You’ve booked your annual corporate retreat, you’ve got your whole management team in attendance, and you spend the entire week strategising. Sound familiar? The real question is what happened after the retreat? Was last year’s strategy implemented? How successful was it?
Strategy is a vital component of a business’s growth and success, but it’s also an area that many businesses don’t implement.
So, how do you formulate the right strategy for your business, and then – more importantly – implement it?
The strategy workshop
First, you need to ensure that you have the right people at your strategy workshops. If everyone has the same perspective, the result will be a very narrow strategy. Instead, diversify the session.
Of course, as a starting point the senior management team needs to be there. But then you need to ensure that there is sufficient diversity. Ask yourself these
- Are all the major departments/divisions represented?
- Regarding gender, women see the world (and business dynamics) in a different way to men. It really makes sense to have both sexes present. Do you?
- It goes without saying that the workshop mix should include delegates from all the main racial or cultural groups. Importantly, the purpose of doing this is not to be politically correct. Rather, one is recognising that the different groups may have different priorities and perspectives. Do you have diversity to enrich the quality of the strategic conversations taking place?
- Are you letting the youth be heard? As a general rule, I normally request that at least two of the workshop participants be under the age of 30. Strategy workshops that are attended exclusively by the older generation may not adequately represent the views and aspirations of the younger generation. Great strategy embodies the views of both these groups.
- Have you invited a maverick or two to the workshop? These are the people who are not afraid to share their ideas, even if they’re perceived as controversial or unconventional.
- Have you invite key clients, suppliers, or strategic partners to attend select sessions? They could add valuable outsider insight, plus you’re showing them how important they are to your business.
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Setting the scene
Once you’ve selected your workshop mix, you need to ensure that meaningful conversations take place. The focus of strategy is not about producing thick documents that nobody uses. Instead, focus on producing a two-pager that is understandable to everyone in your organisation. Remember, everyone in your business has a role to play in implementing the strategy.
Producing the right document starts with having the right conversations (which incidentally are more important than the final document itself). So, how do you ensure strategic conversations take place?
I suggest you focus on the four Ds, namely discussion, debate, dialogue and disagreement. If you can tick all these boxes at the end of your session you’ve had a good
A cautionary note: many strategy workshops commence at the strategic level but are very quickly drawn into vigorous discussions about operational, tactical or even administrative issues. Although the latter are important, the majority of the air-time should be devoted to truly strategic issues. Operational excellence is another matter to be discussed at another time.
Finally, don’t be scared to enter areas of tension or conflict. High-performance teams engage – when necessary – in areas of ‘uncomfortable debate’. This is sometimes difficult or unpleasant, but it’s a vital component of strategy.
Using the right brain
While strategy needs a logical foundation supported by analytical techniques and suitable frameworks and models, it’s important not to turn strategy into a numbers game.
For strategy to have a great impact, bring in a stronger dose of right-brain thinking: make it more creative, more imaginative, more intuitive, more visual, even more playful.
This links in to another important point. We need less telling about strategy and more selling. Strategy can no longer be imposed upon people. Getting buy-in is a vital ingredient. In this regard, the way strategy is promoted and ‘packaged’ can play a big role. Stated otherwise, strategy needs both intellectual and emotional appeal. It needs to come alive through a visual and emotional representation.
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The ingredients of a great strategy
Once you’ve completed your session, you should have a great strategy outline. This should include a number of core ingredients including:
- A business model that works – for now (recipe for value creation)
- Effective leadership (drivers of strategy)
- Connecting with clients and potential clients (satisfying/exciting them)
- Connecting with employees (engaging/inspiring/empowering/growing them)
- An element (or elements) of uniqueness.
And remember, connecting goes far beyond communicating – with connecting, people get each other, there’s feedback, and strong flows of energy in both directions. A great strategy must excite and energise those people who are tasked with its implementation.
Here’s the trick: Simple strategy means using one or two critical strategic processes and a handful of unique rules that guide them. Remember, strategy is a contact sport – you get engaged when you’re part of the action, not watching from the sidelines.
Strategy should be a natural add-in, not a cosmetic add-on. In other words, it should naturally integrate with, or inform, or ‘flavour’ business processes and organisational dynamics (formally or informally).
It’s not a bureaucratic function or duty that is imposed on people and – most importantly – it’s not separate from the rest of the business. Great strategy is a golden thread running throughout the organisation that picks up vital signals, integrates all key components, searches for new opportunities, gives direction, differentiates, inspires and energises, and focuses on achieving desired results.
