Although the identity of the first person to compare a company’s growth to a child growing up is lost to business history, the analogy is probably as old as the discipline of “management” itself.
Commentators love to describe the “growing pains,” the “difficult teenage years,” and so on, and in keeping with such a venerable theme, there comes a point in any company’s growth where those that gave birth to the company need to let go.
Just as a parent watching their child leave home must trust their son or daughter will find new friends and colleagues to rely on, company founders or senior managers that used to combine four or five jobs into one need to trust the person they’ve just appointed as their first chief marketing officer or their new head of R&D.
And – once they’ve got to the point of needing one – their new head of strategy. Setting up a new strategy team in a company or business unit requires both political and operational nous: strategists must deal with decisions and concepts that are at the very heart of what the firm’s most senior managers care about (or, at least, should care about) but must prod and poke all employees to make the right decisions with little formal decision-making power themselves.
And this requires a combination of hiring the right people, using processes, templates etc that get sufficient information from senior managers without overburdening and alienating them, and using a communication strategy that keeps everyone informed and excited about how making the right decisions – and doing the right work – now will lead to greater success in the future.
New strategy teams and the people that lead them can take four steps to manage this tricky balancing act and so provide a useful service to the firm that funds them.
Define Strategy’s mandate – look inward and out: Determine what your role should be by gathering feedback from stakeholders on the company’s direction and analyzing industry trends and competitor moves. Then clearly brand the strategy team to make it clear how you will take the company where it needs to go.
Use business portfolio evaluation to review current business lines and a growth portfolio diagnostic to assess growth investments. Also, consider writing a mission statement to make it clear to the team and the company how the strategy function will be valuable.
Structure the function – look to our benchmarking data: There’s no one way to structure the function, but you can get ideas (and ammunition for resource requests) by looking at how other organizations staff the strategy team and draw reporting lines. Use CEB’s functional benchmarks for information on budgets, team compositions, and organizational structures.
Establish processes – consider unconventional planning models: Again, this will vary according to your company’s needs, but you can gain inspiration from your peers. The two most basic approaches to strategic planning are to stick to a timeline – set a date for when a big strategic initiative (completed M&A deal, new product launched, business line divested, or new market entered) must be complete and work back from that – or to run a set of formal strategic activities (global senior management meeting, strategic planning session, performance reviews etc) on a 12-month calendar.
Some firms break away from this traditional calendar schedule and use “trigger” events such as missing a performance target or a material change to market conditions (the price of oil, say, or the level of unemployment in a key consumer market) to revisit and revise plans and strategic projects. One benefit of this approach is that your function can be more nimble and responsive to market changes.
Develop strategy skills – you’ll need to train others outside of Strategy, too: Naturally, the head of strategy will have to build skills on their own team, but they should also build the strategic-thinking competencies for the company at large.
The strategy team can’t stand behind the shoulder of every manager to make sure their business decisions take corporate strategy into account. If you teach them how to make trade-offs or take advantage of opportunities, they’re more likely to make choices aligned with corporate priorities.
See “The New Strategy Function Playbook” for more than 40 tools, checklists, and company case studies to help with the key steps of building a strategy function.