 "Rethinking the role of the strategist")
Many companies have an executive to guide their strategies. The discipline's professionalisation, which began in earnest in the 1980s as it evolved from the chief executive's domain into a core corporate function, prompted the creation of heads of strategy, strategic-planning directors, and, more recently, chief strategy officers (CSOs). Who better than a professional strategist to help meet the big new uncertainties of the 21st century?
Yet today's unpredictable environment is utterly incompatible with what, historically, has been one of the chief responsibilities of many strategists: leading the annual strategic planning process. While nothing new, the weaknesses of traditional strategic planning - characterised by a lockstep march towards a series of deliverables and review meetings according to a rigid annual calendar - have been amplified by the importance of agility in a rapidly changing world.
Strategists have responded by increasing the scope and complexity of their roles beyond planning. In a recent survey of nearly 350 senior strategists representing 25 industries from all parts of the globe, we found an extraordinary diversity of responsibilities (13 by our count). But running the planning process still loomed large, ranking second in priority on that list, even if many respondents said they would prefer to spend significantly less time on this part of their role.
There's a way out of this box for chief strategists and other senior leaders, particularly CEOs, CFOs, and board members, whose roles are deeply intertwined with the formulation of strategy. The starting point should be thinking differently about what it means to develop great strategy: less time running the planning process and more time engaging broader groups inside and outside the company, going beyond templates and calendars, and mirroring the dynamism of the external environment.
But this isn't enough. Achieving real impact today requires strategists to stretch beyond strategic planning to develop at least one of the few signature strengths. Several important facets of the strategist's role emerged from our research, including reallocating corporate resources, building strategic capabilities at key places in the organisation, identifying business-development opportunities, and generating proprietary insights on the basis of external forces at work and long-term market trends. A number of these roles are more appropriate for some strategists and organisations than for others. But the core notion of stretching and choosing is relevant for all.
Developing signature strengths
Four years ago, executives around the world told us their companies were creating, by their own admission, substandard strategies. Only 35 per cent were generating strategies that passed more than three of ten tests we use for measuring the likelihood that a given strategy would beat the market. And many respondents blamed the ineffectiveness of the annual strategic-planning processes for the state of their companies' strategies.
Since then we've sensed, in our work with a wide range of global organisations and strategists, a growing recognition that traditional strategic-planning processes are insufficient to absorb the shocks and disruptions characterising their markets and to stimulate the ongoing deliberation that a top management team requires. Increasingly, they recognise a need to rethink their approach to strategic planning and to embrace a more frequent strategic dialogue involving a focused group of senior executives. Effective organisations seem to be transforming strategy development into an ongoing process of ad hoc, topic-specific leadership conversations and budget-reallocation meetings conducted periodically throughout the year. Some organisations have even instituted a more broadly democratic process that pulls in company-wide participation through social-technology and game-based strategy development.
Our research also supports one of our major observations about what it takes to innovate in the development and delivery of strategy: over and over, we've seen that the chief strategists best at driving more dynamic approaches have a professional credibility that extends well beyond a traditional process-facilitation role. At the same time, we've seen tremendous diversity in the characteristics of effective strategists. In a quest for greater precision, we applied statistical cluster analysis to the 13 facets that chief strategists responding to our survey described as most important to their efforts. The analysis yielded five clusters in which the strategist's role becomes more than the sum of its parts. Widespread across industries, these clusters embody choices that face every strategy leader (exhibit).
The architect
These strategists, 40 per cent of the executives we surveyed, make the most of their talent for using fact-based analysis to spot industry shifts and to understand their own companies' sources of competitive advantage as a foundation for clear, differentiated strategies. Organic growth is a core concern, and driving business performance to meet tough organic targets is a critical part of the architect's role. By monitoring competitors, these strategists can challenge their own organisations to set ambitious targets and reach them. Architects also focus on driving mergers and acquisitions, divestitures, joint ventures, and other opportunities. They may "own" the deal-sourcing and integration teams and work to find the right acquisition targets in line with a strategic vision.
