategy execution

This is the second part of an article which was initially published in PM World Journal (PMWJ) in November 2016.  PMWJ is a non-refereed online publication devoted to knowledge creation and sharing, and continuous learning in the field of modern program and project management.

Patterns of Strategy: defining how strategy performance will be assessed

It’s important to be able to monitor progress of the capability shifts. So, are you now “this fast, in that business operation”? Are you now able to shift “x amount of resource deployed to Operation A which could also deliver Operation B with y days’ notice”? These are the output indicators, of course, and are directly in the control of your organisation. But our definition of strategy is changing your fit with the environment to your advantage by differential use of power and time, these output indicators give you some leading measures but don’t provide a full measurement picture. To understand if you have been successful in changing your fit, you also need outcome indicators, which assess the external impact of your internal capability shifts, the impact on your fit and your advantage.

As well as defining output metrics, the approach also generates outcome metrics, indicators about you and the other actor. In our experience, this focus on the other actor as well as you is unusual but, given all we have said about the dynamic interactions between you and the other actor, it is critical. We generally look at two types of outcome indicator about other actors. One is monitoring for evidence of the other actor being forced into reacting to delivery of your strategy. The other recognises that even as you are planning and changing, so are they. So the other type of outcome indicator is to look for early signs that they are changing their manoeuvres in any way which could have an impact on you.

When fit is built and sustained, there is a multi-way value exchange, with each actor giving and receiving value from the strategic relationships they have. The manoeuvres change your fit, and so alter the amounts and types of value which you give and receive. Usually, the types of value exchanged are rich and varied, in both directions. The value received and the value given could include a wide range of resources, reputation, learning, access, reliability, resilience and intangibles as well. In this approach, you make explicit what value you want to get, which types of value and how much of each, and what value you are willing to give in order to get what you want. Assessing shifts in the value exchanged, both outputs and outcomes, is part of assessing the performance of the strategy.

Overall, then, you measure outputs for you, and outcomes for both you and other actors – has your strategy made a difference? – and using both quantitative and qualitative metrics. This focus on metrics supports another area of the programme or project manager’s role, that of monitoring and control.

Patterns of Strategy: communicating the strategy to the organisation.

A real constraint on strategy execution is the quality by which the strategy is actually defined and then communicated to the organisation at large and, in particular, to the programme or project manager who will oversee its execution. After the strategy discussion, it’s important to be able to describe it to others, in an easily communicable form. The organisation can only execute strategy when they understand it, and understand it in detail and with precision. If we go back to a previous example, then “being more agile” doesn’t help. But being “this fast, in that business operation” sets a clear expectation to both programme manager and staff.

The elements of Patterns of Strategy themselves make this very straightforward.

There are five main steps to the strategy statement:

1. Define the desired state of each strategic relationship(s), as it/they will be after the manoeuvres have been completed.
2. Define the changes in the Patterns of Strategy elements.
3. Define the capability shifts required to alter the Patterns of Strategy dimensions.
4. Define the metrics you will use, for both Black and White.
5. And finally we turn it into ‘plain English’.

Here’s an example from one of our clients. We’ve redacted it a bit and made it rather more high level, (it is their strategy, after all), but you can clearly see the four steps.

Our Strategy is:

1. To secure our relationship as a preferred first tier supplier to ANO Automotive, so that we can maintain and grow revenue in the long term
2. and we’re going to do this by:

•  synchronising our operations with theirs (so they get what they need when they need it), and
• being more innovative than we have been – at least matching the innovation rate of our peers and what ANO are expecting from us.
  
  3. To do those two things we’re going to have to restructure <these operations> to improve their innovation and agility so we can respond to changes in demand more easily. And to do all that we’re going to invest in people and change, including <these new techniques and skills> and structural change.

4.  And we’ll know this has worked if we get the new contract confirming us a preferred supplier, ANO’s trust in us increases and they start chasing other suppliers to bring them up to speed. And while we’re doing all that, we will need to keep our other customers on board.

