Playing to win. What makes an effective strategy?

Research shows that companies are shifting from diversity as a program to diversity and inclusion as a business strategy. Yet what makes an effective diversity and inclusion strategy? Organisations can copy from others, or they could answer that question by thinking more deeply about the principles that underpin any effective strategy. Our view is that the core tenets of an effective strategy are the same regardless of the business challenge being addressed. In exploring this view, we asked Peter Corbett, a Director in Strategy & Operations at Deloitte Australia to share his perspective. You can read his interview below.

From Peter’s standpoint, there are three elements that comprise an effective strategy, namely a focus on ‘winning’, ‘choices’ and ‘implementation’. Deloitte’s view is that without these elements in strategic design, there is little chance that an organisation will reach the goals it sets, position itself for sustainable competitive advantage and generate a superior financial return.

In order to not just play but to ‘win’, an effective strategy is best expressed through an integrated set of choices based around 5 specific questions. Having a set of good choices positions an organisation for competitive advantage and these choices should be sufficiently compelling to generate management commitment. In Peter’s view, leadership is critical to shaping which strategic choices are made (what we will do and what we won’t do) and guiding the execution of those choices. He also advised caution against using a “cookie cutter” strategy that may not address an organisation’s particular business challenge or getting distracted by new and exciting versions at the expense of an already robust strategy.

What makes an effective strategy?

Peter: To understand what makes a strategy effective it is important to first reflect on what is meant by the term strategy. From Deloitte’s perspective we align ourselves closely with Roger Martin’s Monitor methodology in defining strategy as an integrated set of choices that “collectively position the firm in its industry so as to create sustainable advantage relative to competition and deliver superior financial returns.” When creating an effective strategy what are the big choices underlying it? What is the winning aspiration; Where will you play, (what geographies, channels); How will you win (what is your differentiator); What capabilities do you need and what management systems must be instituted (how will you be successful in executing your milestones)? You can’t be everything to everyone - you have a finite amount of resources so you have to make a set of choices as to how you will best apply those resources, to achieve your strategic objectives.

How important is leadership in achieving strategic objectives?

Peter: Leadership is critical to achieving strategic objectives as leaders play a key role in determining the choices that are made. The challenge in creating an effective strategy is that often it is about making choices in the here and now about a variable, uncertain and complicated future. The best leaders make the right choices that best anticipate future trends and complexities. These choices should also be compelling so as to ensure authentic and energetic management commitment.

How do you measure the success of a strategy?

Peter: According to Roger Martin a strategy that cannot be implemented is not a strategy at all. The success of a strategy is predicated on its execution, in measuring how choices that have been made are linked to achieving the winning aspiration. Measurement would involve having the right systems and KPIs in place and a way of reporting on the outcomes of the strategy.

How often should you re-visit the strategy?

Peter: There is no hard and fast answer to this. Some industries are moving at such a rapid pace that revisiting choices that have been made through a strategic process may be more frequent than those which are not as dynamic. Typically, strategy should be set for a time horizon of at least 3-5 years. Keeping a check on whether the choices made still apply to this vision of the future is best done through a process or ‘habit’ of strategic conversations. At its most basic level, this is asking teams and management involved in strategy setting ‘what do we need to believe for our choices to hold true given our current best understanding of the future?’

What are your top tips for implementing an effective strategy?

Peter: Accountability, prioritisation and timeliness play a very important role in ensuring effective implementation of strategy. Choices should be specific and assigned to resources tasked and incentivised on implementing strategy. As there may be multiple actions to implement strategic choices, activity should be prioritised effectively to maximise the time to implementation given the resources available.

Why do strategies fail?

Peter: Strategies can fail for a number of reasons – poorly informed choices and poor execution are often the biggest reasons. Some strategies however are set up for failure. Take for example what we term as a “Frozen Dinner” approach to strategy development. This is when leaders favour a pre-cooked answer at the expense of a more tailored solution to address the business challenge. There is also the “Leaking Lifeboat” challenge. This is when a new vision is sold into the business at the expense of an already present robust strategy with a good set of choices.

Implications for diversity and inclusion strategies

We suggest the principles underpinning an effective strategy can be applied to create a winning diversity and inclusion strategy. Employing the framework of “winning through distinctive choices” is a useful way to guide decisions on what areas for diversity and inclusion you will compete on (e.g. diversity of thinking to achieve innovation) and on what basis you will do so, (i.e. what initiatives are going to produce the results you want?) so as to generate strategic advantage.

A particular challenge with diversity and inclusion is that leaders may be sceptical about the business case and introduce a diversity and inclusion strategy to meet compliance rather than to act as a strategic differentiator. A critical success factor in creating an effective diversity and inclusion strategy is the strength of the “winning aspiration.” Is it compelling enough to create leadership commitment and step change? To create buy in and ensure connection with business drivers it is imperative that the aspirations of a diversity and inclusion strategy align with the winning aspiration of the overall business strategy.

For further information please contact Fiona Kennedy.