Strategy – Easy to prepare…Hard to implement

I have often wondered why it is that many strategic documents sound really great and can be well founded yet in the end are never implemented quite in the way that was first envisaged.

So why is this?

Have you heard of the term expedient? Any one who has been involved in corporate life or in business life generally will know that there are times either in a month or at a particular time of year when certain things just have to be done. A good example of this would be getting the budget profit for a month OR making sure that you did not exceed the bank overdraft limit. During these times the last thing on your mind is implementing the strategy of the company. It’s simply to get a particular thing done irrespective of what the future holds. This is what I would call expedient behaviour. It’s behaviour which is for the here and now! Must do behaviour.

So why is it that expedient behaviour ever happens in the first place? Surely if strategic plans were implemented in the way they were supposed to, there would not be the need for any expedient behaviour. However I’m sure you are aware that forecasting and budgeting is never a perfect science and that there are circumstances that are outside a person’s control. No one can predict the future with absolute certainty which is why it can be quite difficult to manage and run a company.

Although I am aware of this, I think it is often a ‘cop out’ for a lack of understanding the financial implications of the strategic plan.
How many numbers were there on the last strategic plan that you saw. I have seen some without any numbers at all which is absurd but many strategic plans have only the very high level numbers on them which have not always been rigorously checked in detail and integrated into a sound financial plan.
Sometimes it can be as blatant as this: Get the accountant to work on some numbers which kind of support where you believe where you want to go and it will be OK. Unfortunately it is generally NOT OK.
Think about this for a minute. Who on the management team of a company understands how ALL the numbers work? In my experience many management teams full understand the profit and Loss Account because often their performance bonuses are determined on the profit performance. Sometimes they also have a few working capital targets to achieve but very rarely does the entire team actually understand how the numbers work. They leave that up to the ‘numbers person’ on the management team. However, the so called ‘numbers person’ is often closeted in the numbers and does not fully appreciate the intricacies of the strategy and therefore is unable to always connect the numbers to the strategy.

So what happens when things change?
The numbers will always demand to be attended to. That’s the very reason why expedient behaviour exists! If at the very beginning most of the management team does not clearly understand how ALL the numbers work then when things change, as they inevitably do, people will take actions which may or may not support the strategy. In the end, if there is a major disconnect, the numbers and the strategy become entirely disconnected and the management team become entirely expedient and never implement their strategy.

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