Breathing life into strategy
“Strategic planning just does not add any meaningful value”. This is a comment I often hear in talking to different businesses from CEO’s to operational management and from large listed entities to SMMEs. This is then backed up with a very real frustration. The frustration revolves around making the strategy work. How does the strategy get translated into operational effectiveness? How does the CEO ensure that the time and effort put into the strategic plan converts into reality and ultimately into profit?
An easy comment to make is that it is up to the management team to put the strategy into practice. Failure to implement the strategy is an indictment on management! I disagree – management often are so busy with day-to-day operational crises that they do not have time to revisit that strategic document lying in their bottom drawer.
So is there an effective way of converting strategy into operational reality? I believe the answer is yes and the tool is the Target Operational Model (or TOM).
Start by working with reality
So often strategies consist of futuristic statements about where the business should be in three to five years. The future is looked at and heroic (and often impractical) assumptions are made about resources, capabilities, market conditions and how the business is going to conquer the world.
I have no problem with stretching goals and setting hard to achieve targets, in fact I think it is essential to push the boundaries quite aggressively. However, this you do through setting goals and not in the core strategy. Very few leaders can pull of a dramatically different strategy to the one currently being achieved!
Working with the operating model concept means that you work with what is on hand and how effectively and efficiently these components can be organized to deliver profits. Decisions are based on reality and on being innovative and clever with what is available now. This is then the first step in making strategy so much more focused and impactful in the now.
Expand on the strategy through your target operating model
Once you have a practical strategy defined, then you go to the next level of definition. That is to take a good hard look at your existing way of going to market and how you deliver service to customers through your operating model. An independent review asks questions around your customer segmentation, how you service your customer with your delivery channels, how you make or purchase product, how you create returns through your operating model, etc. Your operating model can be mapped to your value chain and misalignment, inefficiencies, poor market focus, wasteful allocation of resources, etc. can be quickly identified.
There are many facets that need to be reviewed in looking at your operating model. Typically you need to review your markets including customer segmentation, sales channels, supplier strategies, product categorization, and branding. Operations are reviewed looking at engagement between all relevant stakeholders, process design, business systems, assets and resources, governance and decision making, and organizational design. The people aspects such as culture and values, skills development and deployment, performance management, and talent management are all reviewed. Lastly critical success factors, key performance indications and results management are reviewed and aligned to the desired strategy.
Adjustments to the operating model can now be identified and made to the reality of the market and operating environment. There is no one answer to all business just as there is often no right answer – there is only what you and your management team feel is the best way to address a problem.
Once your review is complete you will have a list of initiatives that need to be addressed to optimize your operating model. Some of these you can effect immediately. Others will take time and effort. These can then be turned into projects, prioritized and scoped, and executed with dedicated resources and expected outcomes. You are now delivering your strategy through distinct and measurable projects. In this way I believe the target operating model is a key tool in enabling strategy.
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