Leadership (2)

To further hone your strategic questioning skill, please visit: http://hbswk.hbs.edu/item/6493.html and read about seven strategic questions essential in the business world. In what way these questions apply to leaders and organizations at the same time?

Executive Summary:

Successful business strategy lies not in having all the right answers, but rather in asking the right questions, says Harvard Business School professor Robert Simons. In an excerpt from his new book, Seven Strategy Questions, Simons explains how posing these questions can help managers make smart choices. Key concepts include:

• Asking simple questions enables business teams to focus on key issues instead of on the distracting information that can obfuscate clear thinking.
• A successful business strategy requires an ongoing, face-to-face debate, which a manager can facilitate by posing the right questions to the team.
• Each of the book's seven questions is the root of an "information imperative"—a particular topic or process that a manager must master in order to implement a strategy successfully.

Seven Strategy Questions: A Simple Approach for Better Execution

Published:	November 22, 2010
Author:	Robert Simons

Business leaders can't develop and execute effective strategy without first gathering the right information, says Harvard Business School professor Robert Simons. In his new book, Seven Strategy Questions: A Simple Approach for Better Execution, Simons explains how managers can identify holes in their planning processes and make smart choices. Here's an excerpt outlining the seven questions every manager should ask.

1. Who Is Your Primary Customer?

The first imperative—and the heart of every successful strategy implementation—is allocating resources to customers. Continuously competing demands for resources—from business units, support functions and external partners—require a method for judging whether the allocation choices you have made are optimal.

Therefore, the most critical strategic decision for any business is determining who it is you are trying to serve. Clearly identifying your primary customer will allow you to devote all possible resources to meeting their needs and minimize resources devoted to everything else. This is the path to competitive success.

It's easy to try to duck the tough choice implied by the adjective primary by responding that you have more than one type of customer. This answer is a guaranteed recipe for underperformance: the competitor that has clarity about its primary customer and devotes maximum resources to meet their specific needs will beat you every time.

2. How Do Your Core Values Prioritize Shareholders, Employees, and Customers?

Along with identifying a primary customer, you must also define your core values in a way that ranks the priority of shareholders, employees, and customers. Value statements that are lists of aspirational behaviors aren't good enough. Real core values indicate whose interest comes first when faced with difficult trade-offs.

Prioritizing core values should be the second pillar of your business strategy. For some companies, shareholders come first. For others, it may be employees. In other companies, it may be customers. There is no right or wrong, but choosing is necessary. To illustrate this point, I'll contrast Merck's $20 billion decision to pull Vioxx from the market with Pfizer's decision to continue marketing Celebrex.

3. What Critical Performance Variables Are You Tracking?

Once you're confident that the foundation of your implementation is sound—you've allocated resources correctly and provided guidance for tough decisions—it's time to get everyone who works for you focused on the job at hand.

Tracking performance goals—the third implementation imperative—requires you to set the right goals, assign accountability, and monitor performance. It's easy to fail this imperative by focusing on the wrong performance indicators or monitoring scorecards that have an overload of irrelevant measures. Underperformance is the result.

It's your job to ensure that your managers are tracking the right things by singling out those variables that spell the difference between strategic success and failure. Like the preceding two questions, the focus in this question is again on an adjective, this time the word critical. I will show you a simple but counterintuitive technique that you can use to be sure you're tracking the right things, and I will describe how companies such as Nordstrom and Apple illustrate some unorthodox performance measurement choices that provide the pathway to superior results.

4. What Strategic Boundaries Have You Set?

Every strategy brings with it the risk that an individual's actions will pull the business off course. Here again, it's easy to fail to inoculate the business against this risk. As we will see, the trick is in setting clear boundaries.

Controlling strategic risk is the fourth implementation imperative. Strategic boundaries—which are always stated in the negative—ensure that the entrepreneurial initiative of your employees aligns with the desired direction of the business. Strategic boundaries can also protect you from the types of errant actions that destroyed Enron and brought financial service firms such as Fannie Mae and Lehman Brothers to their knees.

5. How Are You Generating Creative Tension?

Once you're satisfied that you are tracking the right performance goals and controlling strategic risk, it's time to turn to the fifth implementation imperative: spurring innovation. This imperative is woven into the fabric of every healthy organization, and we all know that companies that fail to innovate will eventually die. No company is immune.

But sustaining ongoing innovation in organizations is notoriously difficult. People fall into comfortable habits, sticking with what they know and rejecting things that cause them to change their ways.

