You've heard it. I've certainly heard it: "We have a strategic plan, but it's sitting on the shelf gathering dust."
A strategic plan is, at its core, a leadership tool. Like all tools, it can be poorly used. A dusty strategic plan is a failure of leadership. It is a significant failure because leaders have no greater duty than to lead to a place worth going. Leading, after all, always begs two questions: "To where?" and "How?" Vision answers "To where?" Strategies and implementation answer "How?"
Peter Drucker once suggested that there is a point at which all planning disintegrates into work. Implementation is that point. It is effective implementation that lifts the plan off the shelf.
Mission, Vision and Strategy
There is a hierarchy to a strategic plan. Or at least there ought to be. Every organization has a purpose — its mission. A mission has a very long time horizon and is inflexible. If the organization can no longer fulfill its purpose, it's time to turn out the lights.
Vision has a shorter time horizon, three to five years, and embodies what the organization aspires to become as it fulfills its mission. A handful of strategies should describe what the organization is committed to doing to accomplish its vision.
Good strategies aren't teleological in origin. They reflect a mix of qualitative and quantitative information combined with judgment. Strategies may change during the three- to five-year time horizon, but only if there is a significant shift in the organization's situation or it becomes apparent a strategy isn't working.
Tactics are the more specific to-do lists that underpin the strategies. It is at the tactical level that rubber hits the road and implementation proceeds. There may be a handful of tactics supporting each strategy; they have a shorter time horizon — one to three years. Changes in the strategic plan ought to occur most frequently at the tactical level. That's where the flexibility should exist. Indeed, tactics should reflect a constant flux: Some are accomplished and replaced while others are dropped because they appear unworkable or are squeezed out by higher priority commitments as circumstances relevant to the organization's strategies shift.
Each level of the strategic planning hierarchy ought to sharpen the focus of tactical commitments. Think of each level as a screen. The weave of the mission screen is widest. The vision weave is tighter. And the strategy weave is even tighter. A lot of possibilities will work their way through the mission screen, fewer through the vision screen and even fewer through the strategy screen. What gets through the strategy screen should be the best options for the organization at the tactical level.
Effective implementation requires more than reaction to whatever the circumstances seem to demand. Implementation requires constrained reaction. Some opportunities and threats are more important than others. Options within a situation ought to be bounded by strategy. In other words, the organization should focus on doing things that are consistent with its strategies. And it shouldn't waste resources pursuing things that are clearly inconsistent with its strategies.
The Genius of the Viking Longboat
Resolve is a virtue in the upper reaches of the strategic planning hierarchy. Flexibility is an asset in the lower reaches. It takes both resolve and flexibility to reach the future. Organizations that fulfill their ambitions combine resolve with flexibility. An organization that is made only of resolve will find its prospects of reaching the future limited if the environment it faces is uncertain and turbulent. Rigid things often break when confronted with volatility and surprises.
On the other hand, an organization that is simply flexible is likely to be headed nowhere in particular or merely circling the drain hole. Just staying afloat is an insufficient aspiration. Organizations merely committed to survival invariably lose sight of a purpose bigger than themselves and devolve into a self-centeredness that eventually extinguishes their ability to generate value for the external constituencies for whom they exist. When this happens, the organization is no longer making a meaningful contribution and begins to spiral down the drain.
A combination of resolve and flexibility is a consistent characteristic of things that propel themselves through unstable environments. Research on ancient Viking longboats has made some revealing discoveries. These remarkable vessels were capable of crossing oceans, navigating shallow waters and quickly putting ashore bloodthirsty Norsemen. The keel of the longboat was made of a single rigid beam. The hull was constructed of long, overlapping planks of oak.
Researchers who have reconstructed these longboats and sailed in them have described a surprising experience. The hull of the boat flexed all around them as it sailed. Only in the middle of the boat was it stable. This flexibility generated two fundamental benefits. It made the hull resistant to the crushing power of waves, and it increased the boat's speed. Experts estimate that some longboats were capable of making 20 knots under sail, a speed exceeding that of most modern sailboats of similar size. For the longboat, the keel provided the resolve while the hull delivered the flexibility. Organizations benefit from a combination of resolve and flexibility as they sail into the future.
Blueprints work great for machining and assembling inanimate parts that can be trusted to fall obediently into place and do their job. But a blueprint is a sorry tool when it comes to channeling the human commitment necessary to implement a strategic plan. A recipe is a much better metaphor. A recipe recognizes that things interact, that there is sequentiality involved and that a little pinch of something can have an outsized impact on the outcome.
Far too many efforts to implement a strategic plan suffer from debilitating over-specification. Detailed action plans are blueprinted as if the future can be clearly seen and complex undertakings can be pursued with precision. They can't. The future is uncertain and the present pushes back. Small things can cascade into big things. And people generally resist being over-specified. They want to be respected and trusted enough to design their own path. It is a fundamental reality of management that people tend to own what they help to create. Leaders err when they over-specify rather than defer to those closest to the frothy interface where "action" generates value.
