INTRODUCTION
I wanted to see what pops up on Google when you search "strategy audit." Spending 10 or 15 minutes on the search resulted in hundreds of models. The results confirmed something I have lamented with each strategy class I have taught in the last 20 years of my academic career: strategy is not and should not be relegated to a series of models. Sadly, there are countless faculty at the world's top schools who do very little in class besides riding their favorite model into the sunset! If you have done an undergraduate in business or an MBA, you are far too familiar with models such as PESTEL, Porter's Five Forces, the Diamond E or Value Chain analysis. And you know your educational experience was a "Dollar Store" experience if you spent the bulk of your time "learning" and "using" SWOT (ouch!).
My first full-time MBA class was comprised of 25 mid-career executives. As I introduced the Strategy Class, one of my students put his hand up and asked why I made no mention of SWOT in my syllabus. He went on to say: How can anyone make any strategic decision without understanding, Strengths, Weaknesses, Opportunities, and Threats. My response: "Look, this is our first class, and we just met, so I am going to let it go that you mentioned" - I stop - go to the board and write down without saying anything aloud, the letters S-W-O-T. "I have one rule in my class, and that is we are never to utter out loud or use…" - and I point to the letters on the board - S-W-O-T. There is no other model - and I use the term model while rolling my eyes - that encourages less thinking than SWOT - it is academically and managerially bankrupt!
Strategy is about thinking, not making lists, and certainly not completing models. Look, SWOT and other models are not a bad place to start - but the keyword is start. They encourage managers to tally the pros and cons and churn out decisions. That is the recipe for poor decision making. Decisions are a function of knowing, planning, and doing. Making a good strategic decision requires you to know what is going on in your industry and in your firm; that knowledge and how it leads to insights have to be different from what can easily be seen by your competitors or churned out by a model. Strong decision making then requires a robust planning process that turns those insights into actionable initiatives. Finally, the doers bring those insights and initiatives to life in a way that is difficult-to-copy and truly value-creating. But when the decisions that seem to emerge from your organization are not generating the outcomes you hope to achieve, it may be time for a strategy audit.
A strategy audit is not about listing the strengths, weaknesses, opportunities, or threats within your business but rather about understanding whether you have made the right investments in knowing, planning, and doing. This understanding does not emerge by the grace of any pre-made model; strategy audits require thinking, reflection, and a willingness to ask tough questions.
YOUR ORGANIZATION'S KNOWING ASSETS
The first steps of a strategy audit are evaluating the knowledge your organization typically relies on and assessing your organization's ability to access different kinds of knowledge sources. Leaders' ability to make strategic decisions depends on (1) the quality and variety of the knowledge your organization can access and (2) the sophistication of the systems and structures that allow you to generate insights from knowledge. This drives every organization's ability to outshine its competitors. The following questions can help you understand the strength of your KNOWING ASSETS.
How diverse is the racial, cultural, and experience background of the boundary-spanners in your organization? These are the people who interact with customers whose jobs bring them face to face with different external staeholders? Lived experience shapes how we look at the world. If too many of your boundary-spanners are similar, your organization risks miss key insights from your competitive and industrial context.
How multifaceted is the experience within your leadership and staff? Is there a balance between home-grown talent and talent attracted from vibrant competitors? Have any leadership team members lived and worked - not just travelled - in another country? Think about the importance of lived experience in a global marketplace.
How deep are the network relationships of your staff and leaders? Do they exchange knowledge with others in the same industry? Are those networks ever tested, i.e., are leaders or key staff ever called upon to tap into their networks to generate a particular outcome?
Do leaders and key staff have a specific time set aside every week - even it is only a few hours - to attempt to gain market intelligence?
Are leaders open to hearing about market trends or market intelligence from non-traditional sources?
Is conducting primary and secondary market-intelligence-gathering part of the training received by employees? Or do you simply expect your leaders and key staff will know how to do this?
Do employees rely on data to underpin their suggestions for change? Do they understand the value difference between publicly available tangible knowledge and private, more tacit knowledge? Do they understand winning strategies come from the latter vs. the former?
Are employees' outward-facing behaviours such as conference attendance, investments in continuing education, or webinar attendance measured, encouraged, or enabled?
Does your organization formally capture organizational memory in the form of story-telling to help new hires and leaders facing seemingly new decisions learn from the wealth of information from the past?
Does your organization have a formal knowledge management system that is regularly populated and easily accessed by various staff?
YOUR ORGANIZATION'S PLANNING ASSETS
What does strategic planning look like in your organization? Plans matter because they represent maps for how an organization will achieve its intended outcomes. Planning efforts can be highly formal, like in the production of a highly consultation-based strategic plan. Planning also occurs in real-time as organizations attempt to react to newly faced realities. Evaluating the kinds of planning an organization engages in, how it plans, and how it actively uses those plans can help assess its PLANNING ASSETS.
