Strategy Deployment: The Top Down Approach and What's Wrong With It

Not long ago, the movement for a better understanding of strategies and how managers deploy them was a hot topic, to say the least. While great efforts were put into the exercise of creating strategies in which the entire organization would understand and benefit from, not all persons involved in such exercises were clear as to what exactly these strategies, to begin with, really meant to deliver.

Early adopters of the Balanced Scorecard created by Harvard professors Norton and Kaplan were sure to see an organization that undoubtedly would create more synergies among processes, more engagement from their employees, and of course, more profits as the result of a better aligned organization. Whilst academics and practitioners around the globe focused their efforts on polishing the methods to deploy strategies, little has been done to study the inclusion of various stakeholders in the development of such strategies. 

As many methods will teach the practitioner, strategy must be developed at the top, by senior leadership and by those who indeed know “what the best for the organization is”. It is at the top of the organization that major decisions are made, that resources are allocated, and strategies are created. But how does one organization go from creating strategies without the involvement of those who will in fact execute it? Are we to assume that the communication that flows through the various layers of organizations will not get corrupted? Can we attest that the vision and objectives defined by the C-suite (positions that start with the letter C such as CEO, CFO, COO, and so on) can be clearly understood by mid level managers and operators? And how does one go about measuring such understanding? Let us look at figure 1 for a moment. It shows the traditional way of creating and deploying strategies. In its most simplistic form, strategy is created by the top leadership and then simply “deployed” through the various layers of the organization. In this example, I have only considered four layers: senior leadership, mid level managers, supervisors, and finally operators.

Figure 1 – The traditional strategy development and deployment process

                

Traditionally, and as abovementioned, strategy has been one of the tasks that senior leadership performs in organizations. Leaders develop strategies based on the organization’s mission, vision, and values, or mandate – not necessarily a new practice. In developing strategies, these strategists consider a vast array of factors that influence and provide input to the organization’s path to achieving success. These factors can be of an external nature such as the economy, market (segment) conditions, available labour, legislation, and the environment to name a few. Other internal factors may be the organization’s own available human resources, its financial situation, its product (or service) line, its production capabilities, its margins, and its desire to penetrate into a new market. In short, to shape the strategy, leaders look into different areas of concern in order to create a robust direction for the organization. But leaders are, in most cases, away from operations. They receive input about it from their direct reports and through managerial meetings that not always portrait the real feeling from those who are in fact executing the strategy.

A modified strategy formulation process, developed in contrast to the traditional way depicted in figure 1 is shown in figure 2. In this model, the development of the organization’s strategy does not strictly flow only one-way from top to bottom. The process actually starts with operational input and for as long as the strategy per se is being developed, operations are in constant touch with top leadership and mid-level managers.

Figure 2 – The development of the strategy through operational input

In absolutely no way, shape or form does this suggested model ignore the fact that top leadership always has far more information available at a macro level (economics, global trends, and so on). Instead, this model suggests that the operational department (be it a manufacturing or a service provider), the entity responsible for executing the strategy, knows what occurs at the micro level of the organization’s core better than top leadership. The inclusion of operations in the development of organizational strategies simply demonstrates that macro and micro levels can be aligned in a way that the entire strategy, or strategies, can provide employees with a more meaningful work life - they get to understand what they do at the end of the day. The joint effort proposed herein not only provides the organization as a whole with a much richer input for the strategy development process but also directly affects how employees perceive the strategic effort and how employees understand and work towards the organization’s main mandate. The core of this message is the alignment between what senior leadership intends to deploy as strategies and what employees at floor level perceive as being deployed as strategies.

In short, the first step in accomplishing such alignment between top leadership and operational level is to ensure that both parties - as well as the other levels of management (as depicted in figures 1 and 2) – are in sync when it comes to developing what the organization’s future is bound to be.

eZsigma Group has recently launched its Strategic Management program in which we look at the organization's strategic mandate to find the best fit for continuous improvement initiatives such as our Lean and Six Sigma programs. Contact us directly for more information on how we can help your organization be a better one.

3 Steps to Reinforce Strategy Deployment

Strategy development and deployment can be a daunting process for those who are trying to truly make the connection between the organization's strategic intention and its  operational perception. What I mean is, the strategic efforts (or intention) at the top are not always perceived fully (or even partly) at the bottom. How can an organization reinforce the link between the two ends? For example, how can a sales representative really get what goes on at the top of the organization when it comes to its long term direction? While the below suggested steps are not everything the practitioner would need to address the disconnect between strategic intention and operational perception, they may help in getting there.

