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3 Reasons Why Every Department Needs Its Own Strategy

 7 months ago
source link: https://hbr.org/2024/01/3-reasons-why-every-department-needs-its-own-strategy?ab=HP-topics-text-16
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3 Reasons Why Every Department Needs Its Own Strategy

January 26, 2024
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Summary.    Many leaders would argue that there should be only one strategy for a company, and that strategy provides all the guidance and direction necessary for departments to create implementation plans. However, most high-level strategies have hundreds of ways they...

In theory, strategy is designed by executive leadership and implementation is conducted by management. But in practice, things aren’t as clear cut. It’s well known the purpose of strategy is to outline what a company is trying to achieve, and its success is predicated on how effectively that’s translated into action. But because individual departments are the stewards of implementation, there is always the danger that strategy is mistranslated, and hence where blame falls when there’s failure to deliver.

Regrettably, leaders frequently believe all the “strategy” is baked in — departments don’t need to expand on it, but simply implement it. When departmental efforts don’t align, fall short of goals, or fail to generate growth, this mindset dictates it must be ineffective implementation rather than the lack of a successful strategy interpretation.

However, most high-level strategies have hundreds of ways they can be translated into action. For example, “We will differentiate through superior customer service,” is a strategy no one could possibly disagree with, but what is superior service? What should be done differently that’s not being done today? What actions should be continued, expanded, eliminated, and how?

Without this needed clarity, departments will jump to the same old tired but familiar tactics without considering unique, differentiating, and innovative ways to achieve the new objective. Instead, departments need to establish their own vision for success. Enabling departments to outline what the strategy means to their area — and defining the ways they can bring it to life — provides three key benefits.

It provides a more relevant framework to act upon.

A corporate strategy is intended to focus an organization on what should and should not be done to succeed — a department supporting strategy should do the same. Without one, department efforts can easily become a grab bag of initiatives, most of which are often repackaged versions of activities already underway.

Each supporting strategy should vary by department, but intentionally so. An accounting department, for instance, may view “superior service” as only a sales, marketing, or customer service effort, forgetting that they engage with customers too — mostly but not exclusively internal ones. How can they provide “superior service” and what would that look like? What needs to be changed, added, or removed? More importantly, what boundaries need to be defined? The interpretation of “superior service” for accounts receivable likely shouldn’t be the infinite extension of payment terms, but a supporting strategy can outline how “superior service” should be delivered.

It opens opportunities for change and innovation. 

Typically, game-changing innovations are viewed as key to a strategy’s success, while routine innovations are of lesser importance. But that perspective is short sighted. Supporting strategies provide the opportunity to uncover necessary changes which may be considered insignificant or unexciting, but deliver an incredibly valuable competitive advantage, cost savings, or increased efficiency.

Take the accounting team again. Say they determine their strategic approach to “superior service” is speed and thoroughness of processing, whether it be applications, approvals, etc. This strategy exposes a series of infrastructure and process issues, including excessive switching between legacy systems which increases operational complexity and potential errors. While it may seem mundane, applying innovation to these fundamentals ensures the infrastructure supporting the strategy is sound.

It allows departments to complement each other’s efforts. 

By having each department cross-compare their strategies, opportunities will arise to collaborate and solve problems spanning multiple areas simultaneously.

As our accounting team’s strategy looks to optimize application processing, let’s say the sales department’s supporting strategy focuses on shortening the time it takes from a customer’s first inquiry to receiving application approval. Because each department is addressing the same core problem, albeit from different viewpoints, they can work together to align budgets, resources, and efforts to achieve it.

Many leaders would argue that there should be only one strategy for a company. Yet strategy is a team activity, whereby multiple groups contribute to its success. Enabling each department to define their own approach to achieving it makes it far easier for them to connect to the overall strategy and shape their own contribution.

This means pushing departments to go beyond all-too-common generalities, such as “We must conduct training,” “We need to reduce errors,” or “We need better products.” Those are not supporting strategies. A supporting strategy establishes the “what” and the “how” in a context relevant to those who will have to implement it — an individual department. Without it, corporate strategy implementation will degenerate into what it usually becomes — the regurgitation of old approaches that failed to deliver before and will likely fail to deliver again.


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