The Key to Successful Strategic Thinking: Leave Your Budgets Out of the Conversation

CEOIQ |

budgets

Most CEOs agree that strategic thinking is important. But when leadership teams meet, they often start by discussing their budget or line-item financial performance instead of strategic direction. “Okay, let’s look at how we’re doing,” the leader says. “What’s our performance-to-plan? How are we doing against the budget?” 

And at about the 10th or 12th line item down, an argument breaks out over who spent $600 too much for coffee in the last quarter. That’s the end of any Strategic Thinking Conversation.

Have an Ongoing Conversation

Your team should meet once a month for a Strategic Thinking Conversation – and ban the numbers from the room. You’re not allowed to bring your budgets. You’re not allowed to bring financial statements. You need to talk about where you’re going. Regularly talking about strategic direction and ‘where we are going’ needs to be a regular, recurring, ongoing and evolving conversation. I call it the RROE conversation. 

Are You Clear?

Having a clear set of organizational values is the bedrock foundation for effective Strategic Thinking Conversations. Strong values translate into effective strategy. Ask yourselves: Are we very clear about what foundation we stand on? Are we clear about how people can expect us to show up, whether they’re a customer, vendor, supplier or owner – an internal or external stakeholder? You and your leadership team have to own up to your values even when you’re under stress, when no one’s looking and it’s likely to cost you money. Otherwise your values don’t mean anything. 

IBM’s DNA

In 2003, IBM went through the first re-examination of its values in nearly 100 years. The company held a “Values-Jam” – a 72-hour discussion on the company’s intranet.

“Returning IBM to greatness required getting back in touch with our DNA,” said Sam Palmisano, who launched the exercise when he took over as CEO. 

The values IBM adopted are: Dedication to every client’s success; innovation that matters, for our company and for the world; and trust and responsibility in all relationships. Under Palmisano’s leadership, which ended recently, IBM achieved record financial performance, transformed itself into a globally integrated enterprise and introduced its Smarter Planet agenda, according to Forbes magazine. It’s a terrific example of using values to drive strategy in a very large, iconic American company.

Whether your company is large or small, the Strategic Thinking Conversation has to start with well thought out, deeply-embedded organizational values.

What’s Next?

If your ‘values homework’ is complete…what’s next in your RROE Strategic Thinking Conversations?  There is no ‘magic answer’ or silver bullet for that question. Staying focused on strategy is challenging because you don’t have all the answers.  It’s a matter of thinking about where you want to go…where are you driving this ‘train’ called your business…what’s your strategic intent?  To start answering those questions, you can use a variety of tools and resources.

A great starting point is to ‘frame’ the questions then ask people on your Leadership Team to identify the resources, analysis, strategic thinking that will contribute to the answers. Strategic Thinking Conversations take time…not having them takes even longer.