At my first ever business school lecture on strategy, the professor described strategy as like a magnet being waved above a pile of iron filings. Before the magnet is waved, the filings will be pointing in all directions. But, after it is passed over the pile the filings will, almost magically, all point the same way.
My lesson from this exercise is that strategy must be developed top-down. No matter how friendly or well-intentioned the iron filings, they will only point the same way after the magnet has been passed over them.
Similarly, functional teams, divisional teams and category teams will only fully act together when there is the magnet of a clear strategy. Without it, each team will try do the best for itself. There may be some alignment, in some areas. But it is almost inevitable that you will be faced with competing goals, objectives, priorities and initiatives.
This morning, for example, I met the commercial director of a major UK retailer that is struggling to grow. As we talked it became clear that there was no clear strategy for the business. Major strategic decisions, such as customer targets, pricing, promotional focus, new product development and space management, were effectively held by the heads of the 10-15 category teams.
Unsurprisingly, the retailer’s stores feel like a dozen mini shop-in-shops, rather than a single, integrated shopping experience. The business continues to lose, rather than gain customers.
What is your company’s “strategy magnet” and how well aligned are your functional “iron filings”?
© Stuart Cross 2017. All rights reserved.