Strategic Intent Strategy is both a positioning force of planning and the direction of executive emphasis. Question: What is pervasive across most all organizations, but unique to each; they have a depth of experience with it – yet it is most often underestimated? It’s too infrequently updated – yet always changing; it’s widely communicated – yet vaguely understood. It’s statically positioned – yet dynamically proactive and reactive to events, and it’s an immediate success when creating early failures. Answer: ‘Strategy’ - that widespread, singular, changing, multi-dimensional, focusing, and amorphous cornerstone of organizational momentum. Whether strategy is viewed as change management, opportunity analysis, transformation planning, business case analysis or executive policy, it is the management of the heart of the organization. It involves understanding values, beliefs, attitudes, coaching and team building while managing reward systems, human resource policies, training, planning, communication and program execution. Strategy is both a positioning force of planning and the direction of executive emphasis. It is not a new concept; integrating strategic forces and aligning organizational directions have been a challenge since the Tower of Babel. Often businesses find themselves sinking huge sums of money and resources to the realization of their strategies with little to no visible return on investment. Too often, enterprise-wide strategies fail to meet expectations because all aspects of the organization are not considered when planning a strategy. The uncertainty of whether a change will be evolutionary or revolutionary leads to inadequate preparation making outcomes more unpredictable. In this environment, some results are indeed predictable; they include: • Difficulty Creating and Changing Strategy • Poor Deployment of Strategy • Lack of True Accountability • Insufficient Action to Improve Results • Ineffective Performance Data A survey from EM&I analysts confirms this current state of client strategic planning and execution capabilities. When asked to rate how well strategies are executed and how well executives are known to be held accountable for strategic goals, our analysts rated these attributes lower than the planning attributes (e.g. clarity, practicality, and stakeholder involvement). However, the ranges of responses (on the right) show significant variation. Strategic Performance Accountability Clarity 5 4 3 2 1 0 Executed Practicality Involvement Strategic Performance Range Accountability Clarity 5 4 3 2 1 0 Executed Average Practicality Involvement MIN MAX Figure 1 - Client Strategic Capabilities Five strategic capabilities were ranked on a 0 to 5 point scale. Of the 25 possible points, organizations averaged a 10.5 score with an average range on each score of over 3.5. Indeed, some attributes such as ____________________________________________________________________________________ Engineering, Management & Integration, Inc. 455 Spring Park Place, Ste.350 Herndon, VA 20170 Tel: 703.742.0585 Fax: 703.742.8034 www.em-i.com heavy stakeholder involvement which is desirable for a mature organization would be less desirable for some organizational cultures where a dictated strategy would be more accepted, consistent, and understood. These preliminary results reflect a wide range of unique strategic improvements needed in just EM&I clients. A larger population sample is unlikely to alter this finding. These five attributes are not a complete assessment of strategic capabilities. Additional, characteristics and capabilities were identified (e.g., unification, completeness, mapping strategies to organizational departments, coherence, economical, proper emphasis, and enabling synergies). EM&I can help organizations assess their strategic strengths and weaknesses and identify needed improvements, but a clearer definition is needed to focus efforts. The cultural context in which strategy is executed has a lot of control over how strategies are perceived and evaluated. Henry Mintzberg (1994) in, The Rise and Fall of Strategic Planning [1], points out that people use "strategy" in several different ways: • Strategy is a plan, a "how," leaders establish direction and sequence tactics as a means of getting from here to there. • Strategy is a pattern in actions over time; for example, an organization that consistently markets very expensive products is using a "high end" strategy. • Strategy is (competitive) position; it reflects decisions to offer particular products or services in particular markets to meet, avoid, or subvert the competition. • Strategy is perspective, vision and direction that infuse a culture. Mintzberg believes that strategy emerges over time as intentions accommodate a changing reality. Thus, one might start with a perspective and conclude that it calls for a certain position, which is to be achieved by way of a carefully crafted plan, with the eventual outcome and strategy reflected in a pattern evident in decisions and actions over time. This pattern defines what he calls "realized" or emergent strategy. In Top Management Strategy [2], Benjamin Tregoe and John Zimmerman define strategy as "the framework which guides those choices that determine the nature and direction of an organization." Ultimately, this boils down to selecting products or services to offer and the markets in which to offer them. Tregoe and Zimmerman urge executives to base these decisions on a single "driving force" of the business. Although there are nine possible driving forces, they believe that only one can serve as the basis for strategy for a given business. The nine possibilities are listed below: 1. 