Forget the jargon, buzz words and inane platitudes that dominate management speak on company objectives - strategy must be specific, measurable and time-limited to ensure it is more than just a vague pipe-dream, writes Gerald Flynn.
A STRAIGHT-TALKING senior manager who keeps well away from business jargon, management guff and buzz-terms is a rare person on the Irish business scene, but one of them received recognition recently. Eddie O'Connor became the recipient of the Institute of Management Consultants and Advisers (IMCA) annual medal in recognition of his enterprise and leadership.
At the presentation, O'Connor provided an entertaining reminiscence of his days as senior fuel buyer with the ESB and his experiences restructuring the troubled Bord na Móna, prior to his departure in the wake of a clash with the then resources and communications minister Michael Lowry and the politically-appointed turf board chairman.
O'Connor recovered quickly and used per sonal funds and seed finance from friends to build up Airtricity, which became the State's foremost new power-generation company, often offending his erstwhile comrades in the near-monopoly ESB. Last December, the wind power company was sold to Scottish and Southern Power for €1.1 billion.
Following the medal presentation, a friend recounted a story that illustrates O'Connor's ability to cut through a lot of management nonsense and get an organisation performing effectively. For many years, O'Connor was a regular participant and attendee at management conferences. He soon tired of intense speakers and motivational gurus who kept referring to "new paradigms" and "strategic directions". To pass the time at conferences he would take a sheet of paper, draw a vertical line down the middle, and head the first column with a 'P' for "paradigm" and the other with an 'S' for "strategy".
When anybody asked him what the seminar or conference had been like, he would happily reply: "The paradigms won seven to five over the strategies" - as if it had been a football match - highlighting the degree of pomposity associated with so many management events.
"Paradigm" in a useful term in the philosophy of science or even in language studies, but it can become an appalling word when it is greatly misused, not only in business circles, but by teachers, lobbyists and union leaders, most of whom have not read the works of the US physicists who revived it as a term to describe periods of scientific understanding.
But what is really at issue is O'Connor's second bugbear, the term "strategy", which was first explained to me years ago by a military-minded man, thus: "Tactics is kicking over the bucket of milk; strategy is shooting the cow!" Most senior managers have a fairly coherent strategy for their organisations, but the real trick is to ensure that it is more than a vague pipe-dream conjured up at some away-day seminar.
A recent issue of the Harvard Business Reviewdealt with this very point. In an article titled: Can You Say What Your Strategy Is?Harvard professor David Collis and the late Michael Rukstad pose the simple question: can you summarise your company's strategy in 35 words or less? And a supplementary one: if so, would your colleagues put it the same way?
They conclude that there is "a dirty little secret" near the top of many organisations. Most executives don't actually know what all the elements of a strategy statement are, which makes it impossible for them to develop one, and they cannot articulate it in a simple statement. They identify three critical aspects to a strategy, which are:
Objective - begin the statement with a definition of the ends that the strategy is designed to achieve and the timeframe envisaged, such as to double revenue or increase margins by two percentage points by 2012.
It needs to be specific, measurable and within a limit of a few years.
More detailed measures such as balance scorecards may feed into its ongoing assessment but should not cloud or camouflage the specific objective.
Scope - define the extent of the business activity and the prime areas of activity, while indicating the boundaries over which it will not stray.
This could cover the target customer base, the geographic spread of operations and any vertical integration, without inhibiting innovation, while avoiding spending time on developing projects only to see them spiked at a more senior level.
Advantage - what will the business do that gives it a competitive advantage or provides a "value proposition" to customers or clients, such as having top quality, a wide range of services or well-trained employees?
This is the key part of a strategy, and clarity about what makes a company distinctive helps employees understand to how they can contribute to successful execution of the strategy.
Collis and Rukstad warn that a strategic statement is about setting and achieving goals and not some vague "Miss World contestant style" mission or vision statements. The two authors highlight a few of these inane platitudes, some of which may sound familiar to those who attend the annual shareholder meetings of Irish quoted companies.
How about "we are devoted to maximising shareholder value by exceeding our customers' expectations" or "we are dedicated towards providing opportunities for our employees to lead fulfilling lives while respecting the environment and the communities in which we operate".
A strategy statement is the competitive game plan that has been agreed and decided for the organisation, and relates to what will be done rather than what ought to be done to reach a specific target or goal. Now, if every organisation had one that could be summarised in 35 words, that might count as a paradigm shift, even for Eddie O'Connor.
Gerald Flynn is an employment specialist with Align Management Solutions in Dublin. gflynn@alignmanagement.net