When facilitating strategy workshops, I like to suggest that high-impact strategy is built around the following five Fs.
- Focus: What business do we want to be in? Many companies refer to this as their mission statement, and it’s all about defining the breadth and depth of their proposed business activities. Hot tip: focus on what you do best, and partner for the rest.
- Follow-through: This relates to action and implementation. Many strategies fail due to a lack of follow-through. Many business executives place too much emphasis on high-level strategy, on intellectualising and philosophising, and not enough on execution – this is essentially the discipline of meshing strategy with reality, aligning people and resources, and achieving the results promised.
- Feedback: For strategy to be successful, meaningful feedback needs to take place on an ongoing basis, ensuring that all key stakeholders are kept up to date.
- Flexibility: Strategy is formulated and implemented in the context of a dynamic and rapidly-changing world. Upfront, a number of key assumptions and forecasts are made. If there are major surprises or substantial changes to key variables (such as the price of commodities, or the exchange rate), then the plans need to be amended accordingly. In other words, the strategy process needs to be robust with a high degree of flexibility.
- Fun: Don’t forget the element of fun. Most strategy sessions are dull, boring and overly serious. This often results in standard, generic and uninspiring strategies. Importantly, strategy doesn’t only have to position, it also has to inspire. When strategy becomes fun and exciting, people want to become involved and the process is a lot more productive and value-adding.
You Are Your Own Client
Before you can build a start-up that takes over your industry, you need to treat yourself as your own best client.
In business, when you have a client, the relationship is formalised into a structured one where there are defined expectations and regular meetings. For example, if you are a consultancy and have a one-year contract to deliver services to a client, the relationship will be formalised, structured and possibly include monthly status meetings. Some may be report-back meetings while others may be briefing meetings.
Your client will receive a monthly invoice and there may be quarterly reviews of the work you have done. Your general mindset is one of service to the client because they are important and worthy of the effort. Crudely speaking, most service-provider arrangements work in a similar way because the structured model works.
In contrast, as entrepreneurs, our relationship with our own business is often far more chaotic or ‘organic’ than formal. My contention is that it is also much less effective. When I work with SMEs, one of the first things I do is encourage the entrepreneur to treat his or her own business as a client by formalising meetings, ensuring that there is a feedback loop and having a service-provider mindset. By making these philosophical and structural changes, you will create a far more efficient and well-run business.
There are four aspects to any business which, in my view, should be formalised.
It still astounds me how informal the meetings are between partners in SMEs, especially when they operate from the same office. There are no set times, no agendas and no outputs required. The fact that you might sit in the same office or chat regularly is the problem because it’s interpreted as proper communication while it’s actually a very undisciplined and unstructured process. Casual chats do not ensure that all the requisite items or issues are being properly discussed and dealt with.
The often-given excuse for not holding weekly, biweekly or monthly meetings with team members at the same date and time is that the business is fluid and the entrepreneur needs to be responsive to their clients’ urgent needs whenever these might occur. And so non-rhythmic meetings are occasionally inserted into the gaps in between the chaos.
The discipline that I try to imbed in the SMEs I work with is to hold rhythmic meetings at a certain time and day every week, month or quarter. Should there be a need to cancel this meeting for whatever reason, it should be rescheduled. The simple discipline of rescheduling and not cancelling allows for a compromise between the practical reality of an entrepreneur’s life and the discipline required to build a sustainable business.
Agendas are often seen by entrepreneurs as an icon of the structure of the corporate world. They smack of rigidity, stuffiness and boredom so they are often discarded and replaced with warm and fuzzy chats. In reality, in order for it to be an effective use of time, every meeting requires a structure, outline or agenda.
This can be a comprehensive agenda similar to that used by corporates or as simple as each person in the meeting talking about their three top-of-mind issues. What is important is that there is structure and outputs, otherwise the meeting’s output is merely that it’s nice to know. The output from a meeting with a formalised agenda is that it’s nice to do.
4. Product review
When last did you, as an entrepreneur, formally ask yourself if your products are still relevant and effective in the market? One of the greatest oversights made by SMEs is not regularly reviewing the appropriateness of their existing products or services. In a high-growth, chaotic environment that is attuned to constantly producing new products, existing products soon become the ugly stepchild, only getting attention when the client cancels the contract because your competitor has a faster, shinier and cheaper iteration of your product. An incredibly important discipline in any business is the regular and formalised review of products and services.