2. 3. 4. 5. 6. 7. 8. 9. Products offered Market needs Technology Production capability Method of sale Method of distribution Natural resources Size/growth Return/profit Most organizations will find a mixture of driving forces exists and will not adequately profile their unique needs. In fact, organizations typically choose methodologies, technologies, and business solutions that are successful in other organizations with little or no research into how compatible they are to their own business environment. ____________________________________________________________________________________ Engineering, Management & Integration, Inc. 455 Spring Park Place, Ste.350 Herndon, VA 20170 Tel: 703.742.0585 Fax: 703.742.8034 www.em-i.com Effective strategy requires an honest assessment of capabilities and weaknesses of internal and external resources. Competitive strategy is about being different. Like military strategy, finding a weakness and getting an advantage in one area enables an organization to optimize resources and leverage that position. Focus (i.e. both as a narrowing of scope and as an emphasis of attention) creates a niche that distinguishes an organization to stakeholders, shareholders, and customers. There is not one solution that can accommodate the diverse needs of the dynamic environment and multiple perspectives. However, while strategic plans are unique, they do encompass basic patterns of development. A seven-step outline follows: Step 1. Establish a Clear Vision Regardless of where the driving forces for change begin, organizational leaders must build the support necessary to develop and maintain a mandate. The entire organization must clearly understand the direction and, perhaps more importantly, what must change. Maintaining support will require frequent contact between project teams, senior management and stakeholders, as well as communication with the organization as whole and external partners. Step 2. Translate the Vision into Manageable Components and Guiding Principles Vision must be translated and quantified into concrete forms to be deployed. This often takes the form of a project portfolio. Organizations examine what projects are underway and how they are defined. Project Definition: Dimensions – budget, number of people, elapsed time, output delivered, platform Organization – reporting and control structures Stages – phases, lifecycle, platform Number of projects initiated in a year? (by size) How many projects does an “average” employee work on simultaneously? What are the defect rates? (pre and post delivery)? (by platform) (by cause) What are the customer satisfaction levels? How many concurrent users are serviced? Also, organizational vision statements can benefit from the creation of guiding principles that explicitly outline core beliefs and assumptions. A few stated philosophies such as “buy before building” or “retrain before hiring” can ensure that decisions don’t diverge from the original strategic intent. Break the strategy down into the smallest initiative that measurable value can be achieved and return-oninvestment measured. For each initiative listed: • Map it to the associated strategy objective • Identify dependencies on other initiatives • Estimate level of effort • Estimate cost • Estimate return on investment • Identify how success will be measured Step 3. Identify Stakeholders Proper identification of stakeholders is critical to success of strategic plans. Unfortunately, this step is frequently overlooked or completed haphazardly. Take time to identify the individuals, groups or institutions with interests in organizational outcomes. Be sure to include both “winners” and “losers”, and those involved or excluded from decision-making processes. A stakeholder profile along with the project portfolio form part of a change readiness assessment. ____________________________________________________________________________________ Engineering, Management & Integration, Inc. 455 Spring Park Place, Ste.350 Herndon, VA 20170 Tel: 703.742.0585 Fax: 703.742.8034 www.em-i.com Step 4. Assess Change Readiness Completion of a change-readiness assessment or cultural audit will help to determine the organization’s level of acceptance or resistance to change. Results reveal which areas of the organization may need more attention from the strategic change program to ensure a successful transition. Results also help to identify specific organizational issues that the change strategy must address. Determine the organization’s profile (current and desired) Attribute a. Environment/Culture b. Structure c. Risk Tolerance d. Operational Focus e. Staff Development f. Leadership style g. Measure of Success h. Commitment Traditional Stable, Rule-based Hierarchical, Closed Maintenance (costcutting) Plans/Budgets (sequential) Career Based, training Control Market/Financial Target Enforcement of Standards Transitional Dynamic, creative Network, Partnerships Learning, R&D (investment) Output/Growth (insight) Talent Based, hiring Influence, Coach Strategic Momentum Empowered Individuals Figure 2 - Profile Organizational Attributes Not every organization is ready or needs to transition to a dynamic, high risk, agile, or leading-edge organization overnight. But, determining the current profile and the desired profile enables plans to be evaluated on contribution toward the desired state, and next steps to be identified and prioritized. The following categories help identify the desired state and set the stage to determine appropriate tactical next steps. a. Environment / Culture: Dynamic Behavior, perceptions and attitude within the organization support the implementation of change. The organization's structure, leadership, and processes are aligned with the change. Change the culture from rule-based to creative • Extent to which the organization generally supports change; open culture; degree behavior change is management led. Develop & encourage creativity • Actively promote an environment for staff to be creative without risk; systematic seeking & implementation of good practice; new ideas recognized. Continual organizational learning • How the organization learns best practice and lessons from other change initiatives; review stages & phases; feedback process; up-to-date repository of learning lessons across the organization. Aligning reward, recognition & people policies • Degree 'people' policies and procedures support & reward change; change and project management skills seen as key competencies in leading organizations. ____________________________________________________________________________________ Engineering, Management & Integration, Inc. 455 Spring Park Place, Ste.350 Herndon, VA 20170 Tel: 703.742.0585 Fax: 703.742.8034 www.em-i.com b. Structure: Organizational structure determines communication channels and sets boundaries for performance measures and accountability. Hierarchical structures are associated with larger operations. More agile organizations are flatter and promote flexible with supply chain partnerships. • Open communication supports employee empowerment • Network structures are more easily altered as business needs change. c. Risk Tolerance: IT organizations that support business units are often viewed as an overhead expense. Cost-cutting measures are applied to reduce the expense of IT operations. As IT processes penetrate more business areas, IT assets and benefits become business investments that influence competitive strategies. Risk management enables companies to successfully undertake strategies that lead to higher return on IT investments. Leading companies encourage risk within a controlled investment plan. • E-business technologies • Data Warehouse and Knowledge Management • Virtual teams and globalization d. Operational Focus: Team & Project Management Strategic change is delivered by managing change teams. Change management includes the effective use of process measures, external input/support and training to facilitate this. Mobilizing & Managing Teams • Team members are selected for required competencies; degree & effectiveness • Teams are managed - selection, availability, development, motivation, performance management, reward and transition out. Managing Projects & Programs • Degree project management disciplines are utilized; consistency across organization. Aligning Technology & Processes • Assessment of project on existing technology, systems or processes; how any impacts are managed in advance. Leading companies manage output rather than formalize processes. e. Staff Development: The shortage of staff skills in emerging technologies and even legacy coding for Y2K have created a demand for skills and increased staff turnover. IT employees don’t usually plan on a career with one company, and companies are cautious about training staff who might be easily lured to another company. Leading companies also encourage hiring talent, but they are places where people want to work. These companies understand that training is an investment in staff skills and is often more valued than bonuses. f. Leadership Style: Coach The organization recognizes change as a key method for delivering business strategy. Leaders demonstrate their personal commitment to changes (i.e. set the example, keep up awareness) ____________________________________________________________________________________ Engineering, Management & Integration, Inc. 455 Spring Park Place, Ste.350 Herndon, VA 20170 Tel: 703.742.0585 Fax: 703.742.8034 www.em-i.com Communicating the Vision Effectively • Common vision; fit with business strategy; degree & quality of communication Demonstrating Change Leadership • Active senior sponsor; visible support for change initiatives; commitment; cohesiveness of management team. Quality of Decision-making • Information availability; relevance to strategy, investment commitments; expected return; timeliness. Importance & Quality of the Business Case • Formality; Cost/Benefit; link to business strategy; benefits assessment. g. Measure of Success: Strategic Momentum (Alignment) Methods are in place for managing the balance between normal operations and change. The business takes responsibility for ensuring that the change is relevant to corporate strategy and that long-term business benefit