Wednesday, May 1, 2013

The Elements of Strategy

My expert interview today is with Jeff Prouty, Chairman and Founder of The Prouty Project, a boutique consulting firm started in 1987. Jeff and his team work with clients in areas of strategic planning, organization development, and board and team development. 

You're going to love his ideas on strategy ...

Kevin Donlin: Jeff, let’s talk about strategic planning. It’s a topic that throws a lot of people. When I talk to small business owners or decision-makers at entrepreneurial firms, a lot of them don’t know where to start when it comes to strategy. So, let’s start at the beginning: How would you define strategy?

Jeff Prouty: We’ve got a big quote on the wall in our creative think tank and it says, “Strategy is about stretching limited resources to fit ambitious aspirations.” It’s all about choices, and focus, and alignment.

Kevin: How do you know when your strategy has succeeded?

Jeff: We’re all about metrics and there’s another quote that I heard a long time ago from the CEO of Diageo, Ian Martin was his name, and he said, “Success follows the relentless pursuit of simple objectives.”

So, define your objectives to start with. For us, that defining process includes cash flow, so there’s a profitability element, obviously. But objectives should include customer service, customer satisfaction, employee satisfaction, and employee commitment.

Kevin: What are some examples of metrics to aim for in a winning strategy?

Jeff: It might be that we want to score an 88 percent or better on our annual employee commitment index. Or, we want a score of 75 or better on our customer net promoter index, the percentage of clients who would feel good about referring us to a friend or a colleague.

So we want people to think about how employees and customers grade the company. Then, assuming all those things are working, there ought to be profitability and cash flow metrics.

Kevin: What time frame do you use to measure strategy? Is it one year, five years, 100 years?

Jeff: It varies by client. We’ve got clients who say, “Prouty, I want our team to think out 50 years when my grandson, is running the company.” And we’ve got clients who want to think out 50 weeks.

I think two to three years is a good time frame. And the world is changing so quickly that you have to keep updating and rethinking your strategy every 90 days.

Kevin: What common mistakes do you see among clients who come to you for help with their strategy?

Jeff: I think lack of focus would be one. Lack of alignment would be another. These aren’t in priority order, but things we see frequently.

A third one would be lack of the talent required to do the things they’re trying to do. In other words, we want to win the Super Bowl, but we are weak in some positions that will stop us.

A fourth area is accountability. I’m heading out to California next week to work with a $25-million company and one of their issues is they have no accountability for poor performance. They expect folks to do things but they don’t deliver, and yet they get to stay on the team, or they’re not able to coach those folks to improve their performance.

Now having said all that, we’ve got another quote that we like, from T.J. Rodgers, the CEO of Cypress Semiconductors, who said, “Most organizations don’t fail for lack of talent or lack of vision. They fail for lack of execution.” So a lot of folks know what they need to do, but they don’t execute. They don’t put rituals in place to do the things they need to do to achieve the goals.

Kevin: That idea of execution is so important -- the best strategy on earth does you no good if it’s not executed. How can people be more accountable and execute their strategy?

Jeff: Laser focus. Do 3 things really well versus 10 things kind of well. Focus includes people. I hear lots of clients say, “We want to have two people as the co-champions of this,” and I always say, “Co-champion means no champions.” I want one person with accountability. It doesn’t mean they have to do all the work, but they need to own the initiative so that they are accountable -- did we or did we not achieve that?

I think if I were to boil down all the feedback I see, it’s that people have too many priorities. They’re trying to juggle 12 balls when they ought to be trying to juggle 3.

Kevin: Jeff Prouty from
The Prouty Project, thank you very much!

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