Harvard Business Review, July 2005

Michael C. Mankins, Richard Steele

The Seven “Rules”

Rule #1 Keep it Simple

At many companies the strategic planning process becomes an abstract or academic exercise obscured with lofty goals and unclear outcomes.  This poses a dilemma for the remainder of the organization as they attempt to “translate” unclear plans into actions that should support the strategy.  Articulating the planning and thinking into clear and concrete directions gives the rest of the organization the visibility to take actions that are in alignment with the strategy. Clear strategies inform the organization of what the company will and will not do…with certainty.

Rule #2 Challenge Assumptions

Assumptions and information drive the numbers… not the reverse.  It is pointless to debate “the numbers” until the assumptions and information have been thoroughly vetted and validated.  For example, market conditions and real competitive advantages must have a basis in fact for the financial projections to hold water.  In essence, managing to those elements that impact real economic performance trumps the financial forecast process (that it should ultimately yield).  The financials then become a true projection, a scorecard and a method to assist with course correction or other corrective actions.

Rule#3 Speak the Same Language

The dialog between top management and the organization (or the board for that matter) needs to be grounded in a simple, common language that prevents ambiguity and promotes understanding and confidence.  Lack of clarity will make matters confusing and hinder specific decisions that may or may not be in concert with the overall strategic direction of the business.  Communication on the business strategy must be clear, consistent and continuous.

Rule #4 Discuss Resource Deployments Early

The key word here is early.  Assumptions and a clear strategy drive the financial models for an enterprise.  Resources that will be needed are central to the assumptions of any plan.  The types of resources, when they are deployed and how many will be needed are a critical to execution.  Discussions on resource allocation and timing require rigor and debate in the planning process.  Early discussion of resource requirements promotes a better strategic plan and ensures a higher probability of success in execution.

Rule #5 Identify Priorities

Identifying critical priorities sets the agenda for the organization and provides critically needed direction for countless decisions made at the tactical level.  Strategic priorities can be embodied in “key initiatives” or programs that the organization can tightly manage.  They can also be directed at priority markets, priority New Product Development projects, etc.  The keys here are to identify, communicate and be consistent with priorities…and not so many that they cannot be properly focused on and completed.

Rule #6 Continuously Monitor Performance

When I came up through the ranks I was drilled relentlessly on measuring.  I had the good fortune to study statistics directly under Dr. Deming back in the 80’s.  He was cranky, single-minded and extremely demanding…and, of course, completely correct. 

This article stresses a couple of points that I think even Dr. Deming would grudgingly approve of.  First, is a bias toward real time measurement…that is, proactive and continuous monitoring of the key performance indicators of the business.  High performance companies continuously and aggressively measure.

The other point lies in understanding and measuring what really drives the ultimate numbers.  Focus on those measures that are leading indicators of overall performance is essential to attaining desired results.

Rule#7  Develop Execution Ability

People and process.  High performance companies retain and recruit high performance individuals.  In addition, the individuals have clear roles and accountabilities, understand the processes they are responsible for and are rewarded for superior execution.  Management development is also a central element to overall execution and consistent performance.  Your “A” players need to be identified and developed ensuring their career progress, motivation and performance.  Building your management team with high performers is an essential ingredient in developing and executing superior strategy.