1.01 What is (and isn't) Strategy?
“To be a learning community that seeks to serve society by educating the leaders of tomorrow and extending the frontiers of knowledge."
The quote above from Cornell University to define it's position in the higher education landscape reflects a common problem in higher education: the inability and/or unwillingness of institutions, or even departments within institutions, to stake out a clear position. Professor Richard Rumelt of UCLA shows little restraint when assessing Cornell's effort:
“In other words, Cornell University is a university. This is hardly surprising and is certainly not informative. It provides absolutely no guidance to further planning or policy making. It is embarrassing for an intelligent adult to be associated with this sort of bloviating.” Richard Rumelt
Few concepts in management circles, save possibly “innovation” or “disruption”, are as regularly misused as “strategy.” Otherwise sophisticated organisations produce strategic plans that are anything but strategic.
So let’s start by setting the record straight: strategy is best understood as the means by which an organisation reaches its goals. It explains why the institution will be able to change from its current state (e.g. rankings, research funding, enrolment) to its desired state.
The confusion about strategy often springs from how it is distinguished from other components of the planning process. For our purposes here, let's use these four elements as the basis of a strategic plan:
- Mission: A statement of the institution’s overall purpose; its’ reason to exist.
- Objectives: The specific goals of the organisation during a particular period, say between 2018 and 2021.
- Strategies: How the institution believes it will be best able to achieve its objectives.
- Actions: The steps that need to be taken to enact the strategies.
Strategy, then, is not what you want to do. Nor is it all of the actions you will take to realize your goals. It is the high-level plan that you devised that explains how you will get from here to there.
The three most common types of errors in strategic planning:
Aspirations, Not Strategies
The institution produces not a strategy, but a declaration of its aspirations. The aspirations may be vague (e.g. To be the leading comprehensive institution in the State”) or relatively specific (e.g. “To increase the percentage of full-fee paying students by 10% by 2020”).
“Bad strategy ignores the power of choice and focus, trying instead to accommodate a multitude of conflicting demands and interests. Like a quarterback whose only advice to his teammates is “let’s win,” bad strategy covers up its failure to guide by embracing the language of broad goals, ambition, vision, and values. Each of these elements is, of course, an important part of human life. But, by themselves, they are not substitutes for the hard work of strategy.” (McKinsey)
This type of planning has the benefit of providing the institution with a target; something to aim for. But it doesn’t provide any direction as to how it will reach this goal. How, precisely, will the institution, for example, increase the number of full-fee paying students? Well-designed strategy provides the answers which, in turn, directs activities. (More on “activities” later.)
The second error, like the first, confuses aspirations or goals with strategy. But it adds to the problem by including multiple aspirations. In Good Strategy, Bad Strategy, Professor Richard Rumelt refers to this approach as a “wish list”.
The wish-list error is particularly common in higher education and other institutions that are highly decentralized and where success is routinely defined in narrow terms, rather than broad institutional terms. (To what extent does the Psychology Department concern itself with the productivity of English Department?) In order to satisfy competing interests within the institution, strategic plans attempt to satisfy a broad range of people and departments.
A strategic plan can include multiple objectives, but this practice has two common disadvantages: it inevitably diminishes the focus and resources that are brought to bear on the various objectives, making it less likely than any one objective will be realized. And ideally, the efforts required to achieve each objective increase the likelihood of achieving the others; that is, they are mutually supportive. Alignment becomes more difficult as the number of objectives increase.
Strategic, But Not Coordinated
An institution may manage to devise strategies to support the broader objective, but fail to ensure that the strategies that are crafted work together in a coordinated fashion.
The international retailer IKEA offers a clear example of coordinated strategy. The design of each element of the organization - Parking, product pricing, locations, flat packaging, product design, and other elements - work together to provide a particular value for clearly defined market segments. Offering young, middle-class consumers modern-looking products at low prices, for example, is made possible through the decision to use flat packaging which reduces IKEA’s distribution costs and having customers shop with minimal support, assemble and pack the products by themselves. Shoppers are willing to travel to IKEA’s out-of-the-way locations because of the decision to offer a very high volume of product options, the frequent product refreshment rate, as well as the high-volume restaurant that adheres to the brand’s self-serve strategy.
Strategies explains not what we want to achieve, but how we will achieve it. With good strategies in-hand, the institution in a position to define the best actions. Who needs to what? What changes need to be made? What knowledge do we need that we don't have? Which processes are required and so forth.