Getting Everyone To Think Strategically
September 1 1989 by Benjamin B. Tregoe
Once upon a time and not too long ago, there was a widely held perception that strategy was the exclusive preserve of the CEO and a few of his trusted subordinates. The annual retreat became a metaphor for top management’s sovereignty over strategy, with key executives meeting away from the hubbub and hoi polloi to toil through pressing directional issues. Few managers down the line knew what transpired up on
In many organizations, however, top management’s monopoly on strategy is giving way. Strategy or vision is no longer hidden in the vest pockets of a few executives. It is being brought into the open and becoming everyone’s property. Participation, for years the mantra of gurus promoting operational excellence, has now become the imperative for strategic success. And with good reason. A mid-level manager of a
Rambo rhetoric aside, there is great need to make top management’s vision “ours.” Otherwise, vision will not become action. Commitment requires broad and deep participation in further refining and executing the organization’s strategy.
In addition, the day of the CEO as superman is over. Economic, sociopolitical and technological change puts all the old axioms up for grabs, and well beyond the reach of one person to understand, interpret and act upon. Today’s CEO needs to tap an array of resources, especially when the future of his organization is on the line.
Zuheir Sofia, president of the Columbus Ohio-based Huntington Bancshares, face: change and stiff competition in the markets his bank serves. According to
GUIDELINES FOR STRATEGIC PARTICIPATION
Granted, broader participation is essential for implementing strategy, but how should the CEO proceed to encourage participation without inducing chaos? There are three key ways.
First, recognize that the future direction of the organization remains the unique responsibility of the CEO. Participation should not dilute that responsibility. Arguably, the CEO wields more power over the organization’s future than over its current operations. As Bob Morrison, the recently retired CEO of Consumers Packaging in
“A key to my role is concerning myself with the future health and prosperity of the operation. This means I must take a longer-term view than the people who are charged with day-to-day responsibilities. I must look further out, set a direction, and meet whatever challenges come along to the future of this business.”
Second, the key to strategic success is to gain broad commitment through participation rather than striving for consensus. Participation in the strategic process does not mean that strategy should become an exercise in Athenian democracy. Not only is the CEO ultimately responsible for an organization’s vision, but his is always the deciding vote.
Victor Rice, CEO of Varity Corporation (formerly Massey-Ferguson) is shifting his company’s strategic direction away from a concentration on agricultural equipment to a broader, more diversified enterprise. Concerning his company’s new direction and the issue of participation, Rice remarks:
“Yes, there are different management styles, but they only represent different ways for getting the organization to follow the CEO’s vision. In the final analysis, the CEO establishes the vision and constantly pushes it. He may, in the process, gather the judgments of those around him. But ultimately, he is the one responsible for saying, ‘This is the way we’re going!’ “
Third, have a clear idea of the various roles people should play in the strategic process, from the CEO right on down. In a study of 19 organizations we conducted, CEOs felt they were responsible for articulating the vision, ensuring strategic consistency throughout the organization, establishing strategic reward mechanisms, involving the board of directors, communicating the vision, and keeping the strategy updated and relevant.
On the other hand, senior management viewed itself as a kind of alter ego of the CEO. Its responsibilities are summed up by Ned Richardson of the Federal Reserve Bank of
But participation should not stop with the top team. In most organizations, the great black hole of strategic involvement is the middle-management tier that includes business unit managers, functional managers, managers of geographical areas, staff department heads, and key individual contributors. This black hole need not exist.
Organizations that are successfully implementing strategy have redefined the role of middle managers to include significant strategic responsibility. Such firms expect the middle managers to understand the organization’s vision and all the nuances that apply to their function.
In many instances, middle managers (1) clarify top management’s initial thinking about the kinds of products it wants to offer and the markets it plans to serve and then (2) develop specific action plans. Some managers are also responsible for seeing that systems are in place to support and monitor the strategic direction. While middle managers have different roles in implementing strategy, one connecting thread is the shared responsibility for effectively communicating strategy to subordinates.