1. Clearly state the organization's critical objectives. "To be the best in the industry" or "to deliver the best customer service" sounds nice but what is it that you are trying to measure here? What are the metrics behind these statements? Does "being the best" mean more market share? How much more? Does "best customer service" mean less recall events? How much less? We human beings respond better and quicker to things we understand clearly. Put a name and a metric to those critical objectives or goals you have in mind and make sure that everyone gets the memo about them.

2. Deploy objectives or goals as mathematically as possible! Consider the following: you work in department C that reports to department B that reports to department A that reports to the COO of the organization. By the time that each department has created its own way of measuring a given strategic goal you have to support, most likely and sadly, you have already lost the meaning of it. On the other hand, if your department's metric is calculated in the exact same way as the the others do all the away to the top, you will always know that, for example, the cost of maintenance in your department affects the cost of maintenance in departments B and A directly - mathematically. You can minimize confusion tremendously by using a mathematical link between the company's main goals and your contribution to them.

3. Make the metrics a personal agenda. Ideally, as explored in item 2 above, you will deploy your organization's goals mathematically throughout the company, as much as possible. Now use those metrics for personal bonuses and rewards. Develop John Smith's individual personal plan (IPP) based on those metrics, or with great weight on those metrics. John will understand very well that his personal accomplishments have a direct impact at the organization's strategic plan.

As stated at the opening paragraph of this post, these 3 steps are not all there is to strategy development and deployment (consider for example leadership involvement, change management, ongoing market conditions, HR policies, etc) but they do provide the practitioner with a solid start. eZSigma Group has recently launched its strategic management practice. If you are looking for more information on how you can make your organization an aligned one - strategically speaking - contact us and book an appointment. We would be pleased to help you out!

An All Inclusive Strategy Development Approach

Should strategies be developed within the four walls of a boardroom or should they be discussed with key players of the organization? Should they be imposed to all levels of the organization or should they be shared equally throughout the organization? Is there a better way of doing it? It is difficult to believe that strategies should be developed by a few whom, rightfully so, are in charge of the organization. The formulation of strategies needed to take the firm to where it intends to go, should be an all inclusive exercise, especially in mid-size organizations where the process of developing strategies can easily involve most of the organization's human resources.

When developing strategies for the organization, the owner(s) or senior leadership should consider the following steps, which somewhat mirror what Norton and Kaplan suggest in their popular BSC (Balanced Scorecard) method (previously addressed within this blog).

 1. Interview senior managers as well as operational key players. Ask them “what is going on right now” and where they see the organization headed, and why they feel that way. Needless to say, the “operator” (be it the customer service representative or the sales person) often knows much more about what goes on at the operational level than the owner of the organization.

2. List all similarities discovered in the process. Is there a common theme in the employees’ answers? Is there a common issue? Does what you hear from the shop floor align with what senior management have in mind for the organization?

3. Focus on a few critical performance indicators that are in fact aligned with the overall goals of the organization. You can use these indicators as the basis for your strategic plan.

4. Brainstorm with those who have provided you with input. Why the similarities? Why the discrepancies?

5. Reflect on whether or not what you had in mind for your main strategy (or strategies) is actually doable, reasonable, and more importantly, what your customers expect of your organization. For one reason or another, you may be taking the organization to a completely different destination when compared to what your employees and the market are seeing it going.

The exercise of involving various key players in the strategy formulation will serve you with, at least, a good picture of what’s intended by leadership and what’s perceived by the employees throughout the entire organization when it comes to its direction (the firm's strategies.) Involving other levels (rather than senior management only) in the strategy formulation process can be a powerful tool for alignment and understanding. Think of a soccer team that has been told what to do in the field but yet have no idea about what the rewards (and roadblocks) involved in the task are. The team can still get the job done, but it would be much easier and rewarding for all if the team players have a common purpose in mind.

eZSigma has recently launched its Strategic Management programs. To learn more about them, please visit www.ezsigmagroup.com. We have also started an early bird promotion for all Open Enrolment (OE) courses. Please contact us for more information on how you can get discounts on all courses offered by eZSigma Group.