Optionality — Trial and Error
Tightly designed blueprints disintegrate when subjected to extreme surprises. Nassim Taleb has called such surprises "black swans." Black swans are "large scale, unpredictable and irregular events of massive consequence" that are only "explainable in retrospect." There are negative black swans and positive ones. Taleb suggests that the antidote for black swans is "optionality."
Optionality is a mindset. It requires an openness to adjusting as circumstances change, even to the point of abandoning significant tactical commitments. Abandonment is nature's way of moving forward. Life has its own hierarchy. Some things are more important than others. So the lizard leaves its tail in the cat's mouth. When a child falls through the ice, blood is triaged from its extremities to preserve its heart and brain. And evolution leaves behind the unfit.
Optionality has a shape. It looks like a branching stream where some tributaries end their journey to the sea while others continue to split, deepen and widen. Branching is the shape of nature. It describes the path of evolution. It is also the shape of experimentation and of trial and error. Taleb describes how optionality works in nature and industry:
"It is worth insisting that the most wonderful attribute of nature is the rationality with which it selects its options and picks the best for itself — thanks to the testing process involved in evolution. Unlike the researcher afraid of doing something different, it sees an option — the asymmetry — when there is one. … In trials and errors, the rationality consists in not rejecting something that is markedly better than what you had before. …
"Like Britain in the Industrial Revolution, America's asset is, simply, risk taking and the use of optionality, this remarkable ability to engage in rational forms of trial and error, with no comparative shame in failing, starting again, and repeating failure."
A branching movement into the future is, by its nature, incremental rather than bold. Boldness correlates with risk. If you could clearly map such branching, the length of any single limb would convey the degree of risk it embodies. The longer the limb extends without branching, the greater the risk it carries. A long uninterrupted limb evidences a lack of trial and error along the way. There are no purely straight lines in nature for a reason. All robust and sustainable progress is of the crooked and incremental variety. That's why an incremental path is always the wisest path. It doesn't put the organization too far out on a limb.
Optionality provides freedom for maneuvering. If one path underdelivers or becomes endangered, another path is open. Failure to consider options cuts off their availability. Such failure usually results from two sources, both potentially dangerous: shortsightedness or arrogance. Or, even more deadly, a myopic combination of both.
Strength from Change: Antifragility
Volatility is a way of describing change. Change can be visualized as waves. The distance between the crest and the trough of each wave can be extreme and highly variable, as can be the distance between the troughs and the rate at which the waves move. Optionality is the way sustainable organizations accommodate and exploit change. Tactical implementation is where sensitivity and responsiveness to change is most critical.
Taleb argues that there is a state beyond robust called "antifragile." Antifragile is different from "robust" and the opposite of "fragile." Fragile things are harmed by volatility. The robust are not harmed by volatility. Antifragile things are strengthened by volatility.
Volatility might be viewed as a catalyst that intensifies and accelerates branching incrementalism toward robust and, in some cases, on to antifragile. If you could diagram it, you would show a tightening weave of intersecting branches as the organization moves forward, drawing on a wide variety of options, strengthening its commitment to some while abandoning others. Antifragile organizations consume volatility like a hurricane consumes heat and grows stronger in the process.
In my view, optionality involves seeing opportunities and being persistent in pursuing them; the more opportunities, the greater the optionality. But to be strategic, these opportunities ought to have some boundaries. In other words, they are a subset of the total universe of opportunities. They are the ones that make it through the filters built into the strategic planning hierarchy. Opportunities inconsistent with your strategies aren't worth chasing.
You can see a black swan only in the rearview mirror. Being opportunistic at the tactical level requires an openness to the volatility black swans generate as they fly through. Most options are generated by chance, not by intent. You've got to be able to recognize the ones that serve your strategies and pluck them out of the air.
Opportunity from Error
Most popular business books are built on the heroic model. A heroic organization, led by a heroic CEO, marches straight down a predetermined path to great success. All that is required of other organizations seeking similar success is to implement in the same heroic fashion. The truth is often less inspiring. Implementation can be quite messy and accidental.
Walt Disney's first moves toward his dream at Disneyland easily could have been mistaken for unmitigated disaster as gas mains burst, paddle wheelers capsized and visitors were herded like cattle by rude employees who acted like carnival barkers. Implementing his vision ultimately required Disney to live in his park, making adjustments and refinements along the way. When he moved into his park, it put him closer to the action and in frequent contact with options for improvement. Disney considered his options, then branched opportunistically and incrementally toward becoming a legend. The Disney organization edged toward antifragile.
In 2003, Advocate Health Care found itself accused of violating antitrust laws. After a long, consuming inquiry, the Federal Trade Commission determined that Advocate's physician-hospital organization had not engaged in price fixing. This opened up an option for Advocate to intensify the efforts that had been the subject of the antitrust probe. Its PHO was opportunistically transformed from a lifeless artifact of the '90s into a powerful agent of value for the next decade.
