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How Strategy is Really Developed

February 9th, 2017

In my view, strategy provides the detail as to how an organisation proposes to achieve its overarching vision and mission. If you pick up a typical ‘How To’ guide to strategy, it is often presented as a neat step-by-step process or framework. Follow the prescribed steps and out will pop your strategy. As a former associate at the international management consultancy firm McKinsey & Company (a firm that specialises in strategy), I was taught that while there were different ways of ‘doing’ strategy, there should always be a process of some sort. While I still believe that there can be real value in developing strategy through a formal process, this blog post offers a less formal and more meandering route to developing strategy. Such an approach is illustrated through describing a series of events that assisted mch in making a recent strategic decision.

The Ordinary Event

I recently finished writing mch’s annual Corporate Social Responsibility (CSR) Report. CSR involves operating a business in a manner that meets the ethical, legal, commercial and public expectations which society has of business. Upon completion, I reflected upon the year just gone and compared it, in CSR terms, to previous years. One of the areas of particular reflection was community engagement, which in mch’s case took the form of charity donations and volunteering. From such reflection, the following question formed:

‘How could mch increase the positive impact of its community engagement?’

With no immediate solution forthcoming, the question was consumed by the more immediate, day-to-day questions mch faces. In retrospect though, this ordinary event planted the seed which led to mch’s new initiative. Despite strategists often extolling the virtues of ‘blue sky thinking’ and ‘thinking outside the box’, I believe good strategy can start from simply taking the time to reflect upon the existing, ordinary work that is being done (or not being done).

The New Event

Within days of completing the CSR report, I came across an initiative called the Percent Club. This club is aimed at businesses based in Bath, England (the city closest to mch’s offices). A key requirement of membership is that a business gives at least a percent of its profits to charity, whether through financial or in-kind donations. To encourage such giving, the club organises regular events at which local charities give a brief presentation outlining their work. mch has always donated well over one percent of its pre-tax profits to charities and so was readily able to join. Doing so allowed me to attend one of the club’s events, at which the impact of in-kind support, rather than just donations, was really stressed. Specifically, members were asked to consider whether any of their specialist goods or services would be valued by charities. Not surprisingly, the event reminded me of the question I had asked myself upon completing mch’s CSR report. However, given the event’s focus on in-kind support, a more nuanced question arose:

‘What combination of financial donations, volunteering and in-kind support would lead to mch having the greatest positive impact on community engagement?’

The Complication

Being an organisation that works exclusively with Third Sector organisations, providing in-kind support in mch’s core work of staff development has the potential to be problematic – if it offers one organisation in-kind or pro bono support, then full fee-paying clients may expect the same. For this reason, mch has previously limited its in-kind support to discrete mentoring sessions for individuals who have no means of paying. Instead I have focussed on volunteering in areas that fall outside mch’s core work e.g. volunteering for literacy lessons at the local school.

The new event highlighted that there could be scope to improve mch’s community engagement, but it also raised a complication. Complications invariably arise when developing strategy; I’d be worried if they didn’t. Complications indicate you’re on the right track, as fundamentally any worthwhile strategy should be about removing pain and/or maximising benefit. Complications can simply indicate you’ve come across one of the pains.

The Chance Encounter

A day or so after the Percent Club event, I received a call from a small, local charity enquiring about communication training. They had been given my details by Sue, a resident in my village. Sue had only recently learnt about ‘what I did’ on account of us both attending a local event. For me, this illustrates how you can never tell where insights for strategy will arise.

After ascertaining the charity’s need, I gave a brief outline of how I felt mch could address it. The caller seemed really pleased with the outline, but as soon as we got onto costs, it became apparent that they had insufficient funds for the training.

Looking to Others who are Similar

Such a call is not uncommon and the ending never feels satisfactory. However, the challenge of finding a fair and simple way of working with both small, local organisations and large, national ones is not unique to mch. Realising this is important, as sometimes the best strategic solution comes from observing what similar organisations are doing and then copying them. Consequently, I have reflected on the fact that other staff development organisations offer a ‘small charity rate’ for their services. However, I have never been inclined to go down this route – I have a single preparation day rate and a single presentation day rate. In part, this reflects my desire for simplicity. It also avoids getting into the hazy area of what constitutes ‘small’. Finally, the biggest cost within mch’s fees is my time and I believe the size of an organisation has no bearing on the value of it.

Engaging with Others who are Different

In addition to observing how similar organisations address an issue, I also find that there can be real value in discussing strategic plans with those outside of my specialism and/or sector. So it was in this instance, as around this time I was fortunate enough to have a conversation with the partner of a small firm of patent attorneys. Knowing her well, I was able to be candid and to articulate the issue within a ‘safe space’ - one in which I knew I would not be judged. Through a combination of active listening and comparisons with her own work, the strategic question became even more nuanced:

‘If there was some way to provide in-kind support to charities that would otherwise be unable to afford it, how could such in-kind support be maximised?’

Taking in the Broader Landscape

As someone who subscribes to a sector-specific journal, articles continually reinforce the challenging economic and statutory environment charities face. Within a staff development context, the challenging environment makes it ever more important for charities to have skilled staff. In short, there is a need to provide more staff development to more people. However, increasing demand for services, combined with reduced resources, makes staff development more difficult.