is achieved. Changes are prioritized and monitored. Identifying & Managing Change Capacity • Monitoring systems; processes & people resources for overload; at both project and portfolio levels Integrating & Aligning Initiatives • Resourcing, prioritization, monitoring & integration; interdependencies; conflict management; effective & timely decision making. Managing the Benefits • Clear statement of expected benefits at outset; benefits delivery is a business driver for the organization; benefits tracking; benefits delivery reconciled against business case. Monitoring External Environment • Degree of monitoring of the external business environment; regular external networking with influential groups. Managing Business Risk • Business risk assessed at initial business case; re-assessed throughout the project life; risk management; impact analysis of change on current business; actions taken to protect current business; "stopping" the project. h. Commitment: Empowered Everyone affected by the change is identified and brought into the process. Responses to the change are anticipated and planned for. Communications are honest, convincing, sensitive and well sustained. There is commitment and ownership throughout the organization. Communicating • Structured communication plan exists; degree upward and downward feedback embedded; appropriate media channels; timeliness. Anticipating & Responding to Emotion • Extent staffs are involved in assessing any design and its impact; timeliness; degree reactions to change are used to shape policy & communications strategy. ____________________________________________________________________________________ Engineering, Management & Integration, Inc. 455 Spring Park Place, Ste.350 Herndon, VA 20170 Tel: 703.742.0585 Fax: 703.742.8034 www.em-i.com Developing Stakeholder Involvement • Timely identification of key stakeholders; clarity of their roles & responsibilities. Overcoming Organizational Barriers • Degree of planning of impact of change on organizational boundaries; management of issues; degree horizontal & vertical networks used to engage all parts of the business. Creating & Maintaining Commitment • Individual & team motivation to achieve results; dealing with factors such as organization obstacles to change, politics, conflicting processes, etc. Step 5. Establish the Deployment Strategy It’s not the planning – but the deployment or strategic execution that is the downfall of organizational success. While lack of lower-level definition of corporate-level goals will make deployment difficult, lack of linkage across business units and lack of understanding of individual roles in strategy deployment are typically the roadblocks. Strategic Analysis 1. What are the goals to be achieved? 2. What policies guide or limit action? 3. What are the major action sequences (tactics)? 4. What sequencing of concepts/thrusts is anticipated? (e.g., initial thrusts versus delayed? 5. How does the strategy prepare for the unforeseeable? 6. Are components clear, proactive, focused, flexible, coordinated, surprising, securing, etc? • Mobilize and Communicate This element of the change strategy is pretty straightforward: Knowing who the audience of stakeholders is, determine the message. Consider how often to communicate and by what means. • Align the Organizational Components Organization alignment establishes the foundation necessary to support transition activities. The need for the organization to reflect change can get lost as changes are implemented. The incremental pace of change can trap employees between the old and new way of doing things. Employees may soon discover that the organization has not aligned itself (i.e. updated procedures, re-evaluated job descriptions, reviewed compensation and reward systems, updated measurement systems and training programs, etc.). Leaders must ensure that they are rewarding the type of behavior necessary to successfully transition. • Educate and Train Provide everyone in the organization with the knowledge and skills necessary to understand, embrace and sustain change. Leaders must work closely with internal or external training and with engineering or development teams to design and deploy appropriate courses. There needs to be an aggressive, enterprise-wide effort to educate all of its employees and business partners as to: • Why the transformation is necessary • Consequences in not making the change • Benefits expected from the change • How it will impact them both individually and organizationally • How they can contribute to the transformation effort ____________________________________________________________________________________ Engineering, Management & Integration, Inc. 455 Spring Park Place, Ste.350 Herndon, VA 20170 Tel: 703.742.0585 Fax: 703.742.8034 www.em-i.com Step 6. Transition to the New Ways The strategic transition phase is really a phase of change. It is typically characterized by a strong sense of ambiguity. Employees will be experiencing the stress of moving from the old way of doing things to the new, and leaders must manage this phase properly to ensure a smooth transition. Previous strategy components are in place to provide support during this phase. Each tactical encounter builds upon the existing appraisal of the current context. The possible options and