How to create organisational strategy in a digital world
Sustainable advantage with organisational strategy
Just having an Organisational strategy does not always guarantee success without effective leadership, implementation and evolution (to deal with market conditions or disruption). But without operational effectiveness can an organisation or its strategy be truly successful? In other words, can a large organisation compete with new niche players/start-ups that target its traditional markets/products/services without necessarily being efficient in the delivery/support of those services targeted by competitors? Unlikely at best, but that is where innovation comes in to it. Just having a strategy is not enough to remain in a unique position and does not create a sustainable advantage. So how does organisational strategy create that sustainable advantage?
Operational efficiency must support Strategy
Organisational strategy must also address operational effectiveness focusing on how to carry out activities that support its services better/more efficiently than its competitors so that your customers love and actively promote your products/services. In the face of disruptive forces (such as new competitors and market changes) organisations must also decide what services to continue with and which to stop in order to remain competitive. “Strategy is about creating fit among a company’s activities. The success of a strategy depends on doing many things well (not just a few) and integrating between them. If there is no fit among activities; there is no distinctive strategy and little sustainability” (Porter, M.E. 2006, What is strategy? Harvard Business Review).
Strategy must include Innovation and Customers
Key inclusions to any strategy in this digital era must be how an organisation treats both its customer’s and innovation to create sustainable probability and growth. At the heart of any organisation must be the customer and how the products/services it creates are loved and actively promoted by those customers. Innovation allows an organisational to look at the world differently where they can either innovate on or away from core business services/products in order to create sustainability and growth. Innovation can also be used to solve a technology issue that was thought too complex, create a new product or to differentiate services in a crowded marketplace.
How to communicate
Once an organisational strategy has been created, it has to be clearly articulated to the rest of the organisation, then implemented and evolved by its leaders. Communication methods are critical to how the message is received by individuals and teams alike. Poor communication types are typically information bulletins, mass emailing, video and training sessions, sadly these are examples of methods traditionally used by many organisations to communicate strategy out to the rest of the organisation. The richest communication types were found to be face to face meetings, large group discussions, working groups and presentations. “Strategies are approved but poorly communicated. This in turn makes the translation of the strategy in to specific actions and resource plans…impossible. Lower levels in the organisation don’t know what they need to do, when they need to do it, or what resources will be required” (Mankins, M.C. & Steele, R. 2005. Turning great strategy into great performance. Harvard Business Review).
Leadership in Strategy
The ultimate leader when it comes to organisational strategy is the CEO who can become synonymous with a company’s identity and has responsibility for leading an organisation by pursuing (or not) certain opportunities and how they all fit into the overall picture. This is why the job of strategy creation cannot be outsourced – it is up to all leaders in an organisation to make strategy successful and where necessary raise any issues that may have an impact on an organisation and its ability to close the strategy to performance gap. “One of the leader’s jobs is to teach others in the organisation about strategy-and to say no. Strategy renders choices about what not to do as important as choices about what to do. Indeed, setting limits is another function of leadership”. (Porter, M.E, 1996, What is strategy? Harvard Business Review)
Strategy must = competitive advantage
Ultimately, organisations will have to continue to create/add value to its customers, suppliers and partners so that those parties are better off with your organisation than without. To retain competitive advantage organisations have to differentiate themselves from their competitors. “A company must continually improve its operational effectiveness and actively try to shift the productivity frontier; at the same time, there needs to be ongoing effort to extend its uniqueness while strengthening the fit among its activities” (Porter, M.E, 1996, What is strategy? Harvard Business Review). Having a strategy on its own is not enough, it needs to be effectively communicated and executed by visionary leaders who can inspire and empower others. Any strategy must also outline where/how to create differentiation, such as through innovation (how to do things better or more efficiently than your competitors) and customers (how to engage with and grow loyalty). A strategy must ultimately answer one fundamental question, what problem(s) am I here to solve for my customer’s?