A.T. Kearney: Execs say strategy harder to formulate

20 July 2015 Consultancy.uk

Companies that have a long term business strategy still outperform companies that don’t, research by A.T. Kearney shows. Developing this strategy, however, has become harder in recent years, for which the reason can be found in the interface between the formulation and deployment of strategies. According to the consulting firm, a successful long term business strategy should be formulated as a direction for the organisation to follow, backed up by strong leadership.

A dynamic world
The research by strategy consulting firm A.T. Kearney, entitled ‘The State of Strategy Today’*, finds that the environmental conditions in which businesses are developing strategies for their future are themselves undergoing rapid change. The environment in which businesses must perform their essential function is being disrupted by a variety of macro and micro factors, from global credit turbulence to pieces of disruptive technology transforming traditional market places.

Against this backdrop, 62% of CEOs surveyed for the report note that developing a long term strategy has become considerably more difficult over the past decade. Three-quarters (74%) say complexity forces them to spend more time and effort on strategy formulation. However, despite these increased efforts, 46% of strategies fail to meet expectations.

Strategy vs. Agility

A natural response to an environment that is both hostile and rapidly changing is to be adaptable and agile. By setting a business on a path towards being able to quickly grasp the way to change, strategy and planning is no longer necessary. This is reflected in the survey, with more than 80% of global executives considering agility as important, or more important, than strategy, when it comes to securing a company’s future success. And only a slim 19% believe a strategy-induced competitive advantage is still possible.

Long term strategy
The research highlights that while many C-suits are questioning the relevance of long term strategy in the present environment, companies that have longer term strategies of 5+ years still outperform (85% successful) those that have short term (53% successful) or ad hoc (46% successful) strategic outlooks.

Long-term planning supports long-term success

According to the consulting firm, the ‘agility as a substitute for strategy’ notion is flawed. So, what is causing C-suits and management to drop a key aspect of running a successful business? The answer seems to be in the interface between formulation and deployment of strategies. Of the respondents, 6% blames deployment and 7% formulation. It should be noted, however, that deployment bears more fault in general than formulation, with 29% placing the blame more in deployment than formulation (19%).

Strategizing strategy: formulation
One of the key places in which knowledge, experience and preparation are needed, is in the formulation of strategies. When asked about their strategy formulation failures, most executives complain that it is an insufficiently inspired, unrealistic, impractical, and detached process:

  • Lack of understanding of future trends (88%)
  • Little understanding of internal capabilities (87%)
  • Too much top-down approach (84%)
  • Not enough logical thinking (84%)

Root cause of failure

Strategizing strategy: deployment
So what’s the problem on the deployment side? A key finding is that the interface between formulation and deployment is a key concern, with strategies failing to integrate planning with changes in practice of those involved:

  • Lack of internal understanding of the strategy (90%)
  • Lack of internal capabilities to execute the strategy (90%)
  • Lack of ownership (86%)

A.T. Kearney’s key conclusion suggest that a successful and inclusive strategy requires top-down leadership, with top management formulating the ideas, ground rules, organisational teams, and direction that are critical for middle and lower management to deploy. Strategy, at its best, becomes less of a decision and more of a direction to inspire the organisation to follow—not once, but on an on-going basis. As one CEO says: “Strategy and leadership go hand in hand, you can't have one without the other.”

* Which reached out to over 2,000 executives, business leaders, and heads of strategy functions to discuss their thoughts on the state of strategy today.

Profile

More news on

×

How First Consulting generates more insight using fewer reports

08 March 2019 Consultancy.uk

Organisations are continuously investing in more advanced data collection and manipulation methods to enable smarter and more informed business decisions. In order to maximise their business value, companies understand the growing need for performance related insights from their data. First Consulting, a consultancy firm specialised in business change, has helped many clients in the utilities sector to deliver effective change through improved use of their data.

Most utilities firms are structured in such a way that every business unit has a team of analysts who are responsible for providing relevant data insights to their business colleagues. The business analysis teams form the link between business decision making and IT by translating business requests into meaningful actions and delivering information via reports.

Typically, the business user will receive a unique report for each information request, with each new report requiring individual, tailored support from the analyst team. This limits the productivity of the analyst teams and minimises their ability to address new data requests. The growing demand for information puts additional pressure on these teams, as a significant amount of time is required simply to gather and update the required data. This has caused reporting portfolios to expand dramatically. However, due to the analysts’ already stretched capacity, reports do not always deliver the most vital information and documentation is often incomplete.

Redesigning information delivery

At First Consulting, business consultants work in close collaboration with their clients to improve the mechanism for the delivery of information and analysis in response to business requests. The improved structure focuses on providing information per role type, rather than per request. As such, one dashboard is designed for each organisational role type, with all the relevant information presented in a single overview. This allows all individuals of a given role type to open a single dashboard and view what they need, as opposed to collating a large range of disparate links and unique reports which, previously, were all required to enable business decision making.

Moving from unique reports for each request, to reusing KPIs in a select group of dashboards

By implementing this new way of working, clients are able to reduce the reporting portfolio from over 100 reports to fewer than 20 dashboards (see figure above). In addition, the capacity for data maintenance can be reduced significantly by using modular KPIs, allowing for the re-use of data across multiple dashboards.

Changing while everyday work continues

In order to deliver effective change, it is essential that day-to-day processes remain unaffected whilst transitioning to a new reporting landscape. First Consulting achieves this by embedding business consultants within the client’s analysis team to gain feedback and determine exactly what visuals are necessary within the dashboards. This focuses effort on the outcome (such as what should be presented in the final dashboard) and allows a broad range of requirements to be considered in the business context and combined, where appropriate.

Key users and stakeholders are involved from the outset to help define what makes a high-quality dashboard. Adopting this approach helps the team to produce an optimal output that contains the key business information for the appropriate roles in an easy-to-use format.

Once it is clear what should be included in the final dashboard and how this should be presented, the team works according to the priorities set out by the product owner. This ensures that analysts work on the requirements which deliver the most value and which form the most coherent dashboards.

Main results

The advantages of implementing straightforward, no-nonsense solutions using fewer reports are particularly noticeable for the business and for the analyst teams:

  • Making adjustments is easier and maintaining and updating data costs less time
  • Management information is displayed in one location and is displayed according to defined standards, facilitating decision making
  • There is greater capacity within the business for complex analysis and project support

First Consulting combines process, technology, and implementation consulting to deliver impactful and value-adding solutions. The firm has more than 200 consultants based in the UK and the Netherlands.