To overcome such inertia, you must push people out of their comfort zones and spur them to innovate. I will provide a menu of techniques you can use to generate creative tension to ensure that everyone is thinking and acting like a winning competitor.

6. How Committed Are Your Employees to Helping Each Other?

For most companies, it's critically important to build norms so that people will help each other succeed—especially when you're asking people to innovate. But there are exceptions. Some organizations can, and should, be built on self-interest, with every man or woman working for him- or herself.

I suspect that the choice between commitment to help others and self-interest is deeply ingrained in your organization, yet has never been discussed. But if you haven't addressed this choice explicitly—and worked to make it happen—you have increased the potential that your strategy implementation will fail.

Building commitment is the sixth implementation imperative. I will offer a menu of techniques to foster commitment to achieving shared goals. Or, if rewarding self-interest is more appropriate for your business, I will explore alternative approaches you should employ.

7. What Strategic Uncertainties Keep You Awake at Night?

No matter how good your current strategy is, it won't work forever. There will be booms and busts, customer preferences will change, competitors will introduce new products, and disruptive new technologies will emerge in unexpected places.

This brings us to the final implementation imperative: adapting to change. Adapting is critical to survival, but it's extremely difficult to do. With change constantly surrounding us, employees often do not know where to look or how to respond.

I will consider the techniques that companies such as Johnson & Johnson use to search for new information and ideas as markets inevitably change. Your personal attention is the critical catalyst to focus your entire organization on the strategic uncertainties that keep you awake at night. After all, everyone watches what the boss watches. I will discuss how you can use this principle to guide the emergence of new strategies for the future.

Reprinted by permission of Harvard Business Review Press. Excerpt from Seven Strategy Questions: A Simple Approach for Better Execution. Copyright 2010 Robert Simons. All rights reserved.

About Faculty in this Article:

Bob Simons is the Charles M. Williams Professor of Business Administration at Harvard Business School.

To learn what mission, vision and values statement are, please visit: http://www.axi.ca/tca/mar2004/associatearticle_1.shtml.

Mission, Vision, Values

Mission, vision and values are supposed to be the North Star of strategic planning, the beacon by which organizations set their strategic compasses and then align their everyday priority setting. But let’s face it, the prospect of attending a visioning session is not always greeted with enthusiasm by the conscripts.

We’ve all been there. Held captive in a windowless room, hallucinating slowly from a) too much coffee; b) uncapped magic markers and c) the glaring blankness of the flip charts. We’ve wordsmithed with a warring group of colleagues well beyond the point of caring. The result is a mission statement that looked much like our last one – and like everyone else’s. Or else we’ve crafted a vision so lofty, outrageous, or abstract (save the world, conquer the world…) that seeds of doubt are planted before we leave the room…. Is this really worth the effort?

Persevere, the results are worth it

The development of well-written vision, mission and values statements signals intent and direction, allowing employees the freedom to put their own mark on implementation - an essential part of enthusiastic execution and good governance. A periodic review of mission and vision compels the Board of Directors to agree on the organization’s long-term direction, set a new course if required or to get the organization back on track. Jim Collins makes a strong case in his book Built to Last that embracing a vision is part of what separates truly exceptional companies that have stood the test of time from other companies. Of course it’s much more than coming up with a catchy slogan.

Here is some advice for a successful start to framing your organization’s mission, vision and values. It takes perseverance, the courage to set your own stamp on the results, and a desire to live the results rather than tuck them away on a website and forget them.

Make sure the team shares the same definitions:

Mission statements

• Describe the overall purpose of an organization: what we do, who we do it for, and how and why we do it.

• Set the boundaries of the organization’s current activities.

• Are the starting point in developing a strategic vision.

A mission review gets an organization back to basics. The essential activity of determining whom you serve can be a wake-up call for organizations that have started to skew their activities to meet the needs other stakeholders (such as their funders or lobby targets) and not their actual clients.

Vision statements

• Describe an ideal future.

• Reflect the essence of an organization’s mission and values.

• Answer the question, what impact do we want to have on society?

• Unite an organization in a common, coherent strategic direction.

• Convey a larger sense of organizational purpose, so that employees see themselves as “building a cathedral” rather than “laying stones”.

Values statements

• Reflect the core ideology of an organization, the deeply held values that do not change over time.

• Answer the question, how do we carry out our mission?

• Are the values your organization lives, breathes and reflects in all its activities, not the ones you think you should have.

