Part 5 of a series on Strategic Leadership
In previous posts, I defined strategic leadership and began to identify one way to look at the strategic leader’s work by breaking it down into ten responsibilities to fulfill:
- Manage and lead yourself
- Create the team, generate their commitment, and get clear on who’s responsible for what.
- Set the vision
- Intentionally set time aside for thinking
- Establish the organizational framework and continuously connect the dots to fulfill the vision
- Determine what needs attention in a VUCA environment
- Frame the strategic questions we need to answer
- From those questions, establish a Leadership Agenda
- From the Agenda, determine our current priority
- Commission teams to run experiments to begin to answer the question to fulfill the vision
We examined some of what it takes to manage and lead yourself and what it takes to create the team, generate their commitment, get clear on who’s responsible for what, and setting a compelling vision. Last post, we explored the importance of being intentional about reflection time. In this post, we’ll continue to explore some of what senior leaders must be paying attention to.
What Were We Thinking?
I grew up in a row home neighborhood on West Frederick Street in Lancaster, near Franklin and Marshall College, with about a dozen other guys my age. We lived near what were then active tobacco warehouses owned by P. Lorillard Company. These warehouses received shipments on wooden pallets and the pallets, once used, were discarded outside the warehouse in a large pile.
One summer, some of my friend and I asked one of the workmen if we could have some of the pallets and, after we enthusiastically told him of our vision to build a “clubhouse,” he willingly granted our request. (I think he must have seen us as a way to take care of some of the work that was on his list).
We went home and got our wagons and loaded as many pallets as we could, stacked as high as we could, and began the two-block navigation home – to my backyard, where we dumped them. We got our dads’ hammers and began to take them apart, saving the nails and straightening them out so we could use them in the construction phase. Once we had our supply of wood, we began construction between two walls of my house and the wooden fence that ran from one wall to the rear gate. No plan – just what each of us thought would work, with no coordinated plan. After all, how hard could it be to build a clubhouse?
We immediately began to hammer boards into the fence and tried to use some of the bigger ones to hold up the side against the one wall. We knew nothing about building, but we knew this was going to be the greatest clubhouse ever.
Board nailed to board, and the roof began to take shape, then the brilliant idea to put a second floor on, since that would give us height since there were no trees in our backyards. Fortunately, before any of us took up residence in the clubhouse, the whole structure collapsed, taking part of the fence with it.
Needless to say, when my dad got home that evening, there was some explaining to do, followed by an important lesson in cleaning up the mess and finding a way to discard of the wood (we loaded it up on the wagons and dumped it back at the warehouse – but we kept the nails for future adventures).
Forty years later, one of my clients had an office in that same tobacco warehouse, which had now become a very fashionable facility – and he was an architect. I don’t know much about architecture, but I do know that there’s a lot more to building a building than just starting in and throwing building materials together. And it’s the same for businesses.
Create the Organizational Framework
Like my neighborhood buddies, many people build their businesses with little understanding of the structure of an organization, and so see their ventures collapse with little warning and left to clean up the mess. After all, how hard could it be to build a business?
I found that in my work with many different kinds of organizations, many key elements were missing or leaders were randomly (even haphazardly) starting and ending initiatives that didn’t connect to other parts of the organization. “Let’s restructure.” “We need a new branding strategy.” “If we could only innovate, we could get out of the rut we’re in.” “Let’s open another office.”
As a result of what I saw, I started thinking about what the organizational framework of an organization would look like and came up with this idea (it’s simply one way to explain it; there are many other ways):
© Geoff Davis, 2017
At the top of the framework – the reason the organization exists – is to fulfill a compelling vision that has broad buy-in. A vision is a story that a leader tells about the future that explains why we exist and where we’re going. The vision is slightly out of our reach, but not impossible to achieve. It stretches us in our collective efforts. It takes effort to articulate this story and it can’t be faked.
If you were an NFL Football Team, your vision might be to win the Super Bowl.
In order to achieve your vision, you need a mission that describes what you do for whom to produce what outcomes. It’s an intermediate step that moves us from where we are to where we want to be and may change over time. An effective mission statement should fit on a bumper sticker and everyone in the organization should not only be able to recite it from memory, it should be used in decision-making at every level.
For an NFL Team, your mission might be to win the next game.
