So once we’ve done this vetting of our strategy (discussed in Parts I and II of Structure Follows Strategy) and looked at the resources that we’ll need to execute that strategy and where they should be deployed or where they should be targeted and focused, then comes the structural conversation.

How do you want that? How do we want that organized?

And we have our traditional things. If you have a big team, let’s say you have a team of 10 people and you decide, well, you want to put some one manager in the middle or two teams or sub-teams. If you have a bigger team like I have had in the past, you may have a couple of hundred people and you have a sales manager and things like that.

“Know” Strategy is On-Track

But when I think about the concept of structure, one important thing that I always like to identify are the things that for me require transparency.  That is, those things that I want to know or understand in greatest detail.  What are the things that I want to know the most about or know is being executed the best and cleanest or that are on/off track?  For these things, I will often put that in a functional role with a reporting relationship that allows me to have more insight, more day to day.  I don’t want to say micromanagement, but I use the word transparency – an organizational structure that allows me to see and understand more what’s happening as opposed to burying something strategic (i.e. very important) down in the organization where messages and information will be filtered. Clearly this depends on the size of the team that you have and can be handled either through how the organization is designed or just how you prioritize projects with your team and how you do progress checks and things like that.  But I recommend considering key priorities as part of the final organization – we don’t want to be hunting through layers of organization in order to figure out what’s really going on in some critical area of our business.

Today, consider your organization structure (regardless of size).  Do you have the transparency you need to know your strategy is on-track?

Organize for Transparency is a post from: StrategyDIY - The resource for self-made small business growth strategies. ---------------- Thank you for subscribing to the StrategyDIY feed. For instant access to your free business survival guide please visit http://www.strategydiy.com and sign-up. ---------------- Follow me on Twitter

This post continues the discussion we started here in Part I of Structure Follows Strategy.

Let me come back to the example of my business in Europe.

Again, I was facing the immediate, guttural, visceral reactions from HQ that we need to cut, we need to save, we need to protect the bottom line for long term stability and viability of the business. My reaction was “Okay, let me take that as a set if recommendations and let me go off and see what’s happening and analyze the business and outline what is the strategy, so that we can execute a plan for our resources appropriately.”  Maybe not in so many words or in such a calm demeanor, but you get the point.

It took us maybe four months, in this case, to really develop what would be a strategy. And one of the principal reasons is because of the volatility in Europe and the uncertainty around how the markets were going to develop, how the consumer market is developing, when we might see recoveries – so many, many factors making it an extremely complex, strategic plan. Toward the end of the four-month period, we had our strategic plan mapped out. We had a plan for the near term which is a two-year plan and we had a draft of a five-year plan depending on the outcomes in the two-year time frame.  With these plans in hand,  we subsequently executed on an organizational plan and a structural plan for resources that we needed to be successful in execution.

And I will admit that we had to make some organizational reductions.  But they weren’t as severe as what was originally expected.  We redeployed some of our team to a new customer channel. We created some new roles within the organization, some of which we had to fill from outside our team, which created new positions for external people, and some of our team were moved into new roles. The net result was less severe reductions than the original assumption would have been. And the reason is because we saw more opportunities, we saw a shifting market, we saw some customer segments that had not been attended to that we thought over the two to five year period would help us stabilize the business.

OK, Yes, we did have to institute some reductions in the organization, but it also included some movement of the current team and the creation of some new roles. All-in-all, we ended up with a stronger team to execute our strategy.  I hope it’s a good example of structure following the strategy and that a short term rash decision, an organizational decision may put you at a handicap decision.

Now I want to add something here.  We didn’t consider everything. Our forecast wasn’t perfect.  In fact, we are now under resourced after another six months. We don’t have enough resources to take advantage of some opportunities that we’ve identified since we started executing our strategic plan.  We ended up “in the middle” – less reductions than previously thought allowing us to take advantage of some identified opportunities but, finally, identifying more opportunities than we thought and now having too few resources.  It’s a lesson, too, in strategy – we aren’t perfect.  We make our best plans and move on.  Now we’re struggling to understand how we can do that, how we can take advantage of these new opportunities that we’ve uncovered that fit very well with our strategy.  We’ll find a way.

Will you?

Leave some comments below. We’d love to hear about your thoughts on strategy and structure and how you’ve implemented looking at strategy and then planning your structure and what changes or insights that you’ve had in your own experiences.

Strategy’s Impact on Structure – The Good and The Bad is a post from: StrategyDIY - The resource for self-made small business growth strategies. ---------------- Thank you for subscribing to the StrategyDIY feed. For instant access to your free business survival guide please visit http://www.strategydiy.com and sign-up. ---------------- Follow me on Twitter

Matt, the first thing you need to do is you need to cut 40 people out of your sales organization. Matt, the second thing you need to do is reduce your headquarter staff.

These are two of the directive statements I received prior to my arrival to my new position in Europe; essentially, predefined expectations of a short-term reduction in the organization that I had inherited.

Why? It’s probably a natural reaction especially from business leaders outside of the country.  We were sitting in a collapsing economy, with crashing prices, poor availability of cash, high national and personal debt load, sky-high unemployment and the only viable option people could see to survive depended on rapid and massive reductions in the costs of our organization.

And so, clearly, one of the first questions I needed to answer was if those things were, in fact, our only set of options for survival.  That we must make an immediate reduction in the organization.

And it got me thinking that a good topic, here, might be the concept of structure versus strategy and the implications of the relationship therein.

Structure FOLLOWS Strategy

So generally the concept of structure versus strategy is that structure follows strategy. What that means is we build to our strategy. We build based on what we’re trying to execute, where we’re trying to go and that future state of our business that we want to create.  But without a strategy, we’ll build toward what we think the world will hand to us.

And so that being said, our organization had an immediate, visceral reaction to the market situation and the vision of the future and landed on our need to cut the organization, to cut staff (and at a quite severe level) in order to survive in the short-term and manage the profitability of the business.

But I pushed back, bought a little time.  Why?  Because the direction was being given without a strategy.  I thought that even if we could only make one or two years of a strategic plan, we could at least make an organizational decision based on something other than the immediate short-term.

And the reason I say that is let’s say we would have made an analysis and that we expected major recovery in the market or a major new customer or we found a new channel and we should have redeployed assets. And if we had already cut resources, we will have completely eliminated an opportunity for growth, for long term stability, for recovering the business.

For the cost of a few weeks or months of analytical time we could understand where this business can go in the future and ensure we have the right resources for that situation.

1 or 100, the Same

Now, I use the numbers for my organization, saying cutting 40 people or cutting headquarters staff. But this could be a one person, this could be a two-person team or a couple of hundred person-team, the concept is still the same – you build or you grow, expand or contract based on your strategy and you redeploy your resources based on your strategy. Even if that’s just one other person, we want to deploy/redeploy that person based on the strategy and based on the focus, based on the priorities, and based on the opportunities or risks that have been analyzed.

And so this is a bit of a cautionary tale, too, about intent to hire.  I just want to hire somebody. I got to hire some people. I got lots of stuff to do.

As much for intent to fire.  Things are tough, I’ve got two people working for me. I’m going to cut one.

Well, what if that one person could have been deployed to attend to a new customer or a new channel and could have actually grown your business, or at least covered their own expenses, that would be an opportunity lost. Until we have that strategy, that clarity, we need to make our resource decisions with caution.

And I’ll caveat this entire conversation, saying, in a corporate environment, we’re not talking as much about real “survival” as we might be in an entrepreneurial environment or in a personal business environment where a rapid response to changing market situation and a staff reduction or a cost reduction has a direct effect on personal family income.

But even in a situation of personal business, small business, an entrepreneurial setting, some time to validate the decisions on our personnel or our resources, our staff, or our teams against the strategy that we’re going to execute needs to happen. Even if that’s only a week’s discussion and thought process around where’s the business going, our resource decisions need to be vetted against that analysis.

We’ll continue this discussion in Part II of Structure Follows Strategy.

Today, think about your structure. Has it been balanced and bounced against your strategy?  When was the last time you looked at your strategy in light of the team or the resources that you’re putting against that strategy to execute it and drive for a successful outcome?

Leave some comments below. I’d love to hear about your thoughts on strategy and structure and what changes or insights that you’ve had in your own experiences.

Structure Follows Strategy – or Does It? is a post from: StrategyDIY - The resource for self-made small business growth strategies. ---------------- Thank you for subscribing to the StrategyDIY feed. For instant access to your free business survival guide please visit http://www.strategydiy.com and sign-up. ---------------- Follow me on Twitter

The question today is can we take it too far? Can we over-analyze ourselves into a corner as it relates to strategy?

I think the answer is yes.

We can take things too far. We can take business analysis so far that we actually get to a point of confusion, where we lack clarity, or worse, to a point where we get concerned about so many options that we are afraid to take action because of all the potential outcomes that we can see.

This relates to the importance of scenario planning.

But up to a point. There is value in scenario planning and understanding the potential good news or bad news or change in assumptions that we want to assess over the strategic planning horizon. But at some point, it can become too much.

At some point, we truly can get into analysis paralysis, to quote a cliché. And that is dangerous. That’s a dangerous place to be.

Why?

Because we begin to focus at a granular level, on details, when what we really need to do with the strategic planning discussion is focus on the big picture and the long-term. Classically, it’s the “unable to see the forest for the trees” problem.  We need to be focused on major trends that will impact our business/customers, and major initiatives that as an organization we want to take on. Or new areas for exploration in the market, new places that we can drive business, new customer groups that we can address, the needs, the trends, general direction, priorities that we need to take from an action perspective in order to take advantage of opportunities or to mitigate potential risks.

What a ramble .  . .

But we should be focused on everything except excruciating details when we plan strategy.

Over analysis, over scenario planning can really kill good strategic planning. What does this look like? What does the bad part look like? The bad part looks like discussing details and trying to assess every potential market change on our long-term forecast. You might recognize this if you and your team are asking questions like: “do we think that the risk of price is 10% or 12%.”  If you are, I hope that 2% is gonna make a big difference in your strategic decisions.

