Stefano Maifreni, founder of Eggcelerate, writes for The Executive Magazine on how continually adapting strategic decision-making can help your business.
Do you hate boardroom brainstorms— with those over-excited colleagues, the bizarre ideas and a whiteboard covered in random words? The great news is that strategic decision-making is changing for the better at smart companies.
Most of us have lost many hours of our lives to heavy-duty strategy meetings that failed to deliver much at all. Years ago, we probably saw these sessions as a necessity as we set budgets, identified priorities and carefully steered the course of our companies.
But that drizzly Wednesday you spent last October holed-up with ten other people may not be the springboard for success that everyone imagined anymore… it could be your downfall.
The simple truth is that the world doesn’t stand still long enough to lock ourselves in a room for a day and decide what’ll happen over the next 12 months. And here are just a few reasons why:
Customer expectations will evolve quickly and rise considerably. New competitors will emerge — from start-ups or larger businesses expanding aggressively into your marketplace. And disruptive technologies may present opportunities for you to enhance your products and services.
And don’t forget, your company dynamics can shift profoundly too. Changes to personnel, investors and offices can mean you’ve got suddenly double or half the resources you had before. Illness and other unforeseen factors can change everything too.
The world can look very different… even a few months later.
Sticking rigidly to a detailed strategy can create ‘group-think’, lead to blind spots and prove fatal for a company if you can’t respond to unforeseen challenges.
Relying on consultants to come up with all the answers isn’t the solution either. Most will follow the same point-in-time approach — and not be around when the storms hit home.
So what’s the best way forward for strategic decision-making?
‘Not knowing everything’ is now OK
Increasingly, successful SMEs will need to adopt a strategic approach that adapts continuously and isn’t afraid of being incomplete. I call it strategy-as-you-go.
First, you set the commercial direction of your business from the usual questions, such as: Which of our products/services should we focus on more? How can we exploit a gap in the market? And what type of clients should we target first? And of course, there’s also: What should we stop doing?
But here’s where things change. Rather than specifying how to execute your strategy, you find out through trial-and-error —and adapt your business accordingly.
There’s an old saying popularised by Voltaire that says: “Perfect is the enemy of good”.
The danger is that companies can spend months trying to nail down the precise details of their business strategy. Instead, they should be getting on with it — even if they only know 80% — and then figure out and adapt the rest as they go.
In some industries, this is second nature. Software companies run Beta tests and use the results to improve quality; restaurants are always tweaking their menus to adjust to customer tastes, and; TV networks usually broadcast pilot episodes before commissioning a new series.
Now, this mindset needs to be adopted more widely and deeply. You accept that discovering what works along the way — as the world around you changes — will now be part of healthy business life. That could mean your branding, messaging, skills base and even your incentives need constant, delicate fine-tuning to stay ahead of the game.
Owning things is seductive
This new-found approach should filter back into your company — and into business operations in particular. You may need to change business habits, recruitment, processes and organisational structures that may have become an obstacle to growth or a reason for missed opportunities.
For example, it’s tempting for businesses to build strategies around owning things. They start to employ more people on permanent contracts, they agree leases for larger premises, purchase more equipment and sign large contracts with suppliers.
In the short term, it feels good — like ‘things are really happening around here’. But very quickly it may turn out that some or many of these decisions were bad ones. Worse still, the company narrowed its options, weighed itself down with liabilities and devoured cash-flow. The problems arrived, and no-one saw them coming.
But it doesn’t have to be this way.
Flexibility is key
Today, you can often avoid making big decisions that narrow your options. Virtually you can purchase every kind of service on a pay-as-you-go basis. And the list seems to be getting longer: office space, cars, people, professional services, telephony, IT hardware, software, hosted services, video conferencing and more.
Pick the best of them rather than trying to own them. Then merely only pay for what you use, month by month, scaling up and down smoothly. That’s optimum efficiency, and it keeps your options open, so you can refresh your strategy, day by day.
Even if you’ve had years of success so far, your fortunes may abruptly change unless you switch to strategy-as-you-go approach … and ensure your whole organisation can flex accordingly.
Companies also need to escape from the feeling that everything is urgent and cash is never enough — which is another remnant of old business thinking.
If you avoid this boardroom angst and adopt a customer-centric approach, then your current revenue and margin forecasts will be far more realistic. Don’t be surprised if your profitability appears to be index-linked to how readily you’re listening and adapting to customers, month by month.
Watching the right dials
Strategy-as-you-go approach doesn’t mean do-anything-you-like. It isn’t loose and flaky, like some wacky new business theory. It also means clear accountability and reporting against the leading key performance indicators — to check whether the strategy and the execution are working and to make corrections as and when needed. That way, you can expect sustainable, long-term growth.
Ultimately, strategy won’t become a half-yearly whiteboard wipe-out that everyone loathes — and your strategic pronouncements won’t be met with resigned cynicism from employees. Instead, strategy will be something that everyone lives out, every day. That’s how it happens.
An engineer by education, product manager by role and expert at achieving growth by career, Stefano Maifreni is the founder of Eggcelerate, an organisation to help small tech businesses to manage growth and change while streamlining their operations and improving their bottom lines and cash flow positions.
His professional journey includes Senior Manager roles in global Blue-chip companies, Growing Businesses and Start-ups in technology-intensive and innovative industries (IT, Telecom, Technology Manufacturing, Drones, IoT and FinTech).
He has a proven international and inter-cultural experience in managing, developing and leading cross-functional teams.
Stefano is an Executive MBA graduate of the London Business School and holds an MSc. (Hon.) in Telecommunications from the University of Naples “Federico II”.