most probable outcomes must be evaluated, and realistic implementations must be proposed from given information and insights. Organizational leaders must select and implement best practices that are compatible with the current environment and that drive toward the desired profile. Need for Agility and Flexibility Initial proactive strategy formation, positioning, and resource deployment must react to changes in competing strategies or changes in initial assumptions that formed the strategy. The capability to anticipate and react to relevant changes determines new tactics that sustain growth and profitability. Organizations and leaders that don’t learn from tactical encounters will continue to make inappropriate decisions. Inflexibility and resistance to change lead to repeated failures. A Context of Uncertainty Strategic analysis is based on assumptions, observations, and limited quantifiable evidence of a changing reality. The decision to sustain, modify, or abandon a given tactic must be made without complete information. The context is incomplete and some relevant factors that would determine a “best” strategy are always unknown. What is known is often subjective or filtered through past experiences. Good Practices 1. Create a sense of urgency (i.e., a cause rather than a strategic plan) 2. Develop a competitive focus 3. Provide all stakeholders with skills and resources to work effectively (i.e., training and communication) 4. Establish clear milestones, review mechanisms, and accountability 5. Give the organization time to adopt, adapt, and digest one challenge before launching another (i.e., too many good practices at once aren’t good at all.) Step 7. Monitor Performance Performance measurement is a critical tool for driving change in an organization. There is probably not a more powerful means of communicating to the organization. Ensure that appropriate process measures are in place and are actively reviewed by all organizational levels. Consider the balanced business scorecard approach. It is not enough just to create the strategy at the enterprise level. To be successful and cost-effective, the implementation planning and oversight must also be conducted at the enterprise level. The three most common mistakes are: 1). To create a strategy and then let individual components determine what and when different portions are to be implemented, 2). Failure to put in place the oversight infrastructure necessary to adapt the current direction to unanticipated changes in the business environment, and 3). Not including migration/transition of existing resources in initial plans. ____________________________________________________________________________________ Engineering, Management & Integration, Inc. 455 Spring Park Place, Ste.350 Herndon, VA 20170 Tel: 703.742.0585 Fax: 703.742.8034 www.em-i.com Strategies can be applied to many organizational areas: recruiting, talent pool, budgeting, financial investment, product development, acquisition, risk, customer service, operations, technology, security, partnerships, outsourcing, quality, project selection, transformation, promotion, enterprise-wide alignment, asset management, competitive, and information. To become more efficient, clients have optimized supply chains, reduced the workforce, and outsourced business processes, but still face a gap between execution and strategy. EM&I can help organizations at all stages of strategic evolution through workshops, assessments, coaching, development of plans and scorecards, gap analysis, etc.: • • • • • Strategy planning & development Strategy review & analysis Strategy implementation Strategy execution monitoring Strategy revision & change management The following table lays out a maturity model as a means of assessing and sequentially evolving strategic components: ____________________________________________________________________________________ Engineering, Management & Integration, Inc. 455 Spring Park Place, Ste.350 Herndon, VA 20170 Tel: 703.742.0585 Fax: 703.742.8034 www.em-i.com Strategic Viewpoints Maturity Level Initial Repeatabl e Defined Managed Optimized Formulation (Plan) Mission Statement Capital Structure Statement of Work Value Drivers Dialectical Inquiry Balanced Scorecard Work Breakdown Structure Policy Mgmt. Nominal Group Technique Delphi Method Standards, Architecture Implementation Plan(s) Disaster/Recovery Plans Value Map, Gap Analysis Total Quality Mgmt. Operations Plan(s) Activity-based Mgmt. Asset Plans Focus Groups Portfolio Planning Enterprise Strategy Simulation Technique Growth Models Analysis (Position) Risk Identification Product Strategy Mental models Business Plan Stakeholder Analysis Risk Assessment Competitive Strategy Comparative Benchmarks Process Strategy Factor Analysis*1 Risk Monitoring Market Strategy Project Strategy Customer Profiling Risk Elimination Scenario Planning Demand Mgmt.. Program Strategy Trend Analysis*2 Risk Avoidance Systems Thinking Real Options Analysis Asset Life cycle Mgmt. Organization (Pattern) Organization Charts Charter(s) Resource Mgmt. Recruitment Structural Reorganization Steering Committee Mgmt. by Objectives Matrix Mgmt. Teams Core Competency Support Organization Incentives linked to performance metrics Learning Organization Centers of Excellence Outsourcing Cross-org initiatives