NEW YORK (TheStreet) -- Building a business strategy is an annual headache. Strategy discussions go on and on with little discernable progress.
Often, the reason is each team member reads a different strategy book, senses confusion and tries to lead the discussion towards his or her model. Lewis Carroll wrote: "If you don't know where you're going any road will get you there." And during strategy discussions, it feels like everyone's on a different road.
I have seen cases where discussions continue for six months and more. By the time the strategy is complete, the marketplace has changed. In the end, the business operates without a plan to proactively address the market.
Many CEOs become so frustrated they hire consultants to tell them what to do. There are benefits to using consultants, such as industry expertise and analytical skills, but there are drawbacks too.Drawback 1: Inadequate Learning. In digging through the data, consultants typically learn a tremendous amount about the market and competitors. Client executives are left with the Cliff Notes. Contrast the learning of a person who reads "War and Peace" cover-to-cover with another who reads the Cliff Notes. Drawback 2: Lack of Ownership. If you tell me what to do, I will always find fault. If you ask for my opinion, I will feel responsibility for success. Drawback 3: Poor Alignment. Executive No. 1 wants to maximize product quality, while executive No. 2 wants to optimize product quality (e.g., meet industry standards) and maximize profits. Executive No. 1 will make logical daily decisions based on her assumptions, but executive No. 2 will see those decisions as completely illogical. In the end, they will fight and disrespect one another. Perhaps the greatest benefit that can come from strategy discussions is improved alignment.
Reinventing Strategy DevelopmentOne of the greatest strategy turnarounds in history was IBM's (IBM) shift to become a services company. In April 1993, Lou Gerstner was hired to save or break-up IBM. Earlier in his career, Gerstner was a director at McKinsey & Co., so he knew strategy. As Gerstner walked around IBM, Gerstner saw consulting-firm strategy documents on many executives' desks. When he asked, "What are you doing to implement this," the responses were disappointing. He later wrote that IBM's demise was not caused by inadequate strategic plans. It was caused by poor execution. Gerstner decided to reinvent strategy development.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV