Confident companies do less
This is the first article in a three-part series exploring what constitutes an effective business strategy and how to communicate it effectively. Is your strategy originating from the right place, and is it resonating with your target audiences?
Strategy communication feels a bit … much. The reporting paradigm includes business strategy, purpose-led strategic objectives, the strategy’s link to the operating model, and how strategy is underpinned by governance, sustainability, and culture. We’ve been pondering a soundbite from Roger Martin, former Dean of the Rotman School of Management at the University of Toronto, and how it applies to strategy communication. “Confident companies do less.” Martin’s quote was about managers deciding what strategy to pursue; might it apply to communicating it?
A good plan is not a good strategy
Creating your strategy should not follow a bottom-up or top-down approach but one that is both. Many companies explain their strategy in terms of tactical-level activities that are more related to operations than strategy because of a bottom-up focus. This leaves them open to the reputational risk of being reactive market followers rather than innovative market leaders. Tactical-level activities are easily quantifiable and trackable, whereas strategy should focus on potentially less measurable outcomes.
The diagram shows how strategy is relative. This is because the goal you are working toward depends on where you sit in an organisation. The management team’s goal is tactical to the Board. The two are, therefore, closely interlinked; measuring the progress towards the managers’ goal is essential to measuring the Board’s.
Corporate reporting focuses on the Board’s column. The red box represents the company’s overall purpose, with the strategy being a set of outcomes that bring the company closer to that purpose. The tactics are the activities that enable the strategy to happen. This is why having both a top-down and bottom-up approach is essential. You can’t have a strategy that doesn’t align with your goal, but you can’t have a strategy without the facilities to enact it.
Less is more
The strategy represents an integrated set of outcomes that enable you to meet your company’s purpose. But what does good look like?
Less is more. About 20 years ago, Hornby Railways changed its strategy. It was integrated, simple, and easily broken down into three parts, “(1) to make perfect scale models, (2) for adult collectors and (3) that appealed to a sense of nostalgia”. This straightforward strategy provided a direction for Hornby and a memorable way for stakeholders to connect with the brand. How often do corporate reports articulate strategies with five or more long-winded and disconnected components? Too often. Are you confident your employees can communicate your company strategy? No? Then how is it going to drive their behaviour? Hornby’s clear and relatable strategy was a key factor in quadrupling its share price over a five-year span.
In short, your strategy should reflect a top-down and bottom-up assessment of the company’s capabilities, and its communication must be connected, concise, and focused on outcomes.
In the next article of this 3-part series on strategy communication, we will examine how strategy relates to other areas of corporate communication.
If you’d like to discuss this, or any other subject, please get in touch with Richard Costa, Senior Corporate Communications and Reporting Consultant at richardc@gather.london
We’d love to know what you think.