A successful company today is therefore an agile company, and it is hard to be agile, if your company CEO has invested precious time and resources on rolling out a five-year strategy. A strategy which may turn out to be obsolete after 12 months.
The paradox is that a strategy must have both a long-term and a short-term perspective. It must define the vision for the company in the long term, but it should also be able to keep up with the constantly changing needs and wants of the customers. Companies will not be able to provide long-term growth if they do not achieve a customer-first approach, which requires constant adaptations.
However, there is one far more important and paramount requirement of any strategy designed to create growth: It must be honest, credible and create enthusiasm, not just with the CEO and the other members of the executive team but with each individual employee in the organisation. If the strategy is unable to deliver a “Why” which the employees believe in and want to support, the company will never be able to achieve the full growth potential. Instead of defining a strategy of how much and how the company should grow, it is far more motivating and consequently far better at involving everyone to have a strategy which explains why and how the company should grow. It is essential that the employees are able to understand the necessity of the strategy and feel that they make a difference, and that it is also evident how the company is to achieve those ambitious results, no matter where in the company you work. Only then will the employees feel responsible for the company reaching those targets.
So how is then that the CEO is to define the agile, short-term, long-term, customer-centric and motivational strategy?
- The recipe for an agile and customer-centric strategy is overall as follows:
- Take a point of departure in the customer’s wants and needs. In other words: Talk to the sales staff and your customers, and understand the market’s wants and needs in the future
- Implement the possibility of adapting the strategy as you go along. It is no good to focus solely on the end target and not pay attention to the constant changes in the world around you
- Define a strategy simple enough to be told to your customers, and ensure that the strategy is innovative enough to also solve challenges occurring in 12-24 months
- As CEO, you must be willing to accept that your employees are closer to your customers than you and therefore leave part of the strategy content to those very people further down in the organisation
- As an employee, you must take on the responsibility for the company reaching its targets. And you will want to do so once you understand the necessity of the strategy, and once you realise that your own work makes a difference.
The customers have the answer
To ensure the right content of the strategy, the CEO can begin by talking with his sales staff and show that the customer-first approach is always critical to the company. The sales department has the closest contact to the company’s customers, and there can be nothing more true than a customer’s statement about a product. One of the challenges in motivating your employees for a new strategy is that the various department do not necessarily feel that they have been heard, and that they are just being subjected to a new strategy without understanding why. This is not least true for the sales department, which may hear other wants expressed by the customers than what is in focus in the new strategy. Most companies lack sufficiently documented knowledge about their customers and their customers’ needs, and the obvious place to start will always be the customers.
The customer in focus and a customer-centric approach are buzzwords in the corporate world, but it often gets no further than the words: What are the customers looking for? It is likely to be different than what they wanted 12 months or even just six months ago. Which tendencies are the sales people seeing on the market, and what do they think that the customers will be looking for six months from now?
We see again and again that other functions in the organisation do not trust the sales staff because they often try to sell something that the business does not have. But instead you should perhaps focus on quickly testing whether what is being produced or is in stock is in fact what the customers will also be requesting in 12 months. You should have the courage to be innovative and develop new products all the time, which may or may not be just what the customers are looking for. You should optimise your processes to enable the company to produce more faster and cheaper. And your production can just as well be a service as a product.
But if you want to create the courage to push more products faster to market, you must also have room for making the wrong decisions. It must be okay to be wrong.
Customer service should not just be a department in your company. Customer service is what you are. The same goes for innovation. I see that many companies have an approach to innovation which involves setting up an idea office and thinking this creates innovation. This has nothing to do with innovation! Innovation should be part of your company’s DNA.Niklas KMD
How can we afford mistakes?
You could begin by putting a stop to the majority of the internal reporting processes. Our guesstimate would be that reporting takes up 25-30% of administration time at headquarters. In other words, reporting costs money and also fuels the finger-pointing culture in which you ultimately have to defend why you did not reach your targets, which were perhaps defined when the market reality was completely different than today. None of us has ever met a person who was enthusiastic and motivated by long strategy reports. And the weakness of a strategy report is that it is probably already obsolete the moment it is completed. The market is changing faster today than the conventional strategies and benchmark tools are able to keep up.
Many strategies are just about the numbers and focus on where the company should be in five years, which is not wrong but is just a small aspect of the optimal solution. An agile company is characterised by having defined a strategy with an embedded possibility of stopping and re-evaluating the situation after six months, without the strategy being regarded as a failure. Adaptation should be considered a strength.Mads Valcon
The good CEO can make his company dynamic by adapting resources to demand. This does not necessarily mean cutbacks with consequent loss of precious knowledge in the company but rather a transformation to more dynamic roles in the company in which the employees move around in the company according to market needs, and in which knowledge-sharing is a natural part of the work life. Competences should be anchored in the organisation rather than with individuals.
But it is hard to be dynamic and agile if you are also heavy and complicated. An agile strategy must be simple enough to be retold to your customers and retold again by them. And it must be so simple that its implementation will be equally simple. Why and how are, as previously stated, far better words to create a strategy making your employees committed and motivated. So instead of having a strategy of reaching the Eastern European market within the next five years, the strategy should explain why the company should reach the Eastern European market and be specific on how.
Originally published in Børsen Ledelse.