The Canadian Cancer Society – a great example Mission The Canadian Cancer Society is a national, community-based organization of volunteers whose mission is the eradication of cancer and the enhancement of the quality of life of people living with cancer. Vision Creating a world where no Canadian fears cancer. Values These serve as guidelines for our conduct and behaviour as we work towards our vision. Quality – our focus is on the people we serve (cancer patients, their families, donors, and the public) and we will strive for excellence through evaluation and continuous improvement. Caring – we are committed to serving with empathy and compassion.

To get the job done:

• Don’t get hung up on semantics. If a future-oriented mission statement works for your organization as both mission and vision, go for it! The important thing is to understand what you do (and don’t do) and what you are working towards. Gaining consensus on this and being able to communicate it to stakeholders are huge achievements.

• Don’t tie yourself in knots with wordsmithing. Take the process as far as you can go, and then pick a group to finalize your words based on the discussion. Your meeting time is better spent moving forward than polishing after consensus has been achieved.

• Consider developing three to five mini-visions instead of a single vision statement. These may be easier to develop than a single, perfect overarching statement. Remember, it’s all about signalling intentions.

To ensure inspirational and practical results:

• Put “mega” into your mission and vision. What kind of world are you helping to create for tomorrow’s children? What added value to society is your organization working towards? It’s a concept that should not be restricted to charitable organizations or public benefit associations. Roger Kaufman, a well-known strategic planning author, champions the need for an organization’s planning to have a “Mega” dimension that focuses on external clients, including customers/citizens and the community that the organization serves. Mega goals address the need for companies to have a higher purpose than simply making money – or simply serving a narrow interest group in the case of associations. Collins found that paradoxically, companies with a higher purpose were more financially successful than companies strictly focussed on profit.

The mission of the Association of Professional Engineers, Geologists and Geophysicists of Alberta is to serve society and protect the public by regulating, enhancing and providing leadership in the practice of the professions of engineering, geology and geophysics. The Canadian Manufacturers & Exporters’ mission is to continuously improve the competitiveness of Canadian industry and to expand export business. Wow! Serving society and the sector are much better long-term strategies than serving the membership alone. I contrast the mission of the Science Teachers of Manitoba “To promote and support the development of science education for teachers and students of Manitoba” with another provincial teacher’s group “Through leadership and service we dedicate ourselves to the promotion of the professional excellence and personal well-being of teachers…”

• Make sure your value statements are meaningful to your everyday operations by spelling out what you mean. The key to meaningful values is to avoid lists of single words. After all, we all believe in integrity, don’t we? The Canadian Cancer Society example, given above, shows how definitions transform values from slogans to guidelines.

Many private and non-profit organizations use a code of ethics, a credo or other long-form description of what they believe in. The John Howard Society sets out six principles to guide the activities of its employees and volunteers, including “People have the right to live in a safe and peaceful society as well as a responsibility implied by this right to respect the law” and “All people have the potential to become responsible citizens.” These kinds of values statements help people to make decisions, and to respect the intent and spirit of their organization’s purpose and plan even when specific situations aren’t covered.

• Finally, learn it, live it, align it. This means spending time making sure your organizational goals and objectives are aligned with your mission, vision and values. Are you serving your clients or your members in all your activities? Are you true to the intent of your mission and vision? Are your departmental objectives and tactics supporting your mission and in line with your values? Well-written phrases are nothing without good execution - Enron’s values statement famously included “respect, integrity, communication, excellence”.

Mission, vision and values statements are fundamental to strategic planning and good management. And reviewing major decisions against these yardsticks is a powerful governance tool. Reviews allow those involved to truly understand the objectives of the organization, to make everyday decisions that are consistent, and to buy into new directions. The organization is able to evolve without experiencing chaos because its overall direction and intent are clear. The Board, employees and volunteers gain a sense of pride in working for an organization that stands for something and are united by a common sense of purpose. These are compelling reasons to create meaningful, reflective statements that shine beyond your organization’s annual report and web page, bringing guidance and motivation to all your initiatives.

Recommended further reading:

• James C. Collins, Jerry I. Porras, “Building Your Company’s Vision”, Harvard Business Review, September 1996. (also look at www.jimcollins.com)

• James C. Collins, Jerry I. Porras, Built to Last: Successful Habits of Visionary Companies, HarperBusiness, 1994.

• Roger Kaufman et al;. Strategic Planning for Success: Aligning People, Performance and Payoffs, Jossey-Bass/Pffeifer, A Wiley Imprint, 2003.

Jane Logan is principal of Jane Logan Consulting. An experienced, bilingual facilitator, she brings 20 years experience, including eight as a senior executive in national trade associations, to her work in strategic planning and policy development for associations.