The Secret to a Successful Strategy: Knowing Your Company's Operations
Imagine This
You're sitting around the conference table with the rest of your C-suite colleagues, having the most brilliant goals discussion. You think, "this is amazing, we are going to knock the socks off of our stakeholders with these amazing strategic goals."
You decide on a few ambitious strategic goals and proceed to tell everyone you know. You get great feedback from the media, your investors, your customers, your mom (although she thinks you're great no matter what), etc. You congratulate yourself on your brilliance.
One Year Later
A year down the road, you find that your most important strategic goal ("we will increase demand for our one-of-a-kind widget through marketing investments, and thus sales will soar!") seems to be hitting a snag.
Sure, the marketing efforts have been highly successful and demand has gone up, but... for some reason... production can't keep up!
Vendors aren't getting paid on time and are starting to refuse to deliver more raw materials. The widget-making systems can't seem to make enough finished product even IF you are able to get the raw materials... the product isn't available in stores and online purchases aren't shipping to customers on time... sales are dropping and your reputation is too.
Now your stakeholders are getting upset... the media is blasting you, your share price has taken a swan dive into the abyss, and even your mom is mad (but that's just because you haven't called lately).
The Board has decided to replace you. Your career as the head of a one-of-a-kind widget-making company is over. You tuck your head and leave your office in shame...
[End Scene]
What Happened Here?
I can tell you what happened. The C-suite made strategic decisions ("invest in more marketing to increase demand") without having a good understanding of whether their operations could handle the increase.
We have all seen this story before, over and over again (we could probably recite the lines in our sleep by now).
They Had No Idea
This widget-making company had no idea that Susan, who was their most efficient fabricator of widget part #218375 was on short-term leave, and that her coworkers only worked at half her speed because Susan had never shared or documented her quicker process.
They had no idea that their Accounts Payable department had so many layers of approvals that bills took up to six months to get paid, or that Bob in Accounting could never remember how to log into the system in order to sign-off on invoices.
They had no idea that the contract with the delivery company was up for renewal or that Molly in Legal was new and could not find any documented history of who had originally agreed to do what, so the discussions had become contentious.
Understanding Operations is Key
In my quarter-century of experience, I have learned that understanding the day-to-day operations of an organization and the challenges faced by those on the frontlines are critical to leadership’s ability to make well-informed strategic decisions.
I have also learned that gaining this understanding can be difficult and that many leaders lack this level of insight.
You may say, "But, why would I know that kind of minutiae? Doing that level of work isn’t really my job, after all."
To that I would say… valid point, but it is not so black and white.
While I believe that organizations should define ambitious strategic goals (“gonna be the BEST widget-maker!”), if they don't have an understanding of the realities of their operations, they are setting themselves up for failure.
Strategic Goal = Not Met
I once worked with a company who described a vision of increasing their partnerships with small businesses. They wanted to support and give back to their community. A lofty and well-intentioned goal, for sure. But, did it work out?
Based on the subject of this post, you can assume that the answer is no and you would be correct.
They were not able to accomplish their goal because, just like the widget-maker, leadership had no idea how long their Accounts Payable process took or how complicated it was for vendors to get paid. Small businesses generally do not have the cash to float while waiting 90 or 120 days to get paid. By not being able to achieve this goal, leadership came out with egg on their faces.
Gaining the Needed Insight
So, how exactly does leadership gain useful insight into company operations so that they can make successful strategic decisions?
Maybe the show Undercover Boss comes to mind, where the CEO pretends to be a worker to learn what’s really going on. To that, you may say, “but Jennie, I’m allergic to fake mustaches!”
That’s ok, I am too. However, fear not, my friend. There are ways to gain that level of insight without getting a rash on your upper lip.
Leverage Internal Audit: Your internal audit function is a valuable resource, as they generally have the broadest knowledge of the organization. They can give you insight into how your operations function, recommend improvement opportunities, and help to mitigate operational risks. Treat them as strategic partners and give them a seat at the table.
Engage an Outside Vendor for Process Assessments: Engage a firm to perform process assessments and to provide improvement and efficiency suggestions. Just be careful how you message this to avoid alarming staff. Unless you WANT to alarm staff, in which case, you do you.
Talk to Your Team Members, Listen Carefully, and Be Willing to Invest in Improvements: In my experience, folks are generally willing to tell you what isn’t working with their processes, but only if they feel comfortable doing so and believe that they can have an impact. Building a “no blame / no retaliation” culture is key to helping them feel comfortable (building a culture like that is a topic for another day!).
It's Not a Detour, It's the Foundation
Understanding the intricacies of your operations is not a detour from your strategic goals, it is the foundation upon which to build them.
Using your resources this way can not only help you build ambitious AND achievable strategic goals, but it can help bridge the gap between aspiration and execution. So, grab your nearest Chief Audit Executive or strategic business partner (like Melody Advisory!) and get going!