Leaders at Advocate have acknowledged that they did not at the time of the FTC inquiry envision the value of the PHO option. But that option became Advocate Physician Partners, one of the nation's best examples of an FTC-compliant, clinically integrated physician network. The path to Advocate Physician Partners may have created an organization that's antifragile.
Not all black swans are external. In 2001, when 18-month-old Josie King died of dehydration at Johns Hopkins, it was a very black swan for an organization accustomed to being regarded as America's best. Anesthesiologist Ed Miller, Hopkins' CEO at the time, had always made a point of staying close to the people who created value for the organization. Long before the Josie King tragedy, he had made a habit of walking the halls at Hopkins. After the death, Miller began asking those who he encountered on his walks what they were doing to improve patient safety.
His encounters were unplanned. They were opportunistic. And they opened up options that might otherwise have gone unconsidered. One thing he heard repeatedly was that Hopkins was burdened by too many meetings. Mandating a reduction in the number of meetings opened up the space to consider more options for improving patient safety. It created a path that translated tragedy into learning and perhaps into antifragility as well.
A Good Leader Is Not a Victim
Implementation can suffer from a lack of resolve, flexibility and optionality. Another enemy of powerful implementation is a fundamental lack of commitment to its object — accomplishment of a compelling future. Some executives disdain making and implementing strategy. Their view goes like this: "Strategy? I don't need no stinkin' strategy. I don't have time for strategy. I'm busy fighting a hundred blazing fires. So, man the hoses!" The problem with this stance is that it describes a victim. Leaders ought to be the opposite of victims. They ought to be the agents of a compelling destiny and the servants of worthy followers. And they should ask obvious questions like "Why is the house always on fire?"
An organization that fails to commit to the future often suffers from an absence of aspiration and imagination — a failure by leaders to describe a shore worth reaching. Describing a compelling future requires some understanding of what triggers the commitment of followers, particularly those close to the action where value is created. In health care, leaders have a diversity of followers, some of whom are under no obligation to follow and must be persuaded by a call to action they view as relevant and authentic. The understanding that gives rise to relevance and authenticity requires leaders engaged in the real work of the organization.
Too often, a CEO delegates strategic planning. The message is clear: What does not deserve the leader's direct involvement doesn't deserve the attention of the organization. Involvement and advocacy from the CEO is essential to creating the traction that implementation requires. The CEO, not the chief strategy officer or the consultant, is an organization's top strategist.
Leaders have to create the space to continuously consider their tactical options as they emerge. This requires time for dialogue. They also have to be persistent in communicating mission, vision and strategies, then create the mechanisms to facilitate the organization's ability to answer the call to action. Part of the challenge of communicating is nonverbal. A CEO who parks his car in a patient drop-off zone is communicating a lot.
Translating a strategic plan into reality doesn't line up well with traditional functional organizational structures. Executives have to take off their functional hats (e.g., finance, nursing, operations), put on a strategic hat, then work across functional lines to implement effectively because most strategies crosscut functions. This usually necessitates a matrix structure. And this can set off turf battles. It is the CEO's job to mitigate such conflicts. It is also the CEO's job to keep implementation coordinated.
Executives comfortable working in silos will be prone to crawl back into them at the earliest opportunity because that's where the safety of their professional acculturation resides. It is the CEO's job to pull them out of those silos and facilitate ongoing interaction toward implementation. That interaction should include ongoing conversations about options as they emerge from the shifting situations within the boundaries of the organization's strategies.
In some organizations, the disciplined facilitation of interaction among those vested with responsibility for implementation is called "pause and sync." Implementation efforts are paused and then, through disciplined interaction of participants, they are synchronized. Critical questions that should frame this conversation are: "What are you working on? What's going really well? What's not going so well? How can we improve coordination and progress?"
Accountability for All
Another significant reason strategic plans don't get implemented is that no one's clearly accountable for making them happen. The board of directors and the CEO should be clear in their expectations that the strategic plan is to be accomplished.
In our strategic planning engagements, we assign a "strategy leader" (or co-leaders) to each strategy. Those leaders then select a "strategy team" responsible for defining supporting tactics, timing and resource requirements as well as an individual responsible for each tactic. This individual may, in turn, assign a task force to support implementation of the tactic. Then the executive team should make regular reports to the board regarding progress related to accomplishing each strategy.
Most organizations build accountability for performance. They ask, "Did we achieve our financial targets? Our clinical targets? Our growth targets?" But it is accomplishment that generates performance, not the other way around. Performance is an effect, not a cause. The strategic plan lives in the realm of accomplishment. Executive teams should be accountable for accomplishing what they committed to accomplishing and for holding their subordinates accountable for accomplishment as well.
While many organizations embody enough operating momentum to generate some degree of performance regardless of their accomplishments, in some instances that performance may be largely accidental. Basing executive compensation solely on performance targets misses the point: that executives should be primarily focused on getting important things done.
Organizations often declare their responsibility to define the future done once the strategic plan hits the shelf. The key to the future is to never let the plan reach the shelf.
Dan Beckham is the president of The Beckham Co., a strategic consulting firm based in Bluffton, S.C. He is also a regular contributor to H&HN Daily.