With our vision and mission in place, we need to create a business model. For years, I searched for a way to understand the concept of a business model . Whenever I asked my financial professional friends about it, they would say, “What are your anticipated revenues and costs for the next five years?” Not being a financial guy, this was never very helpful. I couldn’t see the DNA of the business.
One of my clients in Europe told me about this book, “Business Model Generation” by Osterwalder and Pigneur, that was the best description of the key elements of a business model I have ever seen. It has since become a big seller in the U.S. In graphic format (they call “The Business Model Canvas”), they describe the key elements of the business model:
- The core consists of identifying what customer niches you’re going to serve, what their needs, gains, and pains are, and then crafting a value proposition that tells those same customers what you’re prepared to do to meet their needs, increase their gains, and ease their pains – and how you’ll do that differently from competitors.
- The revenue side of the “Business Model Canvas” includes how we establish relationships with our customers, how we’ll let them know about our unique value, and the channels through which we’ll deliver our value proposition. This is how our model produces revenue.
- The cost side includes what it takes to produce our value proposition – key activities, key resources, and key partners. That translates to the costs required to produce the value proposition.
Every NFL Team is, at its core, a business and operates a business model that has a value proposition for its customer niches – owners, players, fans, the media, and several others
What do we do to achieve our mission and build on our business model? How do we test it to make sure it moves us towards our vision? Organizations consider where they are and identify where they want to be. Strategic planning contains a form of goal setting – identifying all the possibilities that are present – all that we could pursue – and choosing which ones will best benefit us in helping us achieve mission and vision. Goals are how we achieve our mission, which helps us move towards our vision.
Our NFL Team has offensive goals (so many first downs, so many scores), defensive goals (allowing so many yards of offense, limiting scoring to no more than X points), and special teams (kick-offs through the end zone, punts inside the 20 yard line, punt and kick-off returns for touchdowns). These goals are part of the plan that help the team win the game in their pursuit of the Super Bowl.
Michael Porter defined strategy as “deliberately choosing a different set of activities to deliver a unique mix of values, different from rivals (competitors) or performing similar activities in different ways.” He shared that “a sound strategy is undermined by a misguided view of competition, by organizational failures, and by the desire to grow.” Interesting that a desire to grow can undermine your strategy, especially if you’re not clear how all of the elements of your business work together. Strategy helps define how we’ll achieve our goals.
A budget is a financial expression of our strategy and is integral to understanding the assumptions inherent in achieving our goals, ensuring our business model is producing the desired results and lets us know if our value proposition is valid. It’s part of our plan, but also part of how we keep score and evaluate the results we planned.
A “West Coast Offense” or a “3-4 Defense” might be ways that our NFL Team defines its strategy.
Action plans define who has to do what by when in order to achieve our strategy and achieve our goals. It defines how we will execute our plans to achieve our strategy to achieve our goals.
Every NFL Team has detailed “playbooks” that define their strategy, break them down into plays with specific responsibilities for each player, that help win the game.
Structure is how we organize and deploy people and resources to fulfill our strategy and accomplish our goals. While “restructuring” was quite the fad in the 1980’s, it failed because it never connected the dots to strategy and was referred to by one author as “re-arranging the deck chairs on the Titanic.” One school of thought maintains that “strategy determines structure.”
The player positions on our NFL Team are dictated by the strategy the head coach defines. Certain positions are essential to strategy; others become irrelevant.
Finally, what holds all this together is the culture of the organization. Being intentional about building the right culture consists of defining the desired outcomes the organization wants to achieve, the behaviors (values) that will be required from each member in order to achieve that, and what Covey calls the “restraining forces” that keep us from behaving in those desired ways and keep us from achieving our outcomes (the parts of the current culture blocking us).
The Oakland Raiders have an historically different culture than the New England Patriots. The Philadelphia Eagles, under owner Jeffrey Lurie, have built a culture that allows them to continually pursue excellence (but I am a lifelong Eagles fan, so there may be some bias there).
Connect the Dots to the Vision
It’s not enough to simply know what these elements of organizational structure are; it’s essential that every important decision be made connecting the dots up to the vision. If you don’t, why are you making the choices you are?
Remember that this is the way I make sense of the elements that contribute to a successful business. Your architecture might look different. But whatever you do, understand the DNA of your organization, identify its key components, and make sure that everyone has a clear picture that gets them all on the same page of the playbook.
© Geoff Davis, 4/12/19