Strategic dialogue
- Why use it? The strategic dialogue is a generic eight-step model for formulating and implementing strategy that is based on engagement with key stakeholders: what the organisation can and will do is not invented in an ivory tower, but is developed and implemented in dialogue with key external and internal partners and stakeholders.
- What does it do? The model treats strategy as an integral process of formulation and implementation. It focuses on content and process: doing the right things and doing things right. It is an iterative process with an approach that leads to making clear strategic choices with the support of key stakeholders.
- When to use it? The strategic dialogue can be used as a systematic approach to strategy in situations where both the formulation and implementation of a realistic and supported strategic plan is needed.
- What question will it help you answer? How should I organise my strategy process to maximise the chances for strategic success?
The big picture
The strategic dialogue is a generic eight-step model for formulating and implementing strategy (Figure 2.1). It focuses on content and process: doing the right things and doing things right. It is an iterative process with an approach that leads to choices while leaving room to keep options open. And it is an approach – the name ‘strategic dialogue’ says it all – that is based on engagement with key stakeholders: what the organisation can and will do are not formulated in an ivory tower, but rather in dialogue with key external partners and stakeholders, and these are explored and discussed with internal stakeholders. However, a dialogue doesn’t imply a democracy: those responsible will still have the final say and have to make the strategic choices.
In a strategy process, there are three critical success factors:
- A good understanding of the context of the strategy definition: without shared understanding of cause, necessity and ambition, a company trying to formulate its strategy is drifting. And without knowing where you stand, there is no way to set a course.
- An adequate use of content in terms of quality, completeness and depth – a thorough analysis with appropriate models and instruments to obtain a complete understanding of the possibilities and impossibilities of the organisation and of the environment in which it is active. A thorough analysis is the basis for finding the right strategic options.
- An effective and inspiring process based on engagement: who are involved at what moment in time, what are the roles, and how is participation organised? In other words: applying the correct methods of engagement. These help to increase the intrinsic level of understanding, stimulate creativity and develop ideas.
For strategic success, organisations will have to understand the essence of context, the essence of content and the essence of the process. Organising both strategy formulation and strategy implementation processes as a dialogue will lead to strategic success. The strategic dialogue presumes that strategic success is the result of the formula:
Formulation × Mobilisation × Realisation
That is to say, strategic success comes from successful strategy formulation multiplied by mobilisation of the right people times successful strategy realisation (or implementation).
Formulation
Many companies devote most of their attention to the F of formulation. They formulate a strategy that, if correct, shows them the way amid the uncertainties of current and future markets. It could lead to the perfect plan. And then it is ‘only’ a matter of perfect execution. All too often, however, strategic plans are not flawless. It is difficult to make the right choices up front for unforeseen future developments. Often choices made – if they really are made in the first place – do not always reflect a combination of thorough analysis and sound entrepreneurship. And often the strategy states what the company will do, but not what the company will stop doing (which is often inherent in making choices). Emphasis on formulation is no guarantee for a consistent execution of strategy, nor for a consistent interpretation by all involved.
Realisation
Next to formulation, it is the R of realisation that typically receives the most attention in strategy processes. Sometimes there are elaborate and detailed implementation plans, which are as comprehensive as an encyclopaedia, and sometimes these are only fragmentary. Most of the time there is some kind of implementation plan, and attention will be given to communication and progress. Milestones and required breakthroughs in the implementation plan are monitored and periodically scheduled on the management agenda (however, they are often not properly addressed, as operational fires must be extinguished first). But even if there is a brilliant strategy with elaborate implementation plans and well-managed change projects, all too often everyone is still surprised that the strategy is not working and does not deliver what they had expected.
Mobilisation
The demands faced by companies in the twenty-first century are structurally different from before and this will be (or should be) reflected in the strategy process. Strategy processes have (or have to) become more agile and decisive. Strategy inherently is about the long term, but nowadays the pressure from banks and shareholders to achieve results in the short term is great. The tolerance for mistakes and risks remains low. Adjustments must be made instantly. You must therefore focus more than ever on the third variable: the M of mobilisation. This is about organising involvement and engagement in the process of both strategy formulation and strategy implementation. In short, it is about engaging key business partners and both external and internal stakeholders to get their understanding of and support for (or even buy-in on) your strategy.
