October 10, 2018
One of the most common and consequential challenges our strategic planning consultants see business leaders wrestle with is decisive direction, or as some in the business community have characterized it, “choicefulness.” That is, identifying those top strategic planning imperatives, their 1-year and 3-year high-impact targets, that promise the greatest financial returns and align with both a business’ core capabilities and its potential. It may sound counterintuitive, but the first step in successfully expanding a business is to cull choices from the clutter of competing priorities and narrow focus to those handful with the greatest likelihood of future-proofing a business and achieving its aspiration. In the words of Peter “the Visionary” Drucker, “Concentration is the key to economic results. No other principle of effectiveness is violated as constantly today as the basic principle of concentration.” He also stated, “Our motto seems to be, let’s do a little bit of everything.”* Doing a little bit of everything is neither the purpose nor the power of a sound strategic plan.
As HighPoint Associates COO Justin Moser indicated in a recent LinkedIn Article, there’s a definite sweet spot for the number of strategic imperatives a business should tackle: Too few is rarely a challenge HPA sees. Too many and those strategic imperatives are sure to burden resources and diffuse attention to the point of being ineffectual. If you’re wondering about the sweet spot for the number of strategic imperatives, sometimes it’s three; other times it’s five. But it’s infrequently, if ever, more than five, and if it is, that should give serious pause to executive teams setting up a strategic plan. Why?
If, for instance, we draw upon strategic imperatives of many multinationals over the last 20 years – to globalize the business in emerging markets – that single imperative will be underpinned by a variety of specific annual goals that build the business in China, India, and (fill in the blank with your preferred) third emerging market. Each will have a different strategy on local business model, lead product or service, and positioning. The level-3 general manager over this globalization effort will translate at least three sets of goals for the three highest-priority markets with further sub-goals related to model, offering, and positioning. Multiply that by another three, five, ten strategic imperatives and you can see the complexity of this undertaking, which has the real possibility of seizing a business’s resources rather than driving its growth.
Another invaluable reminder from Peter Drucker, that business leaders should heed: “the basic principle of concentrating resources around a few things, and doing those few things remarkably well.”*
Once those few things, those narrowed choiceful strategic imperatives have been identified, the path to management team alignment lies ahead. And that is a whole other story.
*Drucker, Peter F., The Effective Executive, HarperBusiness, 2006; Drucker, Peter F., Management, HarperBusiness, 2008.