Employees are a company’s best strategists10 Theses

Ignaz Furger

Copyright © 2010, 2014 Furger and Partner Inc Strategy Development 2

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Starting point Most business strategies are developed by a small group of senior managers with the assistance of external consultants.

Experience demonstrates that the majority of these strategies do not work or do not do so particularly well. Although the ideas behind them may be sound or even brilliant, they create massive problems when they are implemented.

The reason for this is that they win over neither the hearts nor the minds of the employees, so they are either not thoroughly understood or indeed not understood at all and therefore not supported. As a consequence, a great deal of effort is required to dispel the misconceptions and resistance, the costs of which are then booked as “change management”.

Our experience shows that this can be avoided! Involving the employees in an integra-ted development approach means that the strategy becomes the employees’ strategy and so they are more motivated to implement it – with the positive sideeffect of building up strategic competence on a broad basis.

The following ten theses are the basis on which to develop a strategy which is integra-ted into the company and supported by its employees.

Ignaz Furger

Employees who think and act strategically are essential for a company’s survival

Thesis 1

Strategic thinking and acting local

As the customer scope gets bigger, more international and broader and the markets become global, it is critical for a company’s success that entrepreneurial decisions and actions are being taken by the top management on site.

Since a centralized business strategy can never take into account every local impact and risk that influences the global business, local and regional circumstances require adaptations that have to be identified and taken into account by local management.

This means that entrepreneurial decisi-ons have to be taken locally.

Innovation and continuous im-provement

Innovation assures a company’s future. Without the employees’ continuous support, a company cannot be inno-vative – innovation cannot be bought. Employees have to be involved and it is their responsibility to continuously im-

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prove products, services and processes while optimizing the business models.

Therefore entrepreneurial thinking and acting are part of every employee’s job description across all hierarchical levels.

Training

To achieve this, junior staff must be continuously and thoroughly prepared for strategic tasks, and consequently strategic management becomes an integral part of training and career development.

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Thesis 2

Learning by practicing

You do not learn tennis in a seminar. The same applies to strategy. Learning how to develop, analyze, present and implement a strategic topic comes from working on it from the initial vision to the implementation.

The company’s executive management assigns tasks and sets the scope. The team collects information and data, analyzes and evaluates it, develops strategic options, matches these during review meetings with the sponsor, then works out the details and submits these to the management board for decision-making.

Employees learn strategic thinking by working on strategic tasks rather than in seminars

While it is the board of management’s duty to come up with a strategy, they do not have to develop it entirely by themselves!

Building up knowledge

Based on this approach, the company’s employees develop strategic knowledge and proficiency, a good sense of what is achievable and consequently leader-ship skills.

The development of strategy tasks can be started with a High Potential program with strategic initiatives and adjusted depending on the level of

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2requirements and management tasks – up to developing whole business or corporate strategies by and with key personnel.

Following this approach, key personnel may spend about 10 – 20% of their time on strategic tasks.

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A company’s best strategists are its employees

Thesis 3

External knowledge is also availa-ble to competitors

The basic management assumption is that employees are not qualified to be strategists and that they should therefore not be assigned strategic functions. As a result companies spend enormous sums to acquire external con-sultants’ knowledge and fail to utilize the capabilities of their own employees.

This approach has two critical conse-quences:

On the employees’ motivation and willingness to implement the strategy; Regarding the development of a company-specific, unique competitive advantage. The external expert’s knowledge is also available to competitors.

The result is that different companies’ strategies are becoming more and more similar.

Utilizing employees’ knowledge

Every good strategy builds on its know-ledge of markets, products, technolo-gies and especially customers. Without this knowledge, strategic reasoning becomes a purely theoretical exercise.

This knowledge includes the current state of the company and especially

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changes concerning customers and competitors that influence customer decisions.

And where is this knowledge located? With its employees:

the sales staff are the people who best know the customers – and the competitors;

the technicians and product managers are the people who best know the products;

the service staff are the people who best know the problems and areas of application;... and really involved employees are the best innovators.

