Separate strategic initiatives from normal P&Ls

Ringfence the budget and people of your strategic initiatives and watch progress against time closely

Frequently strategic initiatives don’t get budgeted. Why? Does everyone think they have no cost or they earn their way immediately? Are they designed as a stretch challenge for management, pulling epeople, budget and resources from elsewhere?

Not carving out specific resources and budgets will set these initiatives up for failure. Most organisations have a natural gravitational pull towards maximising today’s P&L, rather than tomorrow’s strategic position. Leaving the resources mixed will push this trade-off lower in the organisation, where the pressure is less likely to be resisted and the long term strategic benefits less visible. Most middle managers will buckle under this pressure and keep their best people focused on the P&L, holding back the initiative as “discretionary spending” to mitigate a potential shortfall later.

Strategic Initiatives obey project principles, not operating principles. The critical metric is progress against time, not impact on quarterly profit. The reward from bringing results forward will dwarf higher quarterly costs if it truly is a priority strategic initiative.

It will ensure that any trade-offs between the P&L and the strategic initiatives are made at your level if you ensure full dedicated resources are allocated up-front, even if it generates a little extra work for the accountants at budgeting time.

What immediate action will create your inspiring future?

When you communicate your strategy, lavish attention on the inspiring future and the immediate action required to create it.

The power of the organisation is unleashed when people can connect the motivation of the inspiring future with the immediate action that has to be taken NOW to get there. The strategy will have no power to pull forwards any employee who cannot make this link.

It is fine to leave the intervening steps sketchy. The CEO does not need to lay out all the details about how to execute the strategy. For one thing, the CEO does not have all the answers! Secondly, the rest of the organisation will feel real ownership of the strategy if they fill out the blanks themselves.

The CEO’s attention can therefore be placed on painting the vivid and inspiring future, and at the same time ensuring that there is total clarity about the specific measurable results that have to be achieved now to make it possible.

This creative tension can be maintained as results are delivered, with the CEO continually focusing attention on the action and results that point the direction towards the strategy.

Your people will always have clarity about how the results they are achieving contribute to creating an inspiring future.

Who is responsible for your strategic initiatives?

Put your best people on rolling out your strategic initiatives to the whole organisation – it will be easier to backfill the business as usual jobs

Your strategic initiatives will always be core to your organisation – that is in areas which contribute directly to your competitive advantage. Initially though, they will not be mission critical, and you can safely leave them in the hands of your innovators and experimenters.

The tough decision comes when the pilots have worked and they are ready for prime time rollout. Driving the roll-out requires different skills, although the innovators can have a supporting role. This is when your best people will be required – those who can take an innovation and deploy it across the mainstream organisation while managing the implementation risks.

The challenge is that there are never enough of these reliable commercialisers, and they will already be doing an important job in the mainstream organisation. The courage to redeploy them comes from your confidence that the strategic initiatives you have chosen are truly the highest stakes game in the organisation. Successful rollout will generate competitive advantage, with a substantial downside if the implementation disrupts business.

Put your best people on them! Their current role will always be less valuable and easier to substitute than rolling out a key initiative.

Do you know if you are making strategic progress?

The CEO will be able to monitor their Critical Change Initiatives if sufficient Specific Results have been thought through up-front.

Do you know if the critical changes you are driving are on track? Strategy and Operations are equally important, but how much of your organisation’s time and energy goes into tracking Operational and Financial performance compared to monitoring the critical changes essential to deliver your strategy?

Many Strategic Initiatives have fuzzy plans, focusing on activity and actions rather than results, revealing no real intention to drive them through. The lack of specificity makes it very hard to understand whether the initiative is on-track to achieve the overall objective before it is too late.

Classic project management provides a solution. Identify specific measurable results for each initiative in the planning stage. It should be unquestionably clear to everyone when they are achieved with a clear Yes/No. For example, “Secure Board Approval” is better than “Prepare presentation for Board” – it is hard for colleagues to know what has really been achieved for the latter, and Board approval could still be months away.

For each critical initiative, there should be sufficient specific measurable results, early enough, to allow time for corrective action to be taken if they are missed.

The focus on results and achievement rather than activity will bring great clarity and accountability to the changes critical for the company’s future.

“Do your strategic initiatives have teeth?”

Strategic initiatives are critical to delivering the strategy, but most executive teams only spend a fraction of their energy driving them.

Strategic initiatives are the changes that are critical to delivering the future of your company – the changes in culture, systems, or capabilities that will enable you to achieve the market share and profitability you want in your strategy.

Most management teams systematically drive out the important in favour of the urgent. It is only natural to talk about last week’s sales, and how to react to the competitions latest promotion. Think about the last few times your management team met together. How much time did you spend moving your strategic initiatives forward? How does this compare to the time and discipline you focused on current financial results? How does the rigour of measurement and monitoring compare? Do you really know whether these initiatives are on course or do they lack specific measurable results to enable you to track progress? I have seen several management teams develop a “conspiracy of silence” around strategic initiatives where nobody challenges vacuous progress reports and quarter after quarter go by without real results.

This habit undermined the management teams. The lack of accountability on strategic action became part of the culture of “how things happen round here”.

Far better for the health and discipline of the team would be to pare down the strategic initiatives ruthlessly to the couple that generate real energy and mental engagement. Create specific measurable results for each and allocate the management team’s time every time it meets to drive them forwards with the full force available.