A real example of detail killing business strategy

I’ll give you a specific example. In a recent team meeting, we were working on our long-range strategic plan for the business that I run in Europe. And part of the corporate expectation of this process was not only did we need to build our base set of assumptions by product (over a 5-year horizon), keeping in mind our business constitutes of approximately 40 products, but also for us to explain the net sales and/or profit impact of every change and every assumption that we had within our base business and within our potential good news and bad news.

That is to say we had a baseline forecast for our business; outlined all the key assumptions that were most probable. And then we had to outline all of the other potential future scenarios (for our key customer segments (4) and for all 40 products).

And the specific follow-up question was always the same: “Well, how much could that impact your business?” The required answer is a specific sales number as well as profit number. Also, we needed to quantify in terms of more detailed assumptions, for example, market share or market growth. But essentially, we have to choose. Is it market growth? Is it market share? What is the variance year over year? Can we do better? How would we do thing differently?

Keeping in mind, we’re doing this for 40 products over 5 years and the variability, year over year, of the key factors that are underlying our primary strategy. Our approach into new markets and new territories is getting overlooked. The core strategic elements are getting overlooked; taking second priority for the focus on minute assumptions.

And this is where strategic planning can fail

When we focus so much on the granular detail, trying to understand to a dollar-level the impact of a particular actions or decisions. We end up with fewer decisions, more non-controllable factors, more questions and so more paralyzed.

So this is something, for me, very important to keep in mind as we do our strategic planning. This is an activity to focus on the big rocks. Focus on the major initiatives, major issues, and major trends. And focus on the major variables (positive or negative) that we could have as it relates to our business, looking at the future and the key drivers of that business – major shifts in demand, major shifts in customer groups, major shifts in pricing. These are some of the core components that we would expect in a good strategic plan.

The tactical, granular, real detailed numbers analysis can come out of our short-term or mid-term tactical plan as we identify specifically the actions we need to take. But that is after we have our final strategic priorities and know where and how would we need to adjust those actions based on potential shifts overall in the market.

Focus on the big rocks. Focus on the major trends. Focus on the changes that you need to be aware of and action to maintain a strong and successful business.

Digging So Deep We Can’t See the Sun is a post from: StrategyDIY - The resource for self-made small business growth strategies. ---------------- Thank you for subscribing to the StrategyDIY feed. For instant access to your free business survival guide please visit http://www.strategydiy.com and sign-up. ---------------- Follow me on Twitter

Business Strategy Workshops have quite the reputation – formal, difficult, intense.  I get request for business strategy workshop agendas, templates, and ideas (HMMM, maybe I need to put something together for our community . . .).   It’s as if many of us are afraid to just grab some people and start talking; hammer out some ideas and go from there.

Ah, HA!  Therein lies another of the challenges in pulling off a Strategy Workshop.  We can’t decide who to grab.  Who to involve in building our business strategies is something all of us will struggle with.

Who is The Strategy Team?

Only leadership team?  Key talent?  Someone from every department?  My wife?  My buddies?

Clearly, we want people that can help us in the process.  People that can add value to our business strategy.  People that might have some great insights and cool ideas are always fantastic additions to a strategic team.

But how can we decide?  Who really are the people that we absolutely want to have working with us to build our strategy?

I’m going to throw out what might be a radical idea.

The people we must absolutely have involved in building our business strategy are . . .

CUSTOMERS

Is that the first idea that came into your head?

If we don’t have our customers (clients, accounts, purchasers – pick your term of choice) as a core component of our business strategy, it doesn’t matter who we pick from within our circles to be involved.  Our strategy will fail.

I’ve seen too many strategy teams work tirelessly on their business strategy using “internal  assumptions” of customer needs/wants and market trends.  I call these “institutional beliefs” – those opinions turned “facts” within companies or teams.  When someone throws a customer fact at me (e.g. our customers are only focused on price; we can’t talk to them about new services), I pressure test for “institutional belief” with a simple question “How do we know that?”  Many times, there won’t be a solid source for the data.  So I send my team out to get a real ‘fact’ and a real ‘source’.

Back to the topic at hand.

Good strategy absolutely requires our customers are involved.  That our customers are key players in the strategic process.

Some ways we can do this:

• Invite customers into our strategic workshops (THE HORROR!)
• Get sales people involved (real field sales people, not the managers)
• Do focus groups or other market research often (not just once – an here’s a great resource for you)
• Create an advisory board of key customers or key ‘target’ customers

Do anything to get more access to your customers, especially during a period of strategic decision-making.

Your action: get one new customer insight this next week and then come back and add into comments below some of the other ways we could get the customer into our strategy process.

Are You Missing This Critical Person on Your Strategy Team? is a post from: StrategyDIY - The resource for self-made small business growth strategies. ---------------- Thank you for subscribing to the StrategyDIY feed. For instant access to your free business survival guide please visit http://www.strategydiy.com and sign-up. ---------------- Follow me on Twitter