Using the Patterns

The book includes a catalogue of more than 80 strategies which we have seen used repeatedly by organisations, either consciously or unconsciously. Each strategy is documented with a description, typical use, and an example. Importantly, we also include the sequenced set of manoeuvres which are needed to execute the strategy, and the indicators for monitoring its progress. The strategy patterns are grouped to make it easy to narrow down your search: some are clustered by purpose (defence, growth, collaboration, competition, managing the herd), one for size (small organisations), one by its defining characteristic (cunning plans) and some by what the principal actor is coupled to (supplier or market).

This is a totally different way to work, and while it’s unlikely that your strategic situation will exactly match one of the examples, it is likely to be strongly similar to one of the examples, or a hybrid of two of the examples. An alternative way to use the catalogue is to define your strategic context carefully and then work through all the strategies and ask yourself: how could this apply here? It is possible to do this in about an hour and generate a couple of dozen viable potential options to broaden the thinking and repertoire; many organisations unconsciously reuse a pattern they are familiar with, without reconsidering if it is the most suitable for the current context and situation.

Using the documented strategies provides an accelerant to your strategy development work, which is already quick and easy. And the description of the strategies helps you to diagnose the patterns at play in your sector, and which strategies your competitors or partners might be using, and what that could mean for you.

The approach is fast, and you can readily take the generic components of a pattern and translate and apply it to the realities of your context and strategic situation. This speed matters; the best strategy comes from exploring multiple options and ideas and testing them for their impact – and their doability. The discussion moves between what you might do strategically, and whether and how fast you could do it, and this is the interaction between strategy and organisation. Typically, you are considering what organisation and capabilities you might need for a particular strategy, and simultaneously considering what strategy options are possible or easy, given the organisation and capabilities you currently have, and iterating between these two perspectives. The approach provides rich information to the strategy end of that interplay, and a good model of your organisation is invaluable at the organisation end. Iterating in this way ensures that the programme or project manager can feel confident that the defined strategy is realistically deliverable by the organisation. In terms of planning implementation, this fast iteration is important, because so often conventional strategy is conceived in complete isolation from the harsh realities of the organisation (quite literally because strategy teams go off to a remote location to do it), so the divorce between strategy conception and strategy execution is built into the conventional process.

There is a toolkit for using Patterns of Strategy, and leaders and strategists can use it interactively to explore their strategic relationships, whether competitive or collaborative, internal to the organisation or external, or all of these. It includes boards to map out potential scenarios, and the manoeuvre set which each actor could deploy in those scenarios, as well as a set of cards to explore the actual and potential value exchanges between the actors. In addition, each of the 80 strategies is described, along with the manoeuvres required to bring it about. Using the toolkit helps you get the terminology and – more importantly – its systemic thinking style into your organisation, and provides a frame and a focus for strategy development work. Using the toolkit, leaders can iterate through scenarios and options really quickly, and reducing the cycle time for each iteration of the strategy makes it possible to repeat, review and refine it at a higher cadence or when there is – or may be – a substantive change in the environment.

Bridging the execution gap

Overall, using this approach prompts a number of key questions around the execution gap, including:

• How will you have to change your organisation, to effect a manoeuvre?
• What new capabilities will you need to carry out that manoeuvre?
• What enablers will you need to build that capability?
• What will you measure, both outcome and output?
• What can you observe of the other actor’s strategy?
• If you carry out a manoeuvre, what effect will that have on them?
• How might they react?

Or, starting more from the ‘organisation’ end:

• Which strategies are you capable of?
• Which strategies could you execute without needing to change the organisation?
• How fast can we change?

Having chosen a strategy from the different options you have explored, you are then able to chart its path as it unfolds. You can assess whether the planned capability shifts are taking place to the degree and at the speed required. You can evaluate which actors and which organisations are actually affecting the situation and how effective each is being. Perhaps most critically, this approach provides early evidence of the effect of the strategy; it isn’t necessary to wait until the end to be able to see the results, thus providing better control and the ability to change the strategy to meet changes in the unfolding situation.

Because conventional strategy fails to take into account what other actors might do that could destabilise us, it rarely works as planned, but the blame for that failure is laid at the door of execution. What we are arguing here is that the responsibility for dealing with that uncertainty in the strategic environment lies with strategy not execution, but none of the conventional strategic approaches have been designed to deal with it. Patterns of Strategy does.