CEOs Lack Strategic Thinking – How You Go From Strategy to daily Practice in order to get the Numbers
20+ years in the Business Consulting profession, I have encountered so many times that the problem in Large or Small Organizations lies with the fact that CEOs, or other top executive managers are NOT STRATEGIC THINKERS.
Moreover, they cannot align strategy with Business Plans and/or tactical plans.
They instead start a year with preparing budgets and forecasts in financial terms. This should have been the last to do after working on defining the Business Strategic Plan and making sure that the Strategy is aligned with Objectives and Business Plans.
In other words, they run a Business solely based on Numbers and not on any other critical Resources such as People, Clients, Products, Technology, Methods, Marketing and Sales Channelling.
That is why so often the numbers just don’t come out! And then they blame the other resources including people who have not been considered in the first place at the start of the process!!!
Not to think that I am philosophical and / or theoretical, let me describe a Real Case Study that makes the above crystal clear.
Client: A Mall
Business Objective: To reduce operating expenses by 10% – A clear numerical objective
Timing: One Year
In 3 years of effort they could not come close to that target
They have come to us to answer Why?
How did we handle it?
We went a step backwards and ask them to redefine their Strategy! What is the Deeper need to reduce expenses?
Strategy: We want to be able to operate the Mall with minimum operational expenses but without affecting our Direct and Indirect customers whom we consider the most important Resource
Internal Analysis: Break down Costs by Category and identify Must and Not Necessary Costs based on strategy! One of the cost categories identified was Cleaning. On average a Mall of the size of Cyprus Malls spends anywhere between € 250 – 400,000 per year on cleaning (labour +materials)
We defined the cleaning process which is very similar to the one (mostly women, not excluding men) apply at home. Fill a bucket with water and pour a quantity of cleaning and disinfecting chemicals by experience into the water. In fact most of us think that the more chemicals we pour the better the result of cleaning – WRONG!
We consulted data sheets of cleaning chemicals provided by manufacturers. They stipulate the exact quantity of any chemical (cleaning or disinfectant) for each litre of water. In fact they clearly specify that if you use more not only you don’t clean better but you make the floors slippery with the danger of increased accidents or incidents.
What is next? We developed a simple, practical and effective training for Cleaners. We explained why the use of excessive chemical not only does not contribute to better cleaning but it is dangerous. We told them that if they use the right amount each time they will contribute to a 12% reduction of cleaning material plus a 4% in labour cost due to the fact the floors will dry quicker and they will not need to repeat the process so often.
They are told then, that if they achieve the objective at the end of the year they will get a bonus out of the savings.
Finally we asked them 3 questions:
- Can you do it?
- Will it work?
- Is it worth it? (For You)
And guess what? We got an overwhelming YES!!
Now, what have we done differently from the Mall Management which has been trying three years to achieve a Number?
By now it shall be clear:
- The Mall defined a Strategy – A Clear Direction and Focus
2. They broke that Strategy down to objectives
3. Analysed the business environment and the resources
4. Alligned the Strategy with proper Cost Analysis Strategy, HR Strategy
5. Developed the Plan to do it
6. Coverted all the above into Numbers
As you can see, Strategy is not something vague and philosophical but rather a valuable tool that helps a business align all daily actions to achieve a real objective around a belief!!
If you try the short cut, ie from 6 to 7 as usually done it will not work most of the times. Make no mistake
Senior Performance Consultant /Trainer