Strategy is what you DON’T do!
Focusing on Possible Courses of Action
A comment by Alexander Zimmermann,
CEO & Partner of SOLYP Informatik GmbH
When I discuss with managers the strategy processes of their organizations, one term is mentioned time and again: focusing. The term itself already serves as a guarantee for success. Once said, it seems to possess the magical power of having already achieved what it actually calls for: that is to concentrate, to target, to omit.
But focusing is not an end in itself, and by no means automatic. From our daily strategy work, we know that focusing is very challenging and must be fought for within the organization. In my 3rd blogpost on success factors of strategic planning, I would like to explore the question of how to focus successfully. How can I avoid the danger of arbitrariness? How can I make it manageable? My main attention will be on the linking of hard and soft data.
What do we (not) want to do?
Focusing means to blend out everything which is outside of the focus, or, at least, not to consider it any further. When it comes to making decisions on strategic courses of actions in a business setting, the strategic focus tells me what I shouldn’t do.
Stephan Biermann, Head of Controlling of Zentis GmbH & Co. KG, emphasizes exactly this aspect of the strategic planning process:
“In order to ensure a smooth strategic planning process, at Zentis we mainly rely on focusing on strategic core issues (What do we want to do? What do we not want to do?), clearly defined performance targets, milestones, and responsibilities, as well as effective information management through the use of special software. In a highly dynamic industry, such as the food industry, consistent customer orientation plays a vital role in strategy work as well.”
Mario Knape, Head of Strategy of Wüstenrot & Württembergische AG, underlines the same aspect of “omitting” when he describes a successful strategy process with the words:
"The essence of strategy is to determine what not to do. In the strategy process of the only German bancassurance group with two equal pillars (bank/building society and insurance), the focus on the key success drivers is of particular importance."
Critics may say that this is nothing more than defining what you’re doing by what you’re not doing. I believe there is much more to it, though.
If my corporate strategy merely states what needs to be done, the transition to alternative fields of actions gets far more diffuse and vague. If the strategy, however, clearly defines no-go areas, these fields of action which the strategy process has filtered out as irrelevant or non-productive will fall under the table from the very beginning. In this case, the line between following and diverting from the corporate strategy is drawn more clearly. In short: only through consistent "omission," strategic focusing can succeed, thus, being the success driver as Knape and Biermann view it.
By the way, modern brand management is based on the very same principle of “omission:” In today's cosmos of arbitrariness, a trademark becomes appealing and gains market potential by focusing on what it doesn’t offer. That’s why, for instance, L'Oréal doesn’t sell toothpaste: we would always have the taste of shampoo in our mouth when brushing our teeth with it. For the same reason, a men's skincare series by Nivea still comes in the familiar blue and white lettering and with the same brand genes of the original lotion; it’ll never be a French luxury product.
But how do I gain such sharp strategic focus that provides me with a clear framework and prevents me from leaving the chosen path to success? And how do I achieve it in a timely, sustainable, and manageable manner?
Soft Data Provides Meaning
If a successful corporate strategy makes us focus on those courses of action that are most promising, we need a source to identify these options in the first place. Soft data, or, more precisely, the linking of soft and hard data, provides this source.
Detecting "white spots" in the internal or external business environment can only be achieved by using soft data; after all, only soft data provides opinions on and assessments of the future that need to be considered in the strategy process. I am talking here, for instance, about market analyses or the monitoring of the competitive landscape and market trends. In my eyes, these are the key factors for identifying market attractiveness.
But just like hard data (market share, revenues, growth, etc.) is blind for the future without the meaning which soft data provides, soft data often times is too arbitrary to be useful in the strategy process. That is why the quantification of soft data is the heart of the strategic planning process with the strategy software SOLYP3. Via rating scales in the SOLYP3 questionnaire, the (soft) analyzes, opinions, and assessments of everyone in the organization involved in strategy development are quantified, aggregated, and linked to hard data for comprehensive strategic evaluations.
Even if a strategy process has been successfully implemented in an organization, it frequently neglects soft data, as it is typically available only in unstructured form. It is only descriptive in nature, unable to develop any normative force in strategy development. Only the linking of hard and soft data sharpens the strategy process in such a way that I am able to separate likely and unlikely options for actions and communicate these clearly to everyone responsible for strategy across business units.
In addition, an IT-based strategy process, as facilitated by SOLYP3, supports strategy work in daily operations. For instance, planning data from previous years can be made accessible and comparable by the push of a button. Such a check increases the reliability and robustness of your strategic planning immensely, thereby ensuring sustainable corporate success. Ad hoc analyzes are available by the push of a button as well — at any time and for anyone in globally operating corporation.
An IT-based process that facilitates the linking and mutually reinforcing of soft and hard data, by no means squeezes strategic planning into a strait-jacket: quite the opposite is true. With a software solution, you increase the speed, flexibility, and agility of your strategic planning considerably; factors that ensure sustainability of any business strategy in fast-paced, even chaotic markets.
Nevertheless — and this brings me back to my initial argument — these effects are merely secondary virtues: In the center of a successful strategy process should be the separation of likely and unlikely options for action. To act strategically means to act where it makes most sense. In order to do this, we need to make its source available. And this can be done primarily through the exploitation of soft data.