Since this cluster reflects the most traditional part of a strategist's role, the architect is fairly common. A prototypical architect is the strategist of an oil and gas company who recently led a root-and-branch strategic review of her largest business unit. As part of the effort, she built new analytical tools and capabilities to create insight into the true competitive advantage of her business. She is now leading a programme to identify potential joint ventures and to continue the pursuit of growth in difficult markets. Another strategist we know has redefined what it means to do strategy in the retail part of her business by creating an analytical and granular view of how each of its "cells" is performing against its plan and the performance of its market. Architects can directly push efforts like these, and they also can stimulate a more broad-based reevaluation of strategy by designing and orchestrating gaming and social spaces where it is developed more democratically.
The mobiliser
An additional 20 percent of CSOs surveyed fall into a mobiliser role, developing the strategic muscle of their companies, building capabilities, and delivering special projects. Mobilisers play critical leadership roles in company-wide efforts to build what one CEO in an operationally intensive industry describes as a "higher organisational IQ on strategy." Chief strategists in this model focus on ensuring that strategy meetings are truly strategic and that the people involved in those discussions are actually skilled at making them so. They ask the right questions, scrutinise critical assumptions, and ensure that their companies are learning organisations: porous to outside trends and examples. They also make sure that strategy is synthesised in a concise and easy-to-communicate way that organisations can seamlessly translate into action.
A strategist at an aerospace company, for example, runs training programmes on core skills, such as how to create a business plan, that key members of the organisation need to craft clear, well-informed strategic proposals. Another strategist, in the resources sector, ran a large-scale strategy refresh with a multidisciplinary team from across the organisation. The team, made up of representatives from the business analysis, marketing & sales, technology, exploration, and operations units, conducted analyses and strove to reach strategic conclusions. This approach brought direct experience and expertise from the front line to the company's strategy, which, therefore, became sharper and more relevant. The process also built the team members' strategic-thinking skills while enhancing their understanding of how the business creates value and their own role in creating it. Finally, the process helped generate strong support throughout the company for the actions the strategy set out. All team members acted as its champion within their part of the business because of the clear ownership they felt.
Yet today's unpredictable environment is utterly incompatible with what, historically, has been one of the chief responsibilities of many strategists: leading the annual strategic planning process. While nothing new, the weaknesses of traditional strategic planning - characterised by a lockstep march towards a series of deliverables and review meetings according to a rigid annual calendar - have been amplified by the importance of agility in a rapidly changing world.
Strategists have responded by increasing the scope and complexity of their roles beyond planning. In a recent survey of nearly 350 senior strategists representing 25 industries from all parts of the globe, we found an extraordinary diversity of responsibilities (13 by our count). But running the planning process still loomed large, ranking second in priority on that list, even if many respondents said they would prefer to spend significantly less time on this part of their role.
There's a way out of this box for chief strategists and other senior leaders, particularly CEOs, CFOs, and board members, whose roles are deeply intertwined with the formulation of strategy. The starting point should be thinking differently about what it means to develop great strategy: less time running the planning process and more time engaging broader groups inside and outside the company, going beyond templates and calendars, and mirroring the dynamism of the external environment.
But this isn't enough. Achieving real impact today requires strategists to stretch beyond strategic planning to develop at least one of the few signature strengths. Several important facets of the strategist's role emerged from our research, including reallocating corporate resources, building strategic capabilities at key places in the organisation, identifying business-development opportunities, and generating proprietary insights on the basis of external forces at work and long-term market trends. A number of these roles are more appropriate for some strategists and organisations than for others. But the core notion of stretching and choosing is relevant for all.
Developing signature strengths
Four years ago, executives around the world told us their companies were creating, by their own admission, substandard strategies. Only 35 per cent were generating strategies that passed more than three of ten tests we use for measuring the likelihood that a given strategy would beat the market. And many respondents blamed the ineffectiveness of the annual strategic-planning processes for the state of their companies' strategies.