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Real expertise comes from a company’s customers (and non-customers), rather than from consultants

Thesis 4

80 % of the knowledge is available within the firm – the rest can be purchased

Expert knowledge is often purchased without experts or employees really analyzing and interpreting it.

A large proportion of the knowledge required is normally already available within the company – and collects dust in some drawers (or, nowadays, on some hard discs) and cannot be located.

Practice shows that up to 80% of the required expert knowledge can be compiled by interns and students based on documentation the company already possesses and the Internet.

Additional knowledge can be selectively purchased and applied and is available from databases, analysts, industry ex-perts and associations for a reasonable price.

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Customers’ knowledge is authen-tic – consultant’s knowledge is not

It is the customers who possesses genu- ine, relevant expert knowledge, not expensive experts, who often work with secondary source materials and provide information only in aggregated, anony-

mized and unauthentic formats. Therefore the main questions are:

How systematically and with which approach do you involve your customers?

How systematically and in which format do you use the knowledge of your employees?

Where do you buy – targeted and focused – external knowledge and how do you integrate it?

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Strategic methods and tools are sufficiently well known and can easily be obtained

Thesis 5

Nothing new for decades

Strategic techniques and methods are well known and are freely accessible to everyone, but these only provide the place setting, rather than the recipe for a gala dinner.

Many theories sold as new approaches are old wine in new vessels. Apart from some reworked methods and tools, there have been no significant innova-tions for years.

The tools are easy to learn

It is not the concepts and tools per se that are the crucial factor for the effec-tiveness of a strategy, but how and by whom they are applied. This is some-

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thing that has to be learned sooner or later by the employees since the external specialists are long gone by the time that the concepts and tools are being imple-mented and applied.

5Most larger companies today have departments dedicated to business development which can provide access to all the necessary tools. The skills required to coach and steer the process are usually available internally. External specialists can be called on when required, but their main role is to coach and act as a sparring partner.

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Employees who develop a strategy will also implement it – without change management

Thesis 6

Persuasion is expensive and only partially achieves its objective

Developing a strategy in isolation endangers the chances of it being implemented successfully.

“It took senior management 19 weeks to develop the new strategy; it took the employees 20 minutes to misunder-stand it.”

Just communicating a strategy formu-lated by senior management down the ranks is not enough to ensure that it is properly understood. Only those

who took part in the development of a strategy will have truly internalized it. Otherwise it might sound like:

“Do your employees know the strategy?” “Yes, we presented it during the last company’s Christmas party.”

Listening is not the same as understan-ding, understanding is not the same as consenting, and only those who are convinced will contribute their fair share for the implementation.

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... when employees are convinced of their ideas they also want to realize them and they are usually most con-vinced of an idea they have developed themselves. If a strategy is already in the hearts and minds of the employees because they worked on it, there is no need for extrinsic motivation or incentives and change management becomes obsolete. Besides, people tend to feel responsible for their own ideas and do not immedi-ately put the blame on senior manage-ment if difficulties arise.

6Classic change management is based on the assumption that people resist change and that this resistance has to be overcome. There is the suppo-sition that power promoters, change agents, pilot projects and sophisticated communication strategies are necessa-ry to build up the required energy for change, but ...

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Senior management focuses on the right questions and assignment of tasks during the strategy development process

Thesis 7

Provide the guidelines and questions

It is executive management’s responsi-bility to define the strategic guidelines, formulate clear tasks, find the right key personnel, involve and instruct them. In review meetings they have to decide on proposals and set directions.

Strategic guidelines include the vision, the mission and scope for develop-ment for strategic ideas and options; eventually also the financial targets and growth objectives.

