Want to Be More Strategic? Think Content and Process

To be effective, CLOs must facilitate strategy development and know the content of strategy.

Published

Oct 21, 2009

To be effective, CLOs must facilitate strategy development and know the content of strategy.

There’s no shortage of literature urging CLOs to be more strategic. But to be truly effective, they need to know organizational strategy, yes, but also create processes that quickly adapt it to evolving market conditions. “The core of it is creating a strategic system that allows you to continuously match the firm — its capabilities and resources — to the environment that’s changing in its demands and opportunities,” said Thomas G. Cummings, professor and chair of the department of management and organization at the University of Southern California (USC). Cummings is the author, along with his colleague Larry Greiner, professor of management and organization at USC, of Dynamic Strategy-Making: A Real-Time Approach for the 21st Century Leader. The book aims to help business leaders develop a more agile and responsive organization by creating a strategic system, rather than a strategy. “The strategic system allows you to continuously assess the organization and its environment,” Cummings said. “It allows you to engage the organization at all levels in setting strategic direction. It allows you to implement it and continually modify it. In the absence of that system, this stuff doesn’t happen.” The strategic system links the content of the strategy — the organization’s goals, key differentiators and structure — with the process of setting and implementing the strategy. It’s a process that happens continually in real time, rather than once a year. “We don’t like the term ‘strategy,’” Cummings said. “It’s more a strategic direction. You’re continuously revising it, so you never get there because there is no there, there.” In the past, the CEO and executive team developed strategy annually, often with the help of external consultants. While thorough, this development method failed to effectively incorporate the processes needed to implement, assess and revise the strategy. The result? Business performance suffered, as strategy often failed to translate from the C-suite to the shop floor. “The big question becomes, how do you do it?” Cummings said. “How do you do it in a way that gets people involved, that gets participation across the organization, and how do you do it so that you’re continuously getting feedback on execution, implementation and making adjustments as the environment changes?” Cummings and Greiner recommend keeping strategy simple and writing it down in one or two pages. “We’ve seen companies come out with books on strategy, and nobody understands it all,” Cummings said. “If it’s not clear and people can’t understand it all down the firm, then it’s not a good strategy.” That’s where CLOs can help. Cummings and Greiner recommend that CLOs help set up a process for strategy setting that incorporates assessment of the environment and capability and translates that into strategic direction that gets people committed at all levels. “If you step back and look, dynamic strategy making is a process of organization[al] learning tied to strategy,” Cummings said. “The most important role a CLO can play is helping a firm learn from the very process of setting and executing and learning from strategy. That learning has to be built into the system so it’s continuous.” While the CEO and executive team are the owners, Cummings and Greiner said it’s important that the CLO understand the strategy. “CLOs need to know content if they’re going to be able to facilitate this process,” Cummings said. “They need to understand marketing, finance, etc. In the absence of that, you can’t just do process. You can’t go in there and do better team building. You’ve got to also have familiarity with the content of this.” Focusing on that intersection between strategy and process is where the CLO can make a mark. “The CLO needs to be able to engage content-wise at the strategic level with CEOs and [be able to] lead a process that helps that CEO and line management create what we call a strategic system that continually looks at these issues,” Cummings said. Globalized markets, technology change and dispersed knowledge have created highly competitive conditions that require companies to make adjustments on the fly and respond to business conditions. “What that puts a premium on is speed — how quickly can you respond, how flexible you are,” Cummings said. “In terms of strategy making, how quickly you can get people involved in this process and get it embedded in the firm so that they’re doing it as a matter of course and not some yearly event.” The CLO also can help by providing opportunities to develop the leadership skills and frameworks necessary for thinking about and acting upon strategy, including simulations and laboratories where they can actively practice these skills. “If dynamic strategy is going to work, it takes dynamic leadership,” Cummings said. “What the CLO needs to do is have a training process that has both [cognitive] learning concepts and [behavioral] learning to enact those concepts. If you can’t enact that behavior, all this is a bunch of hooey.”