Strategy for software Dummies – part 15

The title for this series of posts is inspired by the extensive series of instructional/reference books, which serve as non-intimidating guides for readers new to the various topics covered, or for readers who need a solid brush up.  The title doesn’t imply that software CEO’s are Dummies; only that there is a need for a new type of “strategy framework” that produces more than fluff and which can be completed in a very short time.

You can find a list of all posts in the series at the end of this post.

The “no strategy” option

You will find companies, which are successful without a clear strategy and with substantial misalignment. Such companies typically have a strong leader (or leaders) who is (are) capable of driving the company and motivating (paying) the staff to work hard. Established companies with a large installed base, high customer migration cost and a business model based on recurring revenue (from maintenance or subscription contracts) may survive quite some time without any clear strategic direction.

However, you don’t find many “no-strategy” companies in the software industry.

We will even argue that growing a software company from a startup position to a leading global position cannot be accomplished without clear strategies and alignment. The strategy may change frequently while the company finds its’ place in the world and re-alignment is required on an ongoing basis. But motivating talented people to generate extraordinary results requires clear, understandable, meaningful and logical directions.

The “Strategy for software Dummies” series clearly illustrates how easily management misalignment can occur.  We actually believe that management misalignment is the rule rather than the exception. 

The frequent occurrence of this phenomenon raises four questions:

1. Why does misalignment occur?
2. What are the ramifications of misalignment?
3. How can we avoid misalignment?
4. What is the cost/benefit ratio?

Why does misalignment occur?

We touched on these issues in post #4 (Why do management teams disagree?) and there are basically four scenarios:

1. You disagree on the direction of the company and you are exercising a power struggle to enforce your own perception.
2. You disagree on the direction of your company and you are working on finding common ground and direction.
3. You do not believe that you disagree on the direction of the company.
4. You know that you are aligned because you execute systematic alignment exercises from time to time.

Scenario 1: The Power Struggle

The Dictator Approach – only room for one

This scenario is very common and takes place every day all over the world in small as well as in large software companies. It can be executed on all levels in the company from the board of directors all the way through the ranks. The less strategic direction the company leadership is communicating the more uncertain is the purpose of every single activity.

A power struggle seldom lasts forever. The winners will get rid of the losers and a direction will be enforced. There is obviously no guarantee that this new direction is based on any rational analysis, or that the implementation follows a systematic approach. Actually, there is no demand for a systematic approach to strategy definition and alignment in this scenario. The charismatic leader(s) knows what he wants and enforces his views on the organization.

You could call this scenario “The Dictator Approach”. It may work well for some time, but it is not an effective and durable format.

Scenario 2: The Family Affair

The family affair – united we stand

This scenario is not uncommon. It typically happens when the management team knows each other very well and the team members respect each other, but the financial results of the company keep falling short of the budgets and the ambitions are not fulfilled.

Such situations call for a formal and structured framework for driving the process and reaching consensus. However, most often the management team choose to play it by ear and make the adjustments outside the management team.

You may call this “the family approach”. It is somewhat slow and there are no formal “elections”, but the approach has long-lasting advantages.  It doesn’t work well if there are one or more “Dictators” in the management team.

Scenario 3: The Sleeping Beauty

The sleeping beauty – any change requires an impact from the outside

This is the most frequent scenario.  Budgets are met, things are tagging along, and each member of the management team cares about his individual area. There is no compelling need to challenge each other.

Doing a strategy analysis and checking for alignment may open a can of worms and no one in the management team is interested in any additional work.

You may call this “the laissez-faire or sleeping beauty approach”. If it isn’t broken – don’t mend it. It is a very common approach with companies who are reaching their targets, mistaking that for being successful. You see this scenario frequently in all types of markets.

Scenario 4: Democracy (regular re-election required)

Democracy – re-election is required

We have yet to come across a company, which has a regular framework in place to check the strategic direction and assess the degree of alignment. Almost all companies wait for a “rocking the boat” moment; until some external impact leaves no other choice.

We obviously managed to motivate our clients to implement the ValuePerform approach and framework. However, in no situation have we been introducing the ValuePerform framework to replace another framework. There was never one in place before.

The benefits we experience from performing a strategy & alignment check are so obvious and substantial that any company should do so on an annual or semi-annual basis and repeat the exercise whenever new members are added to the management team.

You may call this “the democratic approach”. There are frequent “re-elections” and assessments at the helicopter level. Irrespective of how well the company is performing you are constantly assessing if and how you can do even better.

Previous posts in this series:

Post #1: Strategy? – oh no, not again!
Post #2: Introducing ValuePerform – a lean approach for strategy analysis and alignment
Post #3: The 6 sources for financial growth
Post #4: Why do management teams disagree?
Post #5: Getting the priorities in place
Post #6: The Customer Value Proposition
Post #7: The Customer Value Proposition TODAY
Post #8: The Customer Value Proposition in the FUTURE
Post #9: The Market Situation
Post #10: ValuePerform and the 15 Management Areas
Post #11: What is important and what is not?
Post #12: How are we performing?
Post #13: Identifying the important and the urgent issues
Post #14: The Action Plan
Post #15: Why does misalignment occur?
Post #16: The price of management misalignment
Post #17: Avoiding invisible or suppressed misalignment
Post#18: The cost/benefit ratio of ensuring alignment