Does your organization engage in a planning effort once every 3 to 5 years? Is this a consultative and inclusive experience? Most organizations need to step back once every 3 to 5 years and take stock of their journey so they can look ahead. This is hard to do in a formal cross-organizational way every year. Do you agree with the sentences in red? Do they ring true for you? If you answered YES, it's time to take a second look. I didn't send you this blog by horse and carriage - it's on the internet - can you say the same for your planning process's modernity? Certainly, a highly consultative in-person effort is important and required. But revisiting is something that needs to happen every 3 to 4 months (or more frequently - think COVID19) in a way that leverages technology. Do you have a strategy app that is custom-designed to do this in your organization? If tech is not your thing, do you have a more regular and meaningful way to regularly revisit your strategy and its implementation?
As a leader, is your plan something you check off your list or do you actively refer back to it and use it to help guide how you orchestrate resources to drive performance? Can you demonstrate, in real-time, why you are throwing out parts of the plan or doubling down on others? When you don't pay active attention to planning - nothing happens. Think healthcare or infrastructure in the US. After four years in office, the Trump administration could not move the needle forward in either area despite both being fundamental to people's quality of life, no matter your political stripes. They kept promising a plan but never produced one. See, not having a plan is the same thing as shelving your plan - it gives you the freedom to not act or to do what you want - the sad part is - it also seems to give everyone else the freedom not act or to do what they want - that can lead to dangerous levels of underperformance. A plan not only makes you accountable for performance but also helps you draw out that journey. A plan that stays on your desk vs. your shelf - and that you refer to often - helps you ensure that journey is nimble and creates real value.
How much understanding is there around the plan? Is it a leadership thing? Are there formal efforts to ensure key managers and their direct reports understand and own the plan? Do you have a dashboard that links goals and key initiatives in the strategic plan to KPI's for key teams and individuals within the organization? Is this dashboard visible? Can individuals in the organization provide real-time feedback? All of these things foster ownership, the key to plans creating value.
2020 brought some seismic shifts to how we lead, how we work, and what organizations look like. With these changes came an even more fervent belief among some leaders that you simply can't plan for the future. Would it have been possible to plan for COVID19? Most would say NO. Would it have been possible to plan for how important an issue diversity, equity, and inclusion would become for many organizations? Most leaders would say, NO. Would it have been possible to plan for the Me Too movement? Most leaders would say, NO. If scenario planning at your organization is primarily budgetary, i.e., planning for a 20% increase or decrease in sales, then I agree your answer has to be NO. But your answer would likely be YES if you invest in stress testing your strategy by (1) engaging in risk assessments, (2) actual scenario building and planning, and (3) relying on outside experts to be part of the development and evaluation of your strategy, so you are not blindsided by the fragile interconnections in your organization. Investing in these kinds of PLANNING ASSETS allows you to engage in the resilient thinking required to make key decisions during these unforeseen events.
YOUR ORGANIZATION'S DOING ASSETS
The research will tell you that rational decision making - decisions based on detailed cost-benefit analyses, and improvisational decision making - real-time decision-making reacting to real-time opportunities - positively influences organizational performance. But politically motivated decisions - well, that hurts performance. Although decisions driven by politics are almost always profit draining, understanding power and politics within your organization is crucial to getting things done. You can design and rely on strong systems related to knowing and planning, but if performance is a direct function of what gets done - and what gets done depends on people - you need to have strong DOING ASSETS.
Can an existing team of leaders and key managers design and implement every new strategic direction? When Starbucks came to the point of a few hundred stores, and when Howard Schultz knew the brand had the potential to be defined by tens of thousands of stores - he changed the management team. Do you have the right people in place at the top, in the middle, and on the front line? The right people are table stakes for doing.
Are you investing in doing? Companies love leadership training, but how much of that training is designed to help people get better at thinking vs. doing? Have you invested in training that focuses on helping your leaders not just think about decision-making, not just reflect on their management style or character, but actually engage in simulated environments where they have the opportunity to see and evaluate their doing skills?
Does the leadership team understand the doing landscape in your organization? As a team, whenever you are facing a new future, you must take the time to map out the key players - what they are good at - their weaknesses - where they have experienced success - what drives them and who they are loyal to - understanding this landscape is crucial making plans real - do it on paper and do it with other leaders on your team - so you can see it, influence it, leverage it, and manage it!
Next time you or your leadership team is wondering why your organization is not doing as well as it should - think about getting some help with a strategy audit - where you can have a deep dive discussion that will help you hone your knowing, planning, and doing resources.