Five questions that help define your strategy
I recently gave a seminar for new charity Chief Executives at the CASS Centre for Charity Effectiveness. That morning, my teenage son asked me what I was up to today. “Teaching about strategy!” I said full of tail wagging glee. “That sounds exciting” he replied, not bothering to disguise his eye-rolling.
His response did cause me a moment of reflection - why bother with strategy? Why does strategy excite me so?
The reason is simple. I have seen with my own eyes the difference developing a strategy can make to organisations.
At its best, strategy represents the essence of an organisation and like an expensive perfume distilled from a number of ingredients, strategy can be both precious and powerful.
I have seen it create a sense of purpose and calm where previously there was a cult of busyness. I have seen it heal internal disputes, ensuring resources are aligned behind the same goal. I have seen it change the internal organisational narrative form one of being a victim of events to being in control and able to make the best of ever-changing circumstances.
For charities and charitable funders, strategy can play a particularly powerful role. The sector is powered by passion and commitment – great at getting things done, not so good at stopping projects or saying no. The dominance of a delivery over a learning culture often leads to a “spray and pray” approach with organisations caught in a cycle of endless activity rather than carefully evidenced work with impact. In addition, project funding and time limited contracts can rapidly dilute organisational purpose. Strategy matters particularly where resources are tight – or as Richard Rumelt neatly puts it in his book Good Strategy, Bad Strategy “Having conflicting goals, dedicating resources to unconnected targets and accommodating incompatible interests are the luxuries of the rich and powerful”.
But embarking on a new strategy can feel overwhelming. Concerns abound about when and how to start and what tools to use.
I also often hear social sector leaders worry that time spent developing strategy is an indulgence, easily dismissed as navel gazing which might distract from the importance of “just getting on and doing the job”. And while I understand the need to balance reflection and action within an organisation, and recognise the risk of over-thinking issues, I also have seen the hidden costs of wasted effort and internal conflict that lack of clarity can create.
As strategy guru Kenichi Ohmae puts it “Rowing harder doesn’t help if the boat is headed in the wrong direction”.
With an eye on the need to crystallise an organisation’s strategy as quickly as possible, my approach at Totalpolicy has been to work with an organisation’s Board and Executive to focus deeply on five simple questions that together distill the essence of an organisation as below:
“Why?” is a powerful question that goes to the core of your organisational purpose, the ultimate change you are working for or, if you prefer, the problem you are trying to solve. Your answer should serve as a north star for your organisation. While many charities have worked hard to establish their vision, I am struck by what happens when I ask people in an organisation to tell me in their own words what the organisation is for: frequently quite different and sometimes conflicting stories are told. A strategy review presents an opportunity to tell these stories out loud and spot the common threads as well as be honest about the differences. Of course this takes time, but in my experience it is quicker and less painful to invest in getting this right than to try and correct projects that have gone adrift or to sort out the consequences of a new recruit arriving to find that the organisation is not what they expected.
“Why us?” enables you to understand the context in which you work and the particular position you hold in the world. Answering “Why us?” should help crystallise how your history, insight, capabilities and relationships allow you to achieve that others cannot. A number of things can get in the way of answering the “Why us?” question. When you are leading an organisation, it is difficult to develop an objective and cool view of your organisation’s strengths. It is often outsiders who will provide a powerful reminder of what you uniquely bring to the table. In addition, you will need to eliminate the taboo that social sector organisations often apply to talking about using their competitive advantage or being clear about how they position themselves in relation to other charities.
The next question “Who?” is a simple one on the face of it, but again can be challenging to answer fully. The notion of beneficiaries is core to how charities in the UK are set up. Charitable funders and second tier organisations often struggle to know whether their beneficiaries are the organisations they support or whether they should focus on the ultimate beneficiaries of their work. For service providing charities, robust analysis of who is currently accessing services and who is being left behind is critical. It is only with this in hand, organisations can start developing solid engagement plans and a target for reaching new communities. Another common reason that organisations don’t look more fully at all five questions is a more practical one. Understanding the beneficiaries, you reach, and the gaps you are seeking to fill, often requires fresh analysis and asking new questions of the data you hold about your service users. You may not have the skills internally to undertake this type of work and often there is some fresh analytical work needed to make this happen.
“What?” creates a focus on the concrete changes your organisation is trying to achieve. This is where a theory of change comes in – it is not surprising this approach is proving popular in the charity sector as it has the power to make explicit and concrete the goals a charity is working towards. Similarly, being in a position to describe with confidence the change you are seeking entails stepping back from your current delivery model. And this often creates some organisational pain involving as it inevitably reflections about where your current model is falling short or elements of your operation you might need to bring to an end.
And finally “How?” creates focus on the way you use your resources, capabilities and position to deliver that change alone, and in partnership with others. “How?” provides an important bridge between strategy and implementation and is a central plank to any strategic conversations. It should open up conversations about what you deliver alone and where you forge partnerships to increase impact or deliver a fresh product or reach or a new audience.
Given the power in these five questions, why is it that formulating a strategy feels like such a challenge? One significant reason is that strategy is a conversation not a document. It is a conversation that should engage people internally and externally, provide an opportunity to surface diverse and potentially conflicting views and together forge an answer that all understand. This simply takes time as well as a willingness to listen and reshape direction.
From my practice as a consultant, I have observed how organisations come unstuck when they shortcut the process ending up with a strategy that does not stick. This often results in filling in the gaps with other bits of policy, statements of direction or worse quietly bury the original strategy that took them so much effort to develop.
This is partly because the Board and Senior Executive are itching to crack on with the job they gloss over some of the questions. But I have also been struck by how organisations have some of these questions are more easily answered than others. This image came to my mind when talking to a client about this very issue:
Answers to the “Why?” question gives organisations a North Star. Questions of “How?” are rather like the rigging of a boat – intricate, detailed and seemingly endlessly fascinating. While important,in my experience questions of How? are so well examined and rehearsed that they tend to dominate and in the process overshadow other big strategic questions. Look back at your latest Board agenda and check in the time spent looking at the “How?” of your organisation. The items typically look something like this: how you fundraise and make the budget work, how you recruit the right staff, how you deliver safe services to meet clients’ needs. Questions of how can be like muscle memory for organisation – they feel familiar and comfortable but in a strategy conversation while important they can only be properly answered when all the other questions have been resolved. Remember if you are rowing in the wrong direction, getting your how sorted (rowing harder) won’t help.
By contrast, my experience is that question “Why us?” is one that rests deeply below the waterline. Organisations find it more difficult to answer this question but I have represented “Why us? As the hull and tiller in a boat. That’s because having a solid understanding of “Why us?” is critical to keeping an organisation afloat and heading in the right direction. Organisations benefit considerably where they make key decisions about new projects or directions on the basis of their positional advantage (“Why us?”) rather than simply whether they have the capabilities to undertake a project.
I have also seen other important questions slip below the waterline depending on how difficult the environment is for an organisation or how little head space the leadership team have at a particular point. I think “Who?” and “What?” are often in danger of being lost to view, not least because it requires some effort to improve understanding of your beneficiaries and where the gaps are or to do the the heavy work of specifying the exact change you are seeking. Nevertheless, clarity about these questions can fuel the engine room of any organisation, ensuring that it is sharply focused on making the right changes for the right people.
These five seemingly simple questions can unlock an organisation’s potential. I have also learnt that there are no shortcuts when developing a strategy that truly sticks.
But the investment in developing an organisation’s sense of confidence and clarity of purpose will pay off many-fold and ultimately that is what excites me so about strategy.