We resist structure as entrepreneurs and the price of that resistance is ineffective and inefficient businesses. By simply treating ourselves as we would our clients, we are able to imbed a level of structure to our businesses that will create a far more effective and enduring business.
What’s The Worst That Can Happen With A Disgruntled Silent Shareholder?
Whether a shareholder brings capital to the business, experience or connections, you need to ensure everyone has the same vision and values.
While we often hear that it can be bad to have a silent shareholder that does not want to play ball, it is not often that we make enquiries about how the governance of a company can be hindered by a disgruntled shareholder.
Most of us assume that as long as they own more than 50% of their own company, they are entirely in control of all aspects of the company and how it is governed. This is not true: Even if you are a majority shareholder, holding less than 75% of all the shares in your company can still result in headaches if a minority shareholder, holding at least 25% of the company, becomes disgruntled and neither participates in the decisions of the company, nor consents to the decisions being made.
What is set out below highlights, among others, why it is so important to give shares in a company to prospective shareholders over a period of time, rather than from the outset. This allows for shareholders to prove their worth without you potentially placing your company in a position where it could be held at ransom for many years.
The illusion of holding more than 50% of the shareholding in a company
- Many people assume that by holding more than 50% of the shares in a company they are free to do with the business as they please. This generally only holds true for basic decisions of the shareholders, such as the removal and appointment of directors. The most important decisions of a company are based on special resolutions. A special resolution requires that shareholders, either individually or collectively, holding at least 75% of all the shares in a company, vote in favour of a specific decision.
- Examples of decisions that require a special resolution include:
- Amending a company’s Memorandum of Incorporation
- Approving the issuing of shares or granting of other similar rights
- Authorising the basis for determining directors’ salaries
- Disposing of company assets
- Mergers and acquisitions.
So, what does this mean for you and your company?
- If you are a start-up looking to raise funds, apart from some exceptions, you will not be able to issue further shares to new shareholders or anyone other than existing shareholders if there is a shareholder that is effectively dead weight.
- Should you manage to vote a new director to the board, you will not be able to determine the basis on which they are compensated (their salary) without a special resolution.
- If you intend to merge with another company, you will not be able to pursue this without a special resolution.
- If you plan to raise money by disposing of or selling most of the assets of your company you will, once again, be prevented from doing so.
Accordingly, it is always best when starting a venture to vest your shares over a period of time. This means that, for example, shareholders are only entitled to have their shares allocated to them after a certain period of time to avoid a situation where you have a dead-weight equity shareholder hindering the governing of your company, and requiring possible litigation to remove them.
There’s More To Team Management Than Leadership
When you’re running a business you need to ensure that your employees are on your side, helping you to make profits. Giving them job security, taking them seriously and treating them with respect, will go a long way in enhancing loyalty and productivity.
The staff that work for you determine:
- How happy your customers are with your business
- The quality of the things that you sell
- The costs that you incur to sell your products and services
- Your risks – the things that can go wrong and how much it costs you
All of these things determine your profitability and how competitive your business becomes. How do you ensure that everyone is on the same side and helping you to make profits?
At work everyone believes that they are getting something (such as money) and are giving something in return (such as time and effort). They are weighing up in their mind “how much am I giving, how much am I getting in return and is this fair?” If they believe that they are:
- Giving too much or
- Getting too little
- Then this is unfair, and they won’t work well (poor productivity – how much they produce).
The manager needs to:
- Know what people are thinking about what they are giving and getting and
- Manage the giving or getting side
- So that people become more productive
In a smaller business you sometimes cannot afford to pay more or provide the sort of benefits (pensions, medical aid, bursaries etc.) that larger firms can and so the staff may be unhappy, not be productive and be on the look-out for something better.
How do you increase happiness without money?
- Job security – knowing that you will still have a job next year – and that you will get paid on time.
- Contributing to the success of the business. If you train staff to have the knowledge and skills to do a better job and you then encourage and support them to do this then they are happier, and you increase profits. If you then share some of these profits with the staff that helped you to make them then everyone wins!
- To be taken seriously and treated with respect. If you do this then staff are happier, and they will also treat your customers with respect.
- To be part of the team. You can often do this by having a regular briefing on what your plans are and discussing ideas. Because staff are doing the actual work they will often have good ideas and then will be motivated to implement them – it was their idea after all!
Staff leaving you all the time is a can destroy significant value. If you implement the strategy above, you will have happier staff that are more productive and a more profitable business.