Looking at the broader landscape made me appreciate that the challenging environment for charities was unlikely to go away, and neither were the unsatisfactory calls with charities with a clear training need but an insufficient budget.

A readily proposed solution to these challenges is greater collaboration: generate economies of scale by sharing resources. Despite this undeniable logic, the practice of greater collaboration is often far harder than the principle. One difficulty can be developing the requisite trust for successful collaboration. Also, an initial increase in costs may be required before savings start to be made. Furthermore, there can be complications in managing resources that you don’t actually have authority over.

However, given that the training element of staff development can be quite discrete, it struck me that if charities joined forces to access training, they might not face the collaboration problems outlined above. Furthermore, such collaboration would lead to more people being trained per training course, thus maximising the positive impact of any given training session.

Rather paradoxically, looking at the broader landscape helped me narrow down the type of in-kind support that would be most suitable. I’ve found such paradoxes to be common in strategy.

The Initial Solution

Based on all the above, a potential answer to my strategic question emerged, namely that provided at least two charities partnered together to present a shared training need, mch would split the cost evenly between itself and the partners. Consequently, if a training need was presented by two charities that would ordinarily cost £1,200 to deliver, mch would make an in-kind donation of £400 and only charge each charity £400.

Such a solution acknowledged the reality that many charities do not have sufficient funds to access quality training. The required partnership working would also maximise the number of training beneficiaries.

Reality Checking and Considering One’s Appetite for Risk

Since mch works exclusively with Third Sector organisations, its business model is based on what is sustainable rather than what is lucrative. Consequently, there are genuine limits to the amount of in-kind support it can give. My initial sense was that mch would not be inundated with requests to take up the proposed offer. However, I’ve learnt that it is worth asking a few ‘What if?’ questions when developing strategy. In this case, an obvious one was:

‘What if mch is inundated with requests for this offer?’

For a number of reasons, such a scenario would be best avoided. However, such a risk is readily mitigated by setting clear expectations. Consequently, the initial solution was iterated so that the offer would initially be available up to twice a year on a first-come, first-served basis.

Looking Inside

Strategy often focuses on external impact. However, in my experience a successful strategy depends as much on internal motivations as it does on external opportunities and needs. Consequently, for any strategic initiative, it pays to have a compelling answer to the, ‘What’s in it for me?’ question that almost all staff will be thinking, even if they don’t say it.

Running concurrently with the above ruminations to increase mch’s community engagement was a personal desire to increase the amount of work I conduct locally (so that I was away from my children less often). Consequently, I felt that incorporating this desire into the solution would make it more motivating and sustainable. To this end, the initial solution was iterated further so that the offer would only be available to charities in the Bath area of England.

Being Comfortable with the Flaws

Rarely is a solution perfect. Fortunately, it very rarely needs to be. That said, I’ve found it useful to be aware of and comfortable with the flaws in any strategy. There are obvious flaws to mch’s proposed offer. For example, the likelihood of two organisations having the same training need at the same time (and knowing that they both have the same need) is low. There’s also a risk that the offer will not go to those in most need and that it will cannibalise my business, i.e. the offer will be taken up by two charities that would have been able to pay separately for the training.

While I accept these (and several other) flaws, I am still comfortable with the offer, as at its heart it provides an opportunity for certain charity staff to gain access to training that they otherwise wouldn’t .

Bringing it All Together

The result of this meandering path is that mch is excited to be piloting a new initiative for local charities. Essentially, provided at least two local charities can partner together to present a shared training need, mch will split the cost evenly between itself and the partners. For practical and personal reasons, this offer is only open to charities in the Bath area of England and will initially run twice a year on a first-come, first-served basis. Consequently, if you’re a local charity, please get in touch!

Epilogue

On reflection, I see that some of the events and experiences outlined in the above meandering path would find themselves in many formal strategic frameworks, albeit under a different name e.g. ‘Looking to Others’ and ‘Taking in the Broader Landscape’ could quite accurately be translated into business speak as ‘Market Analysis’.

Furthermore, I think it is fair to say that I was already aware of many aspects of this issue right at the beginning of the meandering path. However, it took a series of events and experiences (many of which were completely unrelated to my ‘day job’) to make something happen. Crucially, it also required time - time to attend the events and have the experiences and time to reflect upon them. A favourite quote of mine by the philosopher, psychologist and educational reformer, John Dewey, seems particularly relevant:

“We do not learn from experience…..We learn from reflecting on an experience.”

Some readers may consider that the above approach to strategy may be appropriate for very small organisations such as mch, but simply not practical for larger ones. If you are one of them, I would certainly acknowledge that, in larger organisations, there is a greater need to coordinate the strategic effort and that formality and process is often necessary for such coordination. However, I would direct you to a book called Obliquity by John Kay (a former mch ‘Resource of the Quarter’). The central premise of Kay’s book is that goals/strategies are best achieved indirectly. For me, a key insight from the book is that no matter how sophisticated your strategic frameworks or how much intellectual ‘horsepower’ you have, life is just too complex to make detailed and accurate plans for well into the future. I’d encourage you to read the book as it challenges some of the core assumptions that many managers and leaders make when developing strategy. Alternatively, an essay John Kay has written on obliquity can be viewed here.

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