Articles: Blog

4G Strategic Balanced Scorecard Principles: How we think about strategy

Clients are asking us, “How do we move away from an annual strategy process, to treating strategy as a process of continuous learning?”

Traditional Strategy: deliberate, top down and annual

First, let us look at how startegy is commonly described.

Strategy as an annual process

In many organisations, strategy is thought about, and run, as an annual process.  Strategy implies a persistency, so it makes sense that the strategy is developed once every so often and revised only occasionally.  As a default, many organisations treat their strategyc thinking, strategic planning and budgeting as an annual process.  It is the same with their personal objectives.  Of course statutory annual reporting cycles also act to fix the frame of thinking.  As a result,the management cycle of the organisation is annual.

Strategy is seen as deliberate

Strategy is deliberate.  That is strategy is seen as a way to achieve a set if (strategic) objectives in the future.  It is a way to deliver a vision.  It serves a mission. The choice of a strategy is very deliberate given a choice about a future ambition (or a set of possible futures if scenario planning is used).  The strategy produces a road map: a very deliberate plan that explains how it will be delivered.

Strategy is top down

Strategic thinking, analysis and planning resides at the top  table.  It sits with the Board and the Senior executive team.  They see themselves as the ones most connected to the wider environment, understanding the markets and competition.  Strategy is about choice, choosing what to do and imporantly what not to do.  They are best at identifying the strategic options and making the strategic choices. Startegy is also about tehwider resource allocation: where to spend and how to invest.  Strategy determines the budget.  Those resource allocation decisions also reside with the top table.

Given all of this why would strategy be anywhere else?

Strategy and strategic change is resource intensive

As a result,

Why have things have changed

There are four drivers of strategy as a continuous learning process:

Uncertainty and change in the environment

Organisations recognise the value of being a learning organisation.  It makes sense that their main strategy process is also a learning process.

Other ways to think about strategy.

manage Strategy: More flexible models

Other parts of the management system are changing

It is not just strategy that is becoming more continuous.

The management system around financial planning, analysis, budgeting and reporting has changed.  More and more organisations are operating their budgeting systems with rolling forecasts.

Markets are demanding more flexibility

Nasdaq, quarterly reporting.  ….

There has been a build up of pressure on organisations.

 

The benefits of continuous, emergent, learning strategy

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