Malcolm Vinnicombe, a divisional chief executive of Counaulds Furnishing and Textile Furnishing Group in the
Information is the raw stuff of strategic thinking and the middle managers can help the top team answer the crucial question: “How viable is the vision when looked at through the narrower prism of a middle manager’s job?” Middle managers and key contributors are closest to the action and are top management’s best sources of information, whether that information tests assumptions that underlie the strategy or indicates how well strategy implementation efforts are proceeding. Providing this information may involve the marketing and sales functions in testing customer intentions and reactions. It may involve research, product designing, and engineering in verifying product requirements. Finance, management information systems, and accounting may be required to provide the appropriate performance measures. Personnel, training, and human resource groups may provide information on levels of commitment and strategic understanding.
One other important strategic role of middle management involves them in setting the vision for their own units. Ideally, strategy should cascade down through the organizational hierarchy. Strategy should proceed from corporate, to global and area business groups, to business units, with progressively more detail and refinement added to corporate’s thinking about products, markets, and capabilities at each step. Much of this refining can be done by middle managers, with approval from the next level up. But what about those less-than-ideal situations where there is a strategic vacuum in an organization? Here, middle managers can seize the initiative. Chet Marks, director of planning for Dow Chemical’s U.S. Plastics businesses, says:
“People who manage small businesses, or functions, or small geographical regions don’t have the same size job as people who manage big businesses or large geographical areas. But they have similar strategic responsibilities.
“They have a responsibility for setting a strategic direction. But if nobody tells them what to do strategically, they should decide what they will do and communicate it up to their superiors and down to their subordinates. If your superiors don’t like what you’re doing, they’ll tell you not to do it. If they do, maybe you’ll be promoted.”
Middle managers should be proactive in fulfilling their strategic responsibility. If the vision is unclear, or the information needed to implement it is inadequate, these managers must take the initiative and probe for answers at the next level up.
In organizations that effectively manage strategic participation-”strategically excellent” companies-even employees at first levels can and should participate in the organization’s vision. Ed Lowell manages an electronics plant for the Minnesota-based OTC Group. Ordinarily someone with his operational responsibility doesn’t pay much attention to strategic vision. But
“It is essential that people feel they are contributing to the vision. We take pains to ensure that our people, from the shop floor right on up, understand where they fit into the whole process and that their role is important. If they understand the vision, the end products they are working on, and the importance of their contribution, they will be responsive, work toward higher quality, and reduce costs.”
Although first-level employees do not require the same depth of understanding as higher-level managers, they should realize the benefits of working in an organization which integrates day-to-day operational activities with the longer-term success promised by the vision. Tim Smucker, CEO of The J.M. Smucker Company, cites an example that demonstrates the payoff from that understanding:
“Typically, I arrive at a plant a little early, before the formal strategy/operations review. I try to meet informally with as many plant people as I can.
“Once I sat beside a woman and asked her how long she had been with us and what shift she worked on. It turned out she had been with us for seven years and worked on the night shift. Noting that it was only in the afternoon, I asked her why she came in for this meeting. She said she wanted to know what the company was doing and that she appreciated being included.”
Employees at grass-roots levels should be able to relate their jobs and priorities to the company’s overall strategy. Achieving quality standards on the assembly line may be the critical factor in product differentiation that makes a strategy succeed. At the sales level, taking time with the customer to probe for new needs can be critical. At the technical level, in the research function, staying on top of the relevant literature might just unlock the door to keeping the strategy on the leading edge.
OPPORTUNITIES FOR STRATEGIC PARTICIPATION
Whatever model for setting and implementing strategy your organization employs, the strategic process offers great opportunities for participation. For example, in our consulting work, we ask the top team first to consider the organization’s basic beliefs. These “self-evident truths” can exercise a gravitational pull on the strategy. They must be made explicit so they can be revised or reaffirmed to square with the strategic direction. Once there is agreement on the basic beliefs or values of the organization, the next question becomes, “Are we living up to these beliefs?”
At the Washington Mutual Financial Group in
One crucial challenge in setting strategy is achieving a tight definition of the future scope, emphasis, and mix of products and markets. Top management at Washington Mutual met to set strategy and did some initial product and market thinking for the future. But that thinking had to be refined. As Kerry Killinger, the Group’s senior executive vice president explains:
“When the top team set strategy, we agreed on the broad range of financial services we would offer now, and on those we might consider offering in the future.
“We let this settle in for a while, then reconvened the original small group of executives, as well as a much broader group of middle managers. We wanted them to work through the issues involved in developing future opportunities.”
Strategic thinking requires careful testing against the hard facts of reality. The initial judgments that top management makes about the future nature and direction of the business must be confirmed, modified or discarded. The reality-testing process opens up yet another opportunity for broad participation in the organization’s vision.