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This requires an intensive engage-ment with the strategy

Caution: involving the employees with strategy work does not relieve senior management of its responsibilities. On the contrary, senior managers have to spend more time on strategy work: they have to read documentation, conduct

7intense (insightful, inspiring and also challenging) discussions – and this not only during the development stage, but also during implementation. They regu-larly have to challenge their employees’ work, as well as their own.

They must probe and challenge the team, actively participate in discussions, and offer their support to advance the implementation. It would be disastrous for top management to sit back rather than lead from the front.

The reward is the very satisfying experi-ence of seeing your people claim credit for the strategy and want to energeti-cally prove that their strategy actually works.

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The mutual development of strategies creates a culture of dialogue and a common language

Thesis 8

A constructive dissent

Strategy development is a project that requires a clear project organization. A process of constructive controversy should take place in the project team – only consent coming from dissent is good.

The prerequisite of a productive dia-logue is that the composition of the strategy team should be varied (key persons from different levels of hier-archy, functions, regions), to make the best use of the existing knowledge.

As strenuous as the clash of different perceptions and experiences can be in the beginning, the more valuable it will be when strategic considerations and options are enriched and founded on real experience (with customers) rather than on numbers.

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A common language and the lear-ning organization

This dialogue, this debate has to take place. Organizations only achieve this if a process and corresponding com-mittees exist, meet regularly and adopt and approve topics.

This approach creates a common lan-guage in the organization. The meaning of terms and definitions become unam-

8biguous and based on the common un-derstanding of problems and solutions confidence can develop.

Therefore this joint development and design for the future is an integral part of a learning organization.

Another important outcome of this di-alogue at the senior management level is that members that initially focused on their own area of responsibility start to jointly shape the future, and evaluate each individual contribution in the course of the process.

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Overall strategic responsibility always lies with the top management

Thesis 9

Roles have to be clearly assigned

For integrated strategy development, roles have to be clearly defined. An independent strategic planning and controlling business process clarifies responsibilities.

Consequently strategy development is part of a transparent planning process.

For example:

3 – 5 strategic initiatives are assigned for a specific deadline, developed for six months and then presented and approved in a meeting with senior management.

The basis of these strategic initiatives is a clear and professional project management.

The aim is not to democratize strategic work. The strategic decisions are always the responsibility of senior manage-ment, but are based on broadly agreed foundations.

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In certain cases decisions have to be developed by senior manage-ment autonomously

In exceptional cases due to non-disclo-sure agreements, strategic decisions cannot be developed on a wide basis, but have to be developed and decided autonomously by senior management. Examples of such exceptional situations are acquisitions, carve-outs or restructu-ring.

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This integrated approach creates a unique strategy that is tailored to the company’s requirements and is difficult or impossible to copy

Thesis 10

Tailor-made

An internal jointly developed strategy is built on specific knowledge of the employees and the customers and thus is tailor-made for the company. A strategy created this way uses the enormous potential of the company’s own employees and customers (current market and customer know-ledge), instead of delegating this critical task outside or upwards.

Immediately effective

A strategy developed this way is imme-diately effective, requires no translation and consequently avoids loss of time and energy. The implementation works on its own since the employees identify with their strategy and therefore want to realize what they have conceived. The probability and speed of a success-ful implementation are significantly increased.

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But by then you will be far ahead of your competitors.

Cannot be copied

While strategy papers are easy to copy, strategies embraced in the hearts and minds of the employees can only be imi-tated by competition with great delays.

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Strategy development You cannot buy a strategy – a strategy needs to be developed inter-nally – and the involvement of the employees is crucial for its success. Furger and Partner Inc will guide your internal team in elaboration of this scheme and will help you to implement strategy development as an independent business planning process.

Strategy seminars To successfully develop strategies, it is essential to train employees to think and act strategically. Using the concept “The Practical Seminar”, Furger and Partner Inc will assist your employees in becoming enterpri-sing individuals, a quality expected by every innovative company.

Furger und Partner IncStrategy Development

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Phone +41 44 256 80 70

furger@furger-partner.chwww.furger-partner.com