Strategy matters
Soon in my carreer I became attracted by reports. McKinsey and Company published around 1999 an article about the relevance of strategy. The consultants picked a quite reasonable group of traded SMEs and analyzed stock markets performance, compared to robustness of strategy. I felt this was one of the most relevant articles I had seen so far, so I collected copies and shared them. Consequence: I lost it. Some decades later I asked McKinsey for another copy. I had to learn from a consultant´s perspective, two decades are far too old… …and last century is too old to be reminded. Maybe time to repeat the exercise? What does it teach about digital memories when paper went away, and the basement is cleaned?
Back to the study: The consultants formed out of the cohort 2 groups: The first consisted of companies where the consultants could not find something like a strategy in public domain, the second showed companies with a strategy. Surprise, surprise: Companies with a strategy performed in average better. Was it just a “pro domo” study cheering strategy consultants?
In a second step, the consultants analyzed the companies with a strategy to differentiate what they called “a meaningful strategy” versus “misleading strategy not supporting the overall goal”. And here came the real fun: Even companies with a strategy the consultants ranked low or meaningless performed better compared to those having no strategy. That was my WOW-effect.
So what? The natural scientist was not too surprised: Imagine an organization is like a box, and those working in it are particles somehow surrounded by the walls. If there is no strategy, no direction, no leadership, the organization is static, and people tend to do what they believe is beneficial. In other words, there is a hell of activity but from the outside no real movement.
That´s what we may call “Browns movement”. One of the best illustrations of this effect one may find on youtube: Produced by the Institute of Physics and the National STEM Learning Centre and Network (https://www.stem.org.uk/), this video illustrates how to show the movement of particles by Brownian motion. But now what does Browns movement tell about organizations? It is a great analogy: Structure follows strategy. If companies fail to have a strategy (direction) and to translate it to processes, to deduct an organization – it ends in hectic actions countered by others: There is quite a lot of activities going on, but no meaningful result. An external observer does not see any effect, but people are busy. If this sounds familiar to you, we should talk.
Strategy drills holes in the box, processes provide direction, and management should support it, too. A strategy must be known to the organization – or how shall they support it? One of the tasks of management at all levels is to translate a strategy into digestible tasks people understand and support.
Sounds logical? It is.
