1.01 What is (and isn't) Strategy?
Topic: Misconceptions about what actually constitutes strategy in an organisational context are widespread, particularly in higher education.
“To be a learning community that seeks to serve society by educating the leaders of tomorrow and extending the frontiers of knowledge."
The above quote from Cornell University attempts to define the institution's position in the higher education landscape. According to Richard Rumelt, professor of management at UCLA, this type of effort 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. Rumelt writes:
“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.
A strategy should be 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 a future, desired state.
How Does Strategy Fit In?
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 an organisation wants to accomplish. Nor is it all of the actions you will take to realize your goals. It is, rather, the high-level plan that explains how the organisation will get from here to there.
The three most common types of errors in strategic planning:
1. 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, generates a list of actions that need to be taken to benefit from the strategy. (More on “actions” later.)
2. Wish Lists
The second error, like the first, confuses aspirations and goals with strategy. But it compounds the problem by including multiple aspirations.
The wish-list error is particularly common in higher education and other institutions that are highly decentralised and the interests of different parts of the institution don't naturally align. (To what extent does the Psychology Department concern itself with the productivity of English Department?) The tendency to produce multiple aspirations or goals, then, stems from the desire to satisfy competing interests across the institution.
Including a wide range of goals in a strategic plan inevitably diminishes the focus and resources that are brought to bear on each objective, making it less likely than any one objective will be realised. Alignment between objectives becomes more difficult as the number of objectives increase.
3. Strategic, But Not Coordinated
An institution may manage to devise strategies to support the broader objective, but fails to ensure that the strategies work together in a coordinated fashion. Good strategy will include multiple actions, but each action aligns with and supports the others.
The international retailer IKEA offers a clear example of coordinated strategy. Each element of the organisation - parking, product pricing, locations, flat packaging, product design, and others - work together to meet the needs of a segment of the market. Low prices, for example, are made possible through the decision to use flat packaging, limited customer support, and self-assembly. Shoppers are willing to travel to IKEA’s out-of-the-way locations because of the very high volume of product options, the fast product refreshment rate, as well as the restaurant - which makes longer visits more convenient.
Strategies explain not what we want to achieve, then, but how we will achieve our goals. In the next installment we look at how the concepts of competition and strategy are related.