At Consumers Packaging in
CEO Bob Morrison raised the key question about the new strategy when he said to his top team, “That’s what we think. Now, what do our customers think we should be?” Morrison’s question led to considerable involvement of his people, right down to the individual salesmen.
Reality testing was done initially at the corporate level by executives talking with their counterparts from customer organizations, and then by personnel down the line who talked with respective customer contacts in marketing, sales, product development, and service and support.
Organizations are vast storehouses of information waiting to be tapped. Much of this information is operational in nature. This is as it should be. But hidden in most organizations is information about environmental trends, customer needs, competitive moves, technological change and the like, all of which is vital for setting and testing strategy. Yet for many organizations, that rich storehouse remains an unused asset and a missed opportunity for broadening participation in the organization’s vision.
STRATEGIC PARTICIPATION: ELEMENTS FOR SUCCESS
Broadening involvement adds complexity to the strategic process. It would be far simpler to go it alone. But setting and living by a vision of the future is a social act. A vision that does not touch every employee’s head, heart and hands remains an idea in waiting. For vision to come alive, participation is needed. This requires careful management.
Strategically excellent companies possess five common elements that mark them for success: a common strategic language, a simple and specific strategy, managed participation, a motivated work force, and CEO involvement.
By strategic language, we mean a common vocabulary of expression that everyone in the organization understands. One way to attain the common language is to have an agreed-upon strategic process. By “process” we mean a necessary sequence of logical steps for collecting and analyzing information and then drawing inferences.
A strategic process provides a common road map for participation, especially important when an organization has a great number of disparate businesses or operates in a multinational environment. Explains Peter Barton, Varity’s vice president of business development, “We had a common strategic process and language at the corporate level and rolled it into each business. Our divisional vice presidents understand what we’re talking about when we use strategic concepts, and we at the corporate level can understand the businesses when they talk about their strategic objectives and action plans.”
Second, strategically excellent companies keep strategy simple and specific so mere mortals can understand and contribute to it. A strategy entombed in a thick three-ring binder will never rise from the dead. Tim Smucker observes that his organization’s strategy is “simple and specific enough to be carried around in everyone’s head.” Not surprisingly, just about everyone at Smucker’s participates in implementing the vision and uses the company’s vision to make day-to-day decisions, from personnel selection to inventory control.
Third, strategically excellent companies carefully manage participation. The last thing any CEO needs is a strategic free-for-all. Managing participation down through the organization entails clearly defining roles along the lines already discussed and carefully creating opportunities for managers and key contributors to become involved. A growing number of companies employ cross-functional task forces to stimulate creativity and commitment and to resolve key strategic concerns.
The fourth element making for strategic success, a motivated work force, keeps vision an ongoing, vital influence. Top management has to provide the enthusiasm so that managers down through the organization want to get involved; participation should not come off as a command performance.
Middle managers and other key contributors should participate in the strategic effort because they see an opportunity to provide input into the organization’s future, to gain valuable experience in developing their strategic capability, and to gain exposure to the next level up.
Ben Goodman, a mid-level manager at Consumers Packaging, reflects on his experience as a member of a strategic task force: “The results we produced were much more than the recommendations made. We learned from one another about what type of questions to ask our customers and how to probe for need. The updates we provided gave us a unique opportunity to exchange ideas with senior management and to further shape our perspective.”
There are many other ways CEOs are keeping vision vibrant, from rewarding strategic initiative and not just operational accomplishment, to building discussions about strategy into the management routine of meetings and planning cycles. Larry Reed, president of Dow Corning, keeps enthusiasm high the old-fashioned way. It is important, he maintains, to “repeat, repeat, repeat the specifics of the strategic message.” When enthusiasm is in the air, everyone wants to be involved.
The fifth element for strategic success, CEO involvement, is the most crucial. Without the personal involvement and encouragement of the CEO in every step along the strategy continuum, from initially formulating strategy to action planning, vision will not come to fruition.
CEOs who have labored mightily to broaden participation in the strategic process have rarely been disappointed with the results. They found that when the key elements for success are present, participation energizes vision. It tests and refines strategic conclusions and is essential for translating management’s vision into action.
Benjamin B. Tregoe, Ph.D., is chairman and CEO of Kepner-Tregoe, Inc., a