Strategic Structure

What is your strategic structure? What is strategic structure?

We could go on with more questions but unless we define structure the question may not stir any thoughtful consideration. Structure is the relationship of elements composing something to the other elements in the whole of the composition. Strategic structure would be the relationships between the different elements of strategy.

If you have a list of goals, even smart goals, you have developed objectives but may not have a structured strategy. The difference is that leaders with a set of objectives may ask others to write their objectives to help deliver the objectives of the leader without having defined a relationship by which the subordinate objectives can be balanced, valued and adjusted as needed. Be honest, how often have you written objectives and had your deputies write theirs only to pull them out at a quarterly or annual review? How often have you had to rationalize that you met expectations despite having not met the objectives you wrote almost a year ago?

The role of structure in strategy is to facilitate delegation, authorization, review and adjustment of the strategy. The structure allows the strategy to be cascaded into the organization. It supports both the significant changes and the operational workings of the organization. It considers both expense and investment.

Structure also allows the strategy to be considered over an interval of time. Long term high level goals can be broken down into near term goals which in turn can be broken down into departmental goals and eventually to individual objectives.

One structure for strategy is the navigation map. At the top of the navigation map are the organization's vision, mission and values. These aspirational headers to the navigation map seldom change with time. On the level below, there resides a concise three to five year goal. This would represent what success looks like for the organization in that time frame. The next level of structure would be the three-to-five core capabilities the organization would have to perform against in order to reach its three to five year objective. The core capabilities are business fundamentals. These capabilities are probably mostly present in the organization but not performing at the level needed to deliver the three-to-five year goals. Were these capabilities at the long term goal level, the organization would have accomplished that goal.

Below the core capabilities are the functional units that deliver the capabilities. Some functions may support only one capability while others functions such as IT, Talent of Finance may cover all capabilities. Placing the core capabilities on one axis and the functional areas on another axis creates a matrix. Evaluating functions against fundamentals provides a structural framework for executives to consider the changes that must occur for the organization to reach its three to five year goal.

Supporting the core capabilities are systems and processes owned by the functional areas. These systems and processes can be evaluated against the core capabilities to determine what changes might be needed to reach the performance level required to reach the three to five year goal.

In this example, the navigation map structure allows leaders different views of their organization, its goals and the capabilities required to reach the goals. This can help leaders see how investment in the current year might be needed to realize three to five year goals. In addition, since there is a concise expression of success in the intermediate term, executives can monetize the value of the three-to-five year goal and compare that to the investment needed to get there.

Leaders can check capabilities against the ability to deliver the three to five year goal. Functional contributions can be references against capabilities. Progress can be measured and adjustments made. Of importance is that the structure prompts the question, are we working on the right things?

Do you have structure to your strategy? Do you have need for it? Hopefully as you build your business you will begin to see your structure emerge.