Evaluating strategy

This week, Matt Hancock, the UK government health minister, announced that he had met his self-imposed target of carrying out one hundred thousand tests for the Covid 19 virus.  Except he hadn’t. Seventy three thousand tests had been carried out and a further forty thousand testing kits had been posted to households.

Most sensible individuals would not count a test kit posted as a completed test and would only consider kits returned to laboratories for analysis as a completed test.  What Hancock had done was the long-practised political tactic of ‘moving the goalposts i.e. if you aren’t going to hit the target, you change the target.

this was the second time this week he had done so.  Earlier in the week, he claimed to have met the stated target for supplying personal protective equipment to healthcare workers. However, he only achieve that target by counting surgical gloves individually, rather than in pairs.

In politics you might just get away with such chicanery; in business you cannot.  You need to set SMART objectives.  You must have the resources and capability within your business to achieve those targets.

Business strategies cannot be formulated or adjusted in an environment of changing circumstances without a process of strategic evaluation.

For many strategic evaluation is a simplistic process of collating business returns e.g. growth rates, profit margins, growth in turnover, etc.

However, this line of reasoning often misses the point of the intended strategy.  Critical success factors are often not directly observed and are not easily measured.  Often strategic opportunities and threats appear only when it is too late to measure them.

So strategic evaluation must look beyond simplistic statistics and financial returns. You need to consider the health of your business over the long-term.

You also need to keep one eye on the future and many business metrics, particularly financial metrics look to the past.

Strategic evaluation asks three questions.

  1.  Are business objectives appropriate?  Do they meet the SMART criteria? Do they fit your organisational culture and do they match the expectations of your market?
  2. Are your policies and plans appropriate?
  3. Do results obtained to date confirm or refute the central assumptions on which the strategy rests?

Answering these questions is not simple or straightforward.

Every business strategy is unique.  Your organisation’s culture and the environmental effects on your business will give a different effect that that affecting your competitors.  In short there is ‘no one best way’ and you cannot succeed by simply copying the practices of others in the market.

The central concern of strategy is the selection of goals and objectives.  This requires situational logic.

Strategic review can create conflict within and organisation.  This often relates as to who is best qualified to give an objective evaluation.  You need ‘management by more than results’ but this often runs counter to modern management thinking.

In science, theories can never be proven absolutely true.  However, they can be proven absolutely false if they do not withstand repeated testing. Similarly in business no strategy can be proven optimal, but you can test for critical flaws.

Testing business strategies should fit within four broad categories:

  1.  Consistency:  Is the strategy inconsistent with your businesses wider goals and policies? Is it consistent with your organisational culture?
  2. Consonance:  Strategy must be capable of an adaptive response.  It must be able to change as the environment changes.  Again we must consider the UK government’s current strategy as to obtaining a trade deal with the European Union following Brexit.  It is generally recognised that big, complicated trade deals take significant time to negotiate and agree.  Often they take one or more decades.  The UK government is adamant that it will not extend the Brexit transition period and that a trade deal must be agreed by December.  This timescale appears rushed in normal circumstances.  In the aftermath of the Covid-19 pandemic, this timescale appears to be lunacy.  the government policy has no consonance.  It is unable to adapt to changing circumstances.
  3. Advantage:  Does the proposed strategy create a sustainable competitive advantage?
  4. Feasibility:  Does the proposed strategy fit within your existing resources and not create unsolvable sub-problems?

If your strategy does not pass one of these four tests, it is likely to be a flawed strategy.

Remember competitive advantage is created through having superior resources, superior skills or creating a superior position, than your competitors.

So in selecting a strategy for your business:

  1.  Does it take advantage of special competences that exist in your business and which are needed to answer questions raised by the strategy?
  2. Does your organisation have sufficient internal cohesion, coordination and skills to deliver the chosen strategy?
  3. Does the chosen strategy have the ability to challenge and motivate key personnel?

To maintain a competitive position in a changing environment you need a dual view of strategy and strategic evaluation:

  1. Within day to day operations; and,
  2. In building systems and structures which make strategy delivery an object of daily activity.