Time for a reality check: Ahead, Level or Behind

When it comes to assessing how effective your business strategy is and whether you have achieved the expectations you set at the start of the year, there are only three conclusions that can be reached

1. You’re Ahead, i.e. actuals are exceeding expectations

2. You’re  Level, i.e. actuals are broadly meeting expectations

3. You’re Behind, i.e. actuals are tracking below expectations

Here at TRC we recommend strategic reviews should take place at the end of each quarter using a 3-step process

Reframe: (Step One) How are we feeling?

Instead of starting with the data, we recommend gathering the senior leadership team to express their feelings about the situation. It’s crucial to understand how people feel,not just what they achieve.

Using a simple set of 3 questions, just go around the room and understand each person’s perspective.

1. What has gone well or better than we hoped for?

2. What has been a harder challenge or tougher than we expected?

3. What have we learnt or re-realised?

And always let them (your leadership team) speak first. Once you have voiced your view as the CEO/MD, it becomes more challenging and less likely that others will present a contrary view.

This session will provide you with a clear understanding of how easy or challenging it has been for the leadership team to implement the strategy, and will allow you to quickly identify who requires more support from you and the team moving forward.

Rethink: (Step Two) What is the data telling us?

Once you understand how people feel, the next step is to examine the data to determine if you are meeting expectations and how it aligns with the views expressed in Step 1.

We recommend combining lead and lag metrics and using a balance of financial and non-financial indicators to give you a holistic view.

The lag metrics indicate what actually occurred in the past quarter, while the lead metrics suggest what is likely to be achieved in the upcoming quarter. For example, turnover is a lag metric that you cannot influence as it’s historic, whereas the value of the pipeline is a lead metric that is much more within your control and influence.

Financial data is important as it obviously impacts profitability and cash flow, but equally important are non-financial metrics like customer satisfaction and employee happiness.

A robust quarterly data review should enable you to assess whether your strategy is working or not, which, as CEO/MD, is probably the most important question you need to be able to answer at any time.

Refocus: (Step Three) and therefore…

Once you have assessed the mood and the data, the question is what alterations, if any, you need to make in this next quarter. This needs to be in relation to resource allocation. For most businesses, the resources available are a combination of money and people.

When you consider the elements within the strategy, you have three options available:

1.  Stop investing resources : If this is clearly not working right now and you are unsure why, the logical step is to cease investing and allocate most of the resources elsewhere.

2. More of the same : If you conclude that this element of the strategy is effective, the logical action is to continue investing the same resources unless you identify an external factor on the horizon that might have an impact.

3. Double down: If the outcomes exceed expectations, then a logical decision would be to increase investment, assuming all other factors remain constant. Your strategy is your medium- to long-term plan for success, so it’s crucial that you don’t change it frequently, as that will confuse all stakeholders and is unlikely to bring you the success you seek, since strategic plans take time to implement and produce results.

If you have taken the time to create what you and your team felt was a good strategy, you need to give the plan time to prove you right or wrong, and one quarter generally isn’t long enough to assess a strategy.

However, you might need to tweak the strategy based on the outcome of your quarterly review in order to improve its effectiveness.

Strategic review sessions are likely the most crucial meetings that leadership teams must regularly allocate time for. They should be structured, well-documented, and designed to encourage input from all members of the leadership team.

“Leadership without strategy is just management.

Strategy gives leadership direction and impact.”