project evaluation and analysis

project evaluation and analysis
Discussion point: Why don’t they understand our strategy?
The writer is vice-dean for executive education at The Wharton School, University of Pennsylvania.
When running executive education programmes, interviewing executives and sitting as a board member, I have heard one statement recur with surprising regularity: `I don’t understand our strategy.’
Strategies come in many shapes and sizes and every chief executive has to have one. The media, institutional investors and the clamour of the annual meeting demand a concerted plan of action, never a simple declaration of business as usual.
Yet those further down the organisation often fail to see the relevance of the strategy to their own activities. Chief executives typically respond: `They’ve been briefed a hundred times — they should understand it by now.’
Good strategies that differentiate a company and create value are not easily found. Managers work hard to identify opportunities, find new ways to compete and make sure they have the resources they need to execute the strategy. But it is usually focus and execution that make or break the company.
The strategy of US retailer Wal-Mart is not complex but its operation is extraordinary. Its competitor K-Mart failed to execute its strategy and went bankrupt. In the airline business, Ryanair in Europe and Southwest in the US have simple business models that they are adept at carrying out.
Competitors tempted to pursue more than one strategy, such as both full-service and discount offerings within the same corporate structure, usually fail, not because the ideas are bad but because employees get confused about their priorities and execution suffers. Think of US airline Continental’s creation of Continental Lite, British Airways’ launch of Go, or US Airways’ cut-price MetroJet.
Multiple strategies conceal a lack of focus and are often couched in terms that merely exhort employees to try hard to overcome their inherent conflicts. Corporate wordsmiths massage the communication of the strategy until it becomes all things to all people, belying its true complexity and meaning nothing to the person trying to do his or her job every day.
Making the connection
Strategy can come alive for every employee but for this to happen managers have to give up some control long before the fad for empowerment of the late 1980s, Kenwyn Smith of the University of Pennsylvania advised: `To gain power, give up control.’
Prof Smith meant that for managers to be really effective they must draw a range of people into situations where they have both an incentive and authority for action. When this works, managers will have gained power through the actions of others but lost some immediate control in the process.
For strategy, this means giving individuals some flexibility to figure out what the strategy means in the context of the execution of their daily job, and encouraging and allowing them to take appropriate action without checking every step.
This does not mean every employee should develop a strategy. It means one must look for ways to communicate the strategy in a way that will mean something — perhaps something different — to everyone. If a person understands what has been communicated, she will ask herself how she can personalise it for her situation and then look for ways to take action.
Problems can result if the individual either does not see a personal link or feels no freedom to act. Employees who understand the communication but do not believe it are unlikely to follow it up with action.
How, then, do you make it personal? Colleen Barrett, president of Southwest Airlines, writes: `When we began flying 32 years ago, our goal was to make affordable travel available to every American barred from exercising their freedom to fly by other airlines’ high fares.’
At Southwest, people learn to do their jobs in support of the strategy to make travel affordable by reducing costs and improving turnaround time (which in turn reduces cost). This is codified in procedures and guidelines but much depends on individual internalising of the strategy on a personal level. Pilots may be seen loading luggage when things are tight, or flight attendants helping to clean aircraft cabins, instead of sticking to a limited job description.
Certain limits are clearly understood, the best example in the aircraft industry being operating procedures and regulations. The combination of innovation with discipline may explain why Southwest has the most efficient company of its size in the industry (it has the lowest operating costs per passenger or per aircraft mile) and the best safety record.
There are simple but highly effective techniques used by experienced leaders to bring strategy alive, help others to remember vital points and find a connection with details of the strategy:
Compensation
The most powerful way to bring St alive is through compensation. This it cult — but works best at lower levels there is an identifiable connection be action and reward. Continental Airlines dramatically improved customer satisfaction-time performance by giving flight bonuses tied to these performance indicators.
Similarly, sales people working or mission always understand the incentives that will help them earn more money.
Mnemonics
We often use memory aids — phrases or i nations of letters and numbers — to help us of something. The `Five Rs’, `E3′ an executive mutterings mean nothing to most of us but can help explain a concept for employees. But advertising slogans — Volkswagen `Drivers wanted’ or BMW’s `The ultimate driving machine’ — do little to help employees to relate the strategy to their jobs.
The best candidates are saying mnemonics that highlight attributes s quality, speed, cost, satisfaction and things employees can affect directly reminds staff: `Everyone knows the customer; everyone improves quality everyone sells’.
The intent is clear: to provide a s that will garner loyalty and encouraging customers to buy again.
Storytelling
Oral history was a powerful part human society before writing and p. developed and remained so for centuries afterwards. We remember stories parent told us as a child, often in a way that helped us learn an important lesson.
Corporate storytelling can clarify and reinforce certain kinds of behavior can deal with issues such as serving customers, intelligent risk-taking or look product opportunities.
The US pharmaceutical group developed a drug to treat river blinds Africa and South America — though it have to be given away because sufferers could not afford to buy it. When the company retells this story to describe its culture in a compelling and memorable way. Making the strategy come alive is more difficult in complex businesses operating in several segments or industries but it generally starts with a statement of purpose. On its website, Unilever says: `Our purpose in Unilever is to meet the everyday needs of people everywhere — to anticipate the aspirations of our consumers and customers and to respond creatively and competitively with branded products and services which raise the quality of life.’
Making this come alive for workers requires adaptation at lower levels and within segments but here playing off consumer aspirations and raising the quality of life are obvious choices.
In large organisations the statement of purpose sets a general context; beyond this, lower-level managers may have to provide more detailed aims for divisions or product groups to help them `walk in the customers’ shoes’.
The desire by individuals to feel valuable and make a contribution to a group is universal. Leaders throughout a company can improve their chances of achieving corporate aims, both for individual satisfaction and for the benefit of the business, by finding ways to bring the strategy alive in a personal way through easily understood examples, reminders and stories.

Q1 Select an organisation (perhaps the one you are working with on a consulting project] whose strategy you understand. How would you relate that strategy using (i) a mnemonic; (ii) storytelling? Prepare your response in the project log.

Q2 A client manager asks you to define the word ‘strategy’. What definition would you offer?

Q3 A client manager suggests ‘my organisation does not need a strategy’. What response would you make? (Hint: ask the client some questions first.)

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