Strategy for software Dummies – part 4
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.
This post #4 is discussing why management teams have difficulties setting the priorities for the six sources of growth.
A short recap from post#3.
The ABC company is planning to go global. They have asked a ValuePerform consultant to help them put an international Go-To-Market plan together. The ValuePerform consultant wants to know the current position of the ABC company before any work on future strategies commences. In post #3 it turned out that the management team wildly disagreed on the priorities for financial performance.
Why do management teams disagree?
There are obviously numerous reasons for disagreements in a management team. That’s not necessarily an issue at all. Decisions can be made through a process of reviewing the reasons for disagreement to a point where consensus is achieved or the CEO can make or delegate the final decision.
Disagreement can be a sign of health. It is a very positive situation when people dare speak their minds and question the decisions of their peers and superiors.
However, there are sets of fundamental issues where a management team cannot disagree for long. The priority of the 6 sources for growth is such a fundamental issue that disagreement will tap the company for the energy, split the management team and lower the performance.
The reasons why so many management teams are [slider title=”misaligned”] we have not yet come across one management team, which was fully aligned! [/slider] on fundamental issues are:
- They have never faced the requirement for assigning a priority to the 6 sources of growth
- They do not understand the ramification of misalignment on the 6 sources of growth
- They are looking at the world from each individual perspective. They are not a management team, just a group of managers meeting from time to time.
- They do not have a framework for distinguishing “MUST agree on” from “NICE to agree on”
- Strategic issues are left unsolved because the CEO wants to please everyone.
The necessity for setting priorities
In a recent interview in the Danish daily “Berlingske Tidende” SAP’s co-CEO Jim Hagemann Snabe said:
“It is possible to grow internationally [for small and medium sized companies], but you have to focus and confine your energy on what you are really good at. Strategy is very much choosing what not to do.”
There is a very close relationship between the priorities you make on the 6 sources of growth AND the strategies, activities and management focus you must apply. Also, the resources required will depend dramatically on your choices.
Pursuing major growth in new markets or with new products is obviously the most difficult and resource-demanding set of sources you can choose. Such an approach requires a very specific set of strategies with a focus on certain management areas and with substantial funds to support the effort.
Other 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