Governance & Policies Strategic Partners Relationship Mgmt. Deployment (Ploy) Change (Perspective) Shared Vision Value Discipline Basic Tactical Plan Inventory Mgmt. Annual Budget Cycle Decentralization ITO/Business Alignment Critical Success Factors Time boxing, Reuse Promotions linked to Training Process Asset Library Early Warning Systems Periodic Quality Reviews Collaboration Change Mgmt. Quality Circles Six Sigma Process Methodology Compliance Reviews Globalization Asset Life Cycles Participative Mgmt. Empowerment Performance Measurement Reward System Customer Focus (CRM) Innovation Regular Strategy Revisions Internalization / Personal Evaluations Managed culture Continuous Improvement Externalization Performance Culture *1 Factors include: economic, social, political, technological, and ecological *2 Trends cover customer, competitor, supplier, and market. Figure 3 - Strategic Practices - Maturity Model ____________________________________________________________________________________ Engineering, Management & Integration, Inc. 455 Spring Park Place, Ste.350 Herndon, VA 20170 Tel: 703.742.0585 Fax: 703.742.8034 www.em-i.com Strategic Analysis Regardless of the definition of strategy, or the many factors affecting the choice of corporate or competitive strategy, there are some fundamental questions to be asked and answered. These include the following: • 1. 2. 3. 4. 5. 6. Related to Mission & Vision Who are we? (e.g., management view, staff view, customer view) What do we do? (e.g., products, services, projects, processes) Why are we here? (e.g., charter, location, specific targets, structure) What kind of organization are we? (e.g., compared to competitors) What kind of organization do we want to become? (e.g., driving forces) What kind of organization must we become? (e.g. core values, culture) • 1. 2. 3. 4. 5. 6. 7. Related to Corporate Strategy What is the current strategy, implicit or explicit? What assumptions have to hold for the current strategy to be viable? What is happening in the larger, social and educational environments? What are our growth, size, and profitability goals? In which markets will we compete? In which businesses? In which geographic areas? • 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. Related to Competitive Strategy What is the current strategy, implicit or explicit? What assumptions have to hold for the current strategy to be viable? What is happening in the industry, with our competitors, and in general? What are our growth, size, and profitability goals? What products and services will we offer? To what customers or users? How will the selling/buying decisions be made? How will we distribute our products and services? What technologies will we deploy? What capabilities and capacities will we require? Which are core capabilities to the organization? What will we make, what will we buy, and what will we acquire through alliance? What are our options? On what basis will we compete? References 1. The Rise and Fall of Strategic Planning (1994). Henry Mintzberg. Basic Books. 2. Top Management Strategy (1980). Benjamin Tregoe and John Zimmerman. Simon and Schuster. About the Author: Dr. Donn Di Nunno CCP, CDP. is an expert in metrics for software process and product improvement with over 29 years in software engineering. Mr. Di Nunno’s areas of specialization include: IT Metrics & Measurement, Quality Management and Process Improvement, Data analysis, Systems Re-engineering, Design Recovery and IT Portfolio Management. Donn joined EM&I as a Chief Engineer in 2002. From 1997, he worked at META Group as a Program Director and Sr. Research Analyst in performance measurement. He was also a Sr. Consultant with Computer Sciences Corporation’s (CSC) Center for I/S Asset Management. He examined, integrated, and deployed emerging technologies for improving productivity and quality in legacy system environments. He established the quality assurance department and was the QA Manager for CSC’s contract on the National Flood Insurance Program in 1986. About EM&I: Engineering, Management & Integration (EM&I) Incorporated is a client-focused, management-consulting firm bridging the gap between business and technology. Our teams of highly skilled specialists provide clients engaged in technology intensive business situations with ____________________________________________________________________________________ Engineering, Management & Integration, Inc. 455 Spring Park Place, Ste.350 Herndon, VA 20170 Tel: 703.742.0585 Fax: 703.742.8034 www.em-i.com solutions geared to reduce risks and ensure successful results. In an ever-changing business environment, we support our client agencies in four key areas: Strategy, Architecture, Business Solutions, & Governance. Please visit http://www.em-i.com for more information. Contact EM&I: If you are interested in hearing more about EM&I's services to the government and private sector or would like to discuss potential teaming arrangements, please contact Dr. Malcolm Slovin at 703.742.0585. © 2005 Engineering, Management & Integration, Inc. – All Rights Reserved. ____________________________________________________________________________________ Engineering, Management & Integration, Inc. 455 Spring Park Place, Ste.350 Herndon, VA 20170 Tel: 703.742.0585 Fax: 703.742.8034 www.em-i.com