4.2
By Pia Fuglsang Bach, Community Manager at CfL, updated June 2024.
A strategy is a long-term plan that provides direction and objectives for the organization. A slightly longer version is as follows:
Strategy is about how we create value in the future – a value creation that requires binding priorities among key actors within and around the organization. A strategy enables you to make the right decisions – even decisions that you did not necessarily consider when developing the strategy.
It may sound complicated, but a good strategy is simple. The phases of strategic work can be complex because everything is at stake, yet in the end, you must prioritize and choose where you want to go.
A golden rule is that you should keep working on the strategy until it is simple again.
A strategy is a temporary commitment. We know that unforeseen events – such as a war in Europe, inflation, or Covid-19 – will occur, but if we were to account for every unforeseen circumstance, it would become truly complex, and we would never be finished.
First, you must clarify the purpose of the strategy. Why this particular strategy? What does the company aim to achieve with it? There can be various purposes. Examples:
Once the purpose is established, you should gradually begin to determine which analyses are needed. This is an iterative process. For example, if a later analysis phase shows that a market is non-existent or completely different from what was expected, you must go back in the process.
Once you have agreed on the purpose of the strategy – and why this time it is not just like last time – you must develop a process for the next phase and decide whether to pursue a top-down or bottom-up design.
Sometimes it makes sense for the process to be managed from the top, because major changes are needed. Other times, it is wise to involve many.
A strategy should not be confused with an action plan. What characterizes a strategy is that you do not necessarily know how the various decisions will be implemented.
You do not know all the answers, so you must involve the organization. It should help answer what will happen in the first half of the year, the next half, and so on.
Greater understanding and more involvement mean that it becomes much easier to execute the strategy. Once everyone agrees that this is the direction, there is less need for further debate.
Here the question is: Which analyses are critically important for the company to conduct? You can analyze endlessly, so perhaps you should first map out what is essential on the company’s cost and revenue side.
What is it that is truly important? Where does the company have its organizational bottlenecks? Where do you see potential, but lack production capacity or competencies? What is needed to optimize in relation to these scarce resources?
It is not only about investments. Some organizations struggle with the notion that money is the scarce factor, but in reality, the problem often lies elsewhere. It could be about new trends, new technology, politics, or globalization suddenly moving in the opposite direction.
Factors of that nature can be much more important than an organization or department receiving 50 million for a given strategic project.
This is how CfL works with strategy – from purpose and analysis to execution.
Based on the analyses and assumptions about what will happen, you then finally define your strategy.
After that, you must begin more detailed action planning on how to continuously get closer to the strategy – without assuming that you can follow a straight line, because you cannot.
Once the decision has been made, you must begin to execute the strategy. Some aspects may progress quickly, while others will take a long time.
A new strategy often entails organizational changes, and if, for example, a director in a group has their powers or area curtailed, that person might choose to leave. This can involve huge potential but also great risks, and therefore it may be necessary to delay that part.
That must depend on a specific assessment in the given situation. It is always up for discussion when the timing is right.
When it comes to execution, CfL relies on the international management expert Stephen Bungay.
His thinking is that you first set the direction – develop the strategy – and then break it down into what it means at the director level, the line level, the team leader level, etc. How does the strategy look from the director’s chair or from the perspective of a middle manager?
It is about establishing the right communication, which in simple terms means that everyone – regardless of level – must come to work with purpose and do what is right. Referring to Stephen Bungay, he says that even if you receive a wrong message, you must do what is right. He calls it "independently thinking obedience."