Since then we've sensed, in our work with a wide range of global organisations and strategists, a growing recognition that traditional strategic-planning processes are insufficient to absorb the shocks and disruptions characterising their markets and to stimulate the ongoing deliberation that a top management team requires. Increasingly, they recognise a need to rethink their approach to strategic planning and to embrace a more frequent strategic dialogue involving a focused group of senior executives. Effective organisations seem to be transforming strategy development into an ongoing process of ad hoc, topic-specific leadership conversations and budget-reallocation meetings conducted periodically throughout the year. Some organisations have even instituted a more broadly democratic process that pulls in company-wide participation through social-technology and game-based strategy development.
Our research also supports one of our major observations about what it takes to innovate in the development and delivery of strategy: over and over, we've seen that the chief strategists best at driving more dynamic approaches have a professional credibility that extends well beyond a traditional process-facilitation role. At the same time, we've seen tremendous diversity in the characteristics of effective strategists. In a quest for greater precision, we applied statistical cluster analysis to the 13 facets that chief strategists responding to our survey described as most important to their efforts. The analysis yielded five clusters in which the strategist's role becomes more than the sum of its parts. Widespread across industries, these clusters embody choices that face every strategy leader (exhibit).
The architect
These strategists, 40 per cent of the executives we surveyed, make the most of their talent for using fact-based analysis to spot industry shifts and to understand their own companies' sources of competitive advantage as a foundation for clear, differentiated strategies. Organic growth is a core concern, and driving business performance to meet tough organic targets is a critical part of the architect's role. By monitoring competitors, these strategists can challenge their own organisations to set ambitious targets and reach them. Architects also focus on driving mergers and acquisitions, divestitures, joint ventures, and other opportunities. They may "own" the deal-sourcing and integration teams and work to find the right acquisition targets in line with a strategic vision.
Since this cluster reflects the most traditional part of a strategist's role, the architect is fairly common. A prototypical architect is the strategist of an oil and gas company who recently led a root-and-branch strategic review of her largest business unit. As part of the effort, she built new analytical tools and capabilities to create insight into the true competitive advantage of her business. She is now leading a programme to identify potential joint ventures and to continue the pursuit of growth in difficult markets. Another strategist we know has redefined what it means to do strategy in the retail part of her business by creating an analytical and granular view of how each of its "cells" is performing against its plan and the performance of its market. Architects can directly push efforts like these, and they also can stimulate a more broad-based reevaluation of strategy by designing and orchestrating gaming and social spaces where it is developed more democratically.
The mobiliser
An additional 20 percent of CSOs surveyed fall into a mobiliser role, developing the strategic muscle of their companies, building capabilities, and delivering special projects. Mobilisers play critical leadership roles in company-wide efforts to build what one CEO in an operationally intensive industry describes as a "higher organisational IQ on strategy." Chief strategists in this model focus on ensuring that strategy meetings are truly strategic and that the people involved in those discussions are actually skilled at making them so. They ask the right questions, scrutinise critical assumptions, and ensure that their companies are learning organisations: porous to outside trends and examples. They also make sure that strategy is synthesised in a concise and easy-to-communicate way that organisations can seamlessly translate into action.
A strategist at an aerospace company, for example, runs training programmes on core skills, such as how to create a business plan, that key members of the organisation need to craft clear, well-informed strategic proposals. Another strategist, in the resources sector, ran a large-scale strategy refresh with a multidisciplinary team from across the organisation. The team, made up of representatives from the business analysis, marketing & sales, technology, exploration, and operations units, conducted analyses and strove to reach strategic conclusions. This approach brought direct experience and expertise from the front line to the company's strategy, which, therefore, became sharper and more relevant. The process also built the team members' strategic-thinking skills while enhancing their understanding of how the business creates value and their own role in creating it. Finally, the process helped generate strong support throughout the company for the actions the strategy set out. All team members acted as its champion within their part of the business because of the clear ownership they felt.
Michael Birshan is a principal in McKinsey's London office, where Emma Gibbs is an associate principal; Kurt Strovink is a director in the New York office.
This adapted article was originally published in McKinsey Quarterly,
http://www.mckinsey. com/insights/mckinsey_quarterly.
Copyright (c)2014 McKinsey & Company. All rights reserved. Reprinted by permission.
Copyright (c)2014 McKinsey & Company. All rights reserved. Reprinted by permission.