When to use it
The strategic dialogue is a systematic approach to strategy formulation to be used in situations where both the formulation and implementation of a realistic and supported strategic plan are needed. It was originally developed as a methodology to overcome generic pitfalls that were frequently found during strategy formulation. These pitfalls are to be avoided in any strategy process and involve three aspects of the strategy formulation process: the scope of the process; the execution of the process; and the decision-making in the process. These aspects, and a description of some of the pitfalls, are shown in the following table.
We emphasise that the context or situation in which a new strategy is to be formulated affects both the content of the strategy and the process of formulating the strategy. This, of course, also holds for a strategy process with the strategic dialogue model. The scope and depth of the strategy process with the strategic dialogue model are also highly dependent on the specific contexts. This includes such contexts as restructuring, mergers or acquisitions and external disruptions (new technologies etc.). In each of these situations, compromises must be made between different aspects in the strategy process, as circumstances require specific demands. It may be that there is only a little time available, and the lead time will therefore be limited. It can also prevent the requirements of confidentiality limiting the group of people involved in expressing themselves. The nature of a specific situation determines the strategy process, sometimes creating more constraints than for a ‘regular’ strategy process.
How to use it
The strategic dialogue model is an integrated methodology of strategy formulation and implementation which has been developed on the basis of practical experience. It is not a one-size-fits-all standard prescription on how to do strategy, but it’s a generic approach that you can customise to your organisation and circumstances. Every company and every environment are different and require a customised approach. The strategic dialogue model offers an iterative process which is applicable to a multitude of situations and strategic issues. In the strategic dialogue model, we identified eight distinct steps, each with distinctive purposes, scope and activities:
- Searchlight. The setting of the process of strategy formulation and implementation and finding a shared ambition and business scope.
- Outside-in: Scenarios. The mapping of potential strategic positions from plausible future business environments.
- Inside-out: Analysis. The exploration of strategic options based on the abilities and limitations in the company.
- Options. The translation of analytical information to insights and, from there, to generating strategic options.
- Choice. The estimation of the risks and feasibility of the various options, leading to the choice of strategy.
- Operationalisation. Making an implementation plan, setting the implementation process in detail and cashing in on ‘quick wins’.
- Execution. The actual implementation of plans, policies and actions for change.
- Monitoring. The assessment of ongoing developments in the environment and organisational performance in relation to the strategy and strategic goals.
In each of the eight steps, other management models can be used for analysis, design or interaction. These are not equally important in every situation, nor is there a prescribed list of models to use in one or more of the steps. To get a clearer view of which ones to use, and when, see the references at the end of this chapter.
The schematic of the strategic dialogue model has the shape of two circles linked together: the process of formulation and of implementation (see Figure 2.1). These two circles together also form a lemniscate – the symbol for infinity – representing the integrated and iterative character of our approach to strategy. It depicts how everything is connected to everything else through logical links. Ideally, the strategy process will go through all eight steps of the model (an entire cycle) from left to right in the figure. The process of developing a mission statement, vision and strategy is described in the left-hand cycle. This process is fluid, interactive and creative. In the middle, the actual process of selection of strategic options takes place. This is where different options are weighed and choices are made. In the right-hand cycle, the emphasis is on the realisation and implementation of the choices made. This process is more rigid and action-oriented.
The final analysis
Formulating a successful strategy depends upon the quality of content and the method of implementation. However, of equal importance is the way in which the process is organised and the way the results are communicated to all parties. Efficient organisation and effective dialogue will greatly increase the success of the implementation phase. A number of factors are critical to get right when first setting up the process, in order to optimise the chances of delivering successful results:
- Determine who is to be involved, and which roles they are to assume during the strategy formulation process.
- Decide how to organise enthusiasm and buy-in for the strategy with the rest of the organisation – a plan without any commitment from those supposed to execute it is unlikely to succeed.
- Assess the quality of the team members’ input with regard to both the analyses and the vision. Consider their willingness to think about the future in a systematic and fundamental way.
- Decide which other models and instruments would be of value as part of the process.
- Decide how to communicate with non-participants about and during the process. This becomes increasingly important once the results become visible.
- Include processes to ensure that agreed procedures are adhered to, by all those involved, especially during the implementation phase.