“Strategy is a framework to guide critical choices to achieve a desired future,” said MIT Sloan senior lecturer Donald Sull in a new MIT Sloan Management Review webinar.
But companies frequently hamstring themselves.
Too often companies get lost in jargon. Sull has made a Mad Libs-style chart of overused buzzwords — fallback words like “digitize” and “monetize” and “leverage” — to illustrate how often companies overinflate their vision.
Other times, companies lay out an overly detailed long-term plan. The problem with this overambitious method is that “no plan survives contact with reality,” he said.
Instead, a strategic vision must be detailed enough to lay out a clear vision while being broad enough to allow for flexibility and adjustment.
Call it the Occam’s razor theory of corporate methodology: An ideal strategy provides enough guidance to empower workers to make trade-offs, formulate goals, allocate resources, prioritize activities, and clarify what people are committing to do. At the same time, it offers enough flexibility to allow people to seize opportunities and adapt as needed.
“This is hard,” Sull acknowledged.
Take American Airlines versus Southwest Airlines. American has goals like “be an industry leader” and “look to the future.” Inspiring but vague. Southwest, on the other hand, has initiatives like “fleet modernization” and “growth of Rapid Rewards program.” Precise and defined.
Here’s how to do the same.
Limit your objectives to a handful. This forces you to focus on what matters most and make important trade-offs among conflicting objectives.
Focus on the midterm. Priorities usually take three to five years to accomplish, Sull said. Annual goals are too tactical, and long-term goals are too abstract to offer real guidance.
Pull toward the future. “Many companies think about what worked well in the past. That’s fine, if the future looks like the past,” he said. To shake off inertia, think about priorities that don’t reinforce the status quo.
Make the hard calls. Strategy is about choice, and priorities should force you to confront the most consequential and sometimes difficult trade-offs.
Address critical vulnerabilities. Your strategic priorities should be critical to your company’s success and are most likely to fail in execution, hence deserving attention.
Provide concrete guidance. Priorities should provide a framework for leaders throughout the organization to decide where to focus and what to stop doing, with metrics.
Align the top team. Leaders often fail on this count. Sull cited a survey of 302 companies, where given five tries, only 29 percent of managers could name three of their company’s strategic priorities.
He closed with a Zen koan.
“If a strategy falls into a company and nobody understands it, does it make a difference?” he asked.
Unlike most koans, this one has a correct answer: No.
Sull teaches the MIT Sloan Executive Education course Closing the Gap Between Strategy and Execution.
Read next: How to create meaningful strategic priorities
