Strategy is the most powerful tool to give every team the possibility to learn and win. But for that purpose, strategy must be something else than a list of wishful thinking or top level promises.
Strategy is about making choices. Making choices means deciding first what winning means for you, where you are going to play and how you are going to win.
Then, once you have made these first primary choices, you need to consider the capabilities and management systems required to make the victory a reality.
In order to set the organizational conditions to learn and win, it is indispensable for each team in the organization to make the choices required to get five elements right.
“Through the implementation of PEAK, ActioGlobal has had the key part in this new phase of Segundamano to transform into a true High-Performance Organization, aligning the objectives of the teams with those of the organization, achieving the agility necessary to respond to the needs of our customers. For me as the CEO it´s highly valuable to be in weekly contact with each team, to see their progress and to be able to help them solve obstacles.”Ariel Cilento, Segundamano
This is why strategy is not a top-down deployment or a bottom-up alignment process. Strategy is a synchronization process of nested strategic choices. This synchronization happens at every level, resulting in clear strategic prioritization that enables the definition of clear OKRs for and by each self-organized team in the organization.
We at ActioGlobal power the visual management of this process through Gemba Walls in our OKR Operating System that help every self-organized team to make the right choices in a visual and systemic way and, furthermore, all these choices made become transparent for every single person in the company. Transparency. Even better: radical transparency.
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Let’s understand the key questions a little deeper to make the right choices right. These choices will help any team to define their OKR adaptively and progressively at any time.
The choice of aspirations HAS to state what winning means.
Winning is all about positioning your business or brand, product or service uniquely, or at least distinctively, to deliver a better experience and better value to a certain group of customers as well as to attain competitive advantage versus certain competitors.
Build an organization with capable people who have the power to win with “those who matter most”, a specific segment of consumers, and “against the very best competitors.” When you win with consumers and against competition, you will deliver superior value to everyone.
Where to Play represents the set of choices that narrow the competitive field (geographies, demographic segments, customers, channels, categories, industry verticals).
Focus becomes the most fundamental Where to Play choice for High-Performance Organization; no company can be all things to all people and still win, so it is important to understand which Where to Play choices will enable the company to win best.
A firm can have a narrow or a broad scope. It can compete in any number of demographic segments (men ages eighteen to twenty-four, midlife urbanites, working moms) and geographies (local, national, international, developed world, economically fast-advancing countries like Brazil and China). Also it can compete in myriad services, product lines, and categories. It can participate in different channels (direct to consumer, online, mass merchandise, grocery, department store).
It can participate in the upstream part of its industry, downstream, or be vertically integrated. These choices, when taken together, capture the strategic playing field for the firm.
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How to Win is about defining the way by which you will win where you decided to play.
Choosing How to Win is about finding and building on sources of competitive advantage (distinct from competition) and developing the capabilities to sustain that distinction.
Determining How to Win means deciding on the way to
Win on the basis of brand and product differentiation. This requires deepening the understanding of customers, building the brand with customers in mind, delighting current customers and creating new ones.
Innovation has always been – and still is the lifeblood of High-Performance Organizations. To consistently win with consumers around the world across price tiers and preferences and to also consistently win versus the best competitors, each product category needs a full portfolio of innovation, including a mix of commercial programs, product improvements and game changing innovations.
Win on the basis of having lower costs than the other players in the industry. This requires understanding cost drivers, removing costs from the system, standardizing and rationalizing through the principles of respect for people and continuous improvement.
Both sides require managers working on the one hand to understand sustainable cost drivers, to remove costs from the system, to standardize and to rationalize. On the other hand, managers need to work at the Gemba to deepen their understanding of customers, to build the brand with customers in mind, to delight current customers and to create new ones.
It must be the Core Organizational Capabilities since they are needed to bring “Where to Play” and “How to Win” to life. It is not about asking what you are good at, but what is needed to win where you have decided to play by the way chosen to win.
The organizational capabilities are those intangibles that are required to fulfill the Where to Play and How to Win strategy. They include et al. efficiency, collaboration, brand building, speed to market, strategic clarity, shared mindset, innovation, accountability, and customer connectivity.
To understand these intangibles you have to ask if you stack up against competition. You have to ask if you feature the right costs for the segment where you want to win. You also have to ask if you own the capabilities to serve the consumers and customers in a unique way by creating value for yourself.
What we have experienced is that these questions often dismantle the “only invented here” paradigm.
In many organizations, we have made clear that the “invented here model” alone was not capable of sustaining high levels of top-line growth. It was against this backdrop that we have created open innovation models.
With a clear sense of consumers’ needs, companies could identify promising ideas throughout the world and apply their own R&D, manufacturing, marketing, and purchasing capabilities to them to create better and cheaper products, faster.
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One of the least understood and rarely examined dimensions of the strategy required to learn and win is the management system. Management systems are required to continuously redesign organizational processes and systems to equip the company to respond effectively to changes in the environment and take full advantage of the human capability of people.
Building strong management systems perseus that companies can work together as a community focused on a common goal (defined as OKR), taking full advantage of their mutual and distinctive individual capabilities, and operate with the effectiveness of a great athletic team.
We at ActioGlobal like to refer to this concept as organizational flow. It is to a business what being “in the zone” is to a sports team.
When flow is achieved, an organization reaches maximum performance through clarity of focus and concentration on the task at hand with a great sense of control and confidence.
We have seen that developing and maintaining a strong community in this state of flow requires many things: a purpose worth a lifetime’s effort, leadership behaviours, values that define the character and guide the actions, and the ability to constantly renew the OKR and the network of self-organized teams in the light of new knowledge and the changes around us, all while preserving the organization´s Core Purpose and Values.