The One Concept Executives Need to Understand for Effective Strategy
Through my years of working with organizations and assisting in the formation of Strategy, I have found one concept or element to be the most important concept for Strategy to become effective. This is the one thing that drives the competitive advantage and insures success in your marketplace. So what is this magic bullet?
First, it is not a magic bullet. Second, it becomes magic in its effect upon the overall performance of the organization when the top managers and executives totally understand this concept. Several years ago, a couple of researchers validated the concept and wrote a best selling management book entitled – the Discipline of Market Leaders. It was determined that companies using the discipline to focus in certain areas and limit investment of time and money in other areas – would lead their markets.
So what is this concept?
It is the Major Driving Force or as I like to call them – the Strategic Drivers of the Organization. The major driving force concept was originally developed by the consulting firm of Kepner-Tregoe. While they popularized the concept, it was mostly misunderstood in the application part of the process. Yet, the organizations who figured out the key parts became market leaders and you can too – if you have the discipline to execute within the boundaries of the Strategic Drivers.
My experience with developing strategic plans with many organizations has shown the following results:
- The Strategic Driver is Exclusive – There is only one Strategic Driver for an organization. There could be multiple drivers for organizations with several different business units or divisions. Yet, the more focused an organization becomes the more the one driver takes hold for the strategy to dominate.
- Multiple Driving Forces – When you have one major product or service and operate with multiple strategic drivers, the organization is destined to be a low performer in the marketplace. Why? There is limited to no focus on the part of executives and decisions are made that moves the organization in multiple directions – diluting revenues and profits.
- Dominant Driver – Every organization has a dominant driver that when management discipline is used properly while propel the organization to the top of their market. This is the key to winning in the marketplace. Knowing your dominant driver coordinates all decisions and focus of the organization.
- Hierarchy of Drivers – This is the difference maker. There is one driver at the top for the organization as a whole, then there may be different or the same drivers for each separate business unit within the organization. This is critical based upon my experience. On several occasions I found management teams using one strategic driver to base their focus and decisions – yet, those same decisions had very negative consequences on some business units. These negative consequences were leading to major financial problems for the business units. Once the management team became aware of the need for each business unit to have it own strategic driver and the accompanying decisions and focus – the results turned the corner and became successful.
- Limits the Scope of products and services – Here is where the need for discipline enters the picture. Once the strategic driver is identified, it sets the boundaries for the types of offerings and even the markets you will enter. Yet, by following the drivers the organization can move up as a dominant market leader.
- Develops an Understanding of the Underlining Purpose of the Organization – Once the strategic driver is in place, management can begin to understand the real relationships between the functional units of the organization, and most important change the “gut feel” into a clear statement of purpose. This ability translates into everyone heading in the same direction – knowing what is important and what is not important in the everyday operations of the organization.
The first question you need to ask after reading the points above is – What are Our Strategic Drivers? If you hesitate or have to think about then what impact does that have on the overall performance of the organization? Then multiply your response by the number of key executives within your organization. Will they have the same response or a different one? More or less clarity to their description of the strategic driver? Your action commitment is clear – get the executive team together to discuss the strategic drivers – if you want to be the market leader that is.
Oh, by the way, there are ten different Strategic Drivers which I will discuss beginning on Friday. If you need immediate answers call me at 901-757-4434.
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