Strategy Decoded: Taking strategy into real life
Strategy Decoded: Taking strategy into real life
"Strategy Decoded" is a series of BSO webinars aiming to help entrepreneurs, business owners and managers to implement strategy effectively. This update is about the first webinar in which the panel covered several crucial aspects of strategic planning and execution. Topics were discussed by experts, and facilitated by Mphahlela (Pat) Mokgatle, Partner at BSO and Head of Entrepreneurial Services.
Here's a summary of the key points discussed by our expert panel. Access the full recording (available here on our YouTube channel):
Understanding Strategy
Strategy is crucial for businesses of all sizes, from one-person operations to multinational corporations. And getting strategy right is not just about having ambitions or intentions, it’s also about planning execution and action. Doing what needs to be done to achieve your goals.
Business owners often find strategy development difficult. It’s easy to get bogged down in oceans of theory and, in doing so, struggling to simplify the process. Strategy development is not about discovering something new; it’s about understanding the business and its environment and having the data to make informed decisions in the context of business objectives.
Professor Adrian Saville, the founder of Boundless World and an Economics; Finance, and Strategy Professor at the University of Pretoria's Gordon Institute of Business Science (GIBS), told us that every business has a strategy, whether it realises it or not. He emphasised that having a strategy is crucial for businesses of all sizes, and that it's essential to understand what strategy is before operationalising.
Regardless of size the basics of a good strategy are similar:
- understand your product/service. Is it relevant? Does it deserve a place in your intended market?
- conduct research to inform decisions - consider both internal and external factors
- position your products/service from your customer’s point of view
- define realistic and measurable objectives
- project plan the various actions and milestones
- involve the right people to execute the plan
- monitor, measure and continually assess, and adapt to stay competitive and relevant
Watch Professor Saville insights.
Integrating Strategy into Daily Operations
Christelle Grohman, a seasoned strategic and financial advisor at BDO South Africa, provided insights as to why strategy can be intimidating and her advice to help listeners understand how to implement strategy effectively.
The importance of accountability and execution is highlighted through the example of preparing for a marathon, where having a plan and tracking progress is essential to achieving the goal. Furthermore, a common myth about strategy in small businesses is that it's seen as separate from everyday business operations, rather than being integrated into daily plans.
Watch Christelle’s insights
Operational Effectiveness is only part of Strategy
Sifiso Dube, strategist and Senior Consultant at BDO South Africa, emphasised the distinction between operational effectiveness and strategy.
Operational effectiveness refers to the activities involved in producing, selling, or delivering a product or service. Strategy (while maintaining operational excellence) mostly involves making decisions about where to play, and how to play to win in a chosen environment.
By understanding the difference between operational effectiveness and strategy, businesses can create a culture that includes both. Sifiso further highlighted that businesses should identify their core competencies and capabilities and make strategic decisions based on those strengths.
The goal of strategy is to make decisions that will enable the business to succeed!
Watch Sifiso’s insights
Aligning KPIs with Strategy
Sifiso went on to discuss how The Cascade model can be used as a useful tool in strategy development. In this model, winning aspirations (the vision) are broken down into smaller, manageable parts. Once the vision is defined, the smaller components (strategic priorities) can be used to create a clear plan for achieving the strategy.
Strategic priorities form the basis of strategic actions and sub-actions for staff and are linked to key performance indicators (KPIs) that align with the overall vision.
The Cascade model ensures the alignment of individual KPIs with the winning aspiration. It is imperative to take the strategy from the top and ensure everyone knows their role in implementing it. According to Sifiso, only 5% of employees typically know the company's strategy, highlighting the need for better communication to achieve buy-in across the business.
Watch for more insights about the Cascade model.
Assessing Business Readiness and Adaptability
Bert Lopes, Partner and National Head of BSO, has over 25 years of experience across a range clients, including listed corporates and small entities.
Bert highlighted the importance of assessing the client's readiness to face multiple business challenges and that companies should regularly review their strategies to remain relevant.
Bert emphasises the importance of understanding an organisation's culture and ensuring everyone is aligned, as culture can "eat" strategy, and that a good understanding of the business and its culture is necessary to clarify everyone's points of view.
Implementing a strategy can be challenging, especially when there are obstacles or resistance. It's essential to get everyone on board, or at least a majority, and then manage those who are not yet convinced, understand their views and moving forward.
Business Lifecycle
To make the strategy relevant, it's crucial to define where the business is in its life cycle. Models such as the seven business life cycles, can be used to understand common themes and then apply them to a business as it continues moving through its stages or phases.
The strategy and actions vary significantly according to the phase, and the objectives as defined by it. For instance, in an exit phase the focus may be on realising value for the exit or optimising proceeds of disposal. A completely different approach to strategy is required in an expansion phase, where the focus might be on raising capital or acquiring resources for growth.
During the ongoing process of operationalising strategy, it's also important to consider potential future scenarios and have a plan to adapt to them. Scenario planning can help navigate unexpected events or setbacks and make it quicker and easier to successfully adapt to change. When the time comes the plans can be rapidly activated.
Watch Bert’s insights.
Summary
The one-hour webinar covered a broad range of topics emphasising that to implement a successful strategy requires more than just planning. By focusing on these aspects, businesses can bridge the gap between strategy on paper and its successful execution in real life.
To get your business strategy going in a better direction e mail bso@bdo.co.za for a free consultation
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