Strategy clean up on aisle 9!

Inspired by Marie Kondo

Everyone once in a while there is a need to clean your house or as Marie Kondo will say get rid of things that no longer bring you joy. Even the well intentioned and communicated strategy can suffer because of scope creeps. We propose a mechanism to keep this in check through a structured process. Let us get into it!

Act 1: Strategy is crafted and communicated

The new leader commissions the corporate strategy team or external consultants to embark on a journey to create a revamped strategy.

After months of back and forth, a well meaning strategy is crafted.

The strategy is then rolled out company wide, resources are allocated and then everyone gets to work to implement it.

Happily ever after? Well not really.

Act 2: Scope creep begins, gradually at first but spreads fast

As time flies by, new projects not aligned to strategy start creeping in

• A regional leader might ask for a product to counter the competition in the region even though the overall strategy was not to play in that segment.

• An overzealous segment leader identifies a lucrative acquisition target (not aligned to strategy) to increase segment revenue.

• An R&D project that was meant to have been killed, rises back like a phoenix on the back of a few loyal supporters.

Slowly but surely the weeds start growing everywhere.

Act 3: Strategy execution suffers, lack of specific diagnosis

Strategy execution starts falling off track. Initially things move to yellow (by the way, you should only use red and green to track!) but slowly the execution dashboard starts turning red.

When a diagnosis is being done, there is nothing in particular that one can find. It seems to be a general malaise. Everything is slow, everything is delayed.

Well just like cancer, there are unwanted things growing in the organization that are feasting on the resources required by key strategic projects. So what do we do?

This is where we propose Act 4 : Clean up your house!

Act 4: Clean up your house!

Well now that we know what is causing this general malaise, it is the time to clean up your house.

This can be done in 2 ways and you can choose one which fits you the best.

Approach 1: Linkage to strategy and return on investment

We suggest an approach here which basically takes into factor two key criterias:

- coherence with strategy

- return on investment

Coherence with strategy is the primary criteria here and has to be met - either fully or partially. The projects that do not meet this criteria, should be dropped immediately.

Return on investment is then used to further prune the long tail. In case you have taken too many projects that are coherent with strategy, prune the bottom ones which have low return on investment.

You need to set targets to ensure you cut at least x% projects or y numbers of projects out of total z projects.

This approach is more valid when you have a high mix of both strategic and operational projects in your strategy. E.g you need to decide between creating a product or streamlining supply chain operations.

Approach 2: Linkage to strategy and attractiveness/ability to win

In case you are dealing with a decision which is more around customer segments or product segments and a choice between those, then the approach needs to be altered a bit more.

We would again propose two key criterias here

- coherence with strategy

- attractiveness and ability to win

The first criteria remains the same, anything not coherent with strategy must go.

Now once the first criteria is passed, you can plot the remaining segments on a 2 by 2 of

- Attractiveness (market growth, potential revenue upside)

- Ability to win (current capabilities, competitive landscape, market position)

Based on the 2 by 2 you need to align now on which areas you want to keep playing in and which ones you want to exit. Again force yourself and the team to choose here to exit a certain number of areas.

Note: If you have a low ability to win in certain attractive areas, you can still choose to keep playing in them as long as you have a plan to build up capabilities to win here. The choosing here is more nuanced than in approach 1.

Repeat: The acts will repeat

This is not a one time clean up. Just like you clean your house time to time, you will need to conduct such clean ups every year or so (or earlier depending on the pace of your industry)

One thing is for sure, once you do it, it will bring you joy and you strategy execution pace and a breath of fresh life!

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Well this is it for this week. Hope you had fun reading this. Do let us know your thoughts or how you have gone about similar clean ups or even the challenges you have faced while doing them. See you next week :)