Field Guide

Shared Language: Strategy and Outcomes

May 28, 2024

Chris Combe

For a strategy to be impactful, it needs to enable distributed decision making, and in so doing, connecting the organisation through outcome alignment.

TeamForm Shared language series

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If teams struggle to understand the organisation's strategy, they cannot put their work into context and that creates challenges around alignment. Teams delivering value to customers, can align their work to the wider outcomes of the organisation. This helps empower teams to be more innovative and identify opportunities more quickly.

A strategy should continue to be validated and refined as the organisation learns. The tighter the feedback loop, the faster organisations can adapt to new opportunities or adjust their approach. This known as the Flywheel Effect and first referenced in the book “Good to Great” by Jim Collins. This was recently illustrated with COVID, any organisation not adapting was at risk of going out of business.

When it comes to strategy, shared language is useful, it just isn't sufficient. Teams must plan and collaborate together, if they are to deliver sophisticated offerings to market. A single cross-functional team will rarely be able to realise a strategic outcome alone.

Learning what works and what doesn't is complex, it requires humility and a willingness to learn and experiment. Simply making a bold decision and putting your head in the sand is never going to work. If this is a topic you are interested in learning more about, the additional resources section below will help you get started.

Strategy to execution is a muscle that we need to build and strengthen. We need to close the divide between strategy and execution. Strategy is for everyone, not just the strategy team. Execution and delivery is for everyone, not just the [..] team.

6 Ways to close the gap between Strategy and Execution - Sooner Safer Happier, Maria Muir

6 ways to close the gap between Strategy and Execution

Definitions

Strategy: “It is how you overcome the obstacles that stand between where you are and what you want to achieve” - Richard Rumelt
Strategy to Execution: Is a mechanism to align, measure and continue to assess the viability and feedback of the implementation of the strategy across the organisation. This includes but is not limited to strategy, objectives, measures, initiatives, work and teams. How strategy is developed, understood, contextualised and communicated, is often as challenging as defining the strategy in the first place.
Outcomes: are the desired change in behaviour or results from the work performed. These outcomes can be at any level from the company to the team, to the product to the customer. The reason for using outcomes is to inspect the behaviour changes and impact of the work (or the output). Doing the work is simply not enough, if it didn’t result in the outcome the organisation was looking for.
OKRs (Objectives and Key Results): are a popular goal setting framework, Objectives are the overarching goals a team or person would like to accomplish. Key Results are measurable (specific and time-bound) action steps towards achieving the Objective (source: Measure What Matters)

According to Richard Rumelt, these are the qualities of a Good Strategy:

"Strategy cannot be a useful concept if it is a synonym for success. Nor can it be a useful tool if it is confused with ambition, determination, inspirational leadership, and innovation. Ambition is drive and zeal to excel. Determination is commitment and grit. Innovation is the discovery and engineering of new ways to do things. Inspirational leadership motivates people to sacrifice for their own and the common good. And strategy, responsive to innovation and ambition, selects the path, identifying how, why, and where leadership and determination are to be applied."

Good Strategy Bad Strategy, Richard Rumelt

Consider your strategy, does it provide clarity on which paths to take? In the context of your organisation, what does it mean for products and services, work, collaboration, etc?

To realise a strategy, what needs to be true, in order to be successful (from Playing to Win) is a great way to empower co-creation over competition. When strategic proposals are reviewed from the lens of a strategy being successful, it enables a more pragmatic view of cost, likelihood, time, effort and value to come into frame. This is a way to remove charismatic pitches from the equation and let the proposal and analysis drive the opportunities and direction. Understanding and tackling hard problems early on, enables better decision making and aids proactive risk management.

A Fictional Journey to Paris

Let’s imagine a seemingly innocent strategy: “we are heading to Paris” (inspired by Chris Matts https://theitriskmanager.com/)

Purpose: Why is the organisation headed to Paris, what does Paris unlock for the organisation or its customers, are we going there before the competition is there, are our customers there?
Clarity: Is that Paris France or Paris Texas?
Timing: How long do we have to get there, should we go today, tomorrow, next week or next year?
Constraints: Are there any constraints such as cost, timing and logistics
Specificity: Paris France is a moderately sized city, is there anywhere in particular we want to arrive, is there an event or building we are trying to get to?
Context: Is it just you heading there, are you going with friends, do you need to see if your travel companions can take work off and does that availability overlap when you can go too?
Drivers: Are you going to Paris to have fun, to take photos for your Instagram, to move there, to participate in an event etc.

Consider a global organisation (e.g. across multiple continents, time zones etc), everyone needs to plan in their own context. They cannot all have the same travel plans, people come from different places of origin, e.g. someone in the UK may take the train, someone in the US might be flying. How people get to the destination will differ depending on the point of origin. This is why teams need to put outcomes into their context even if the overarching outcome or goal is shared. Should everyone pay for private jets, take a ship or is there any guidance for how to get there?

The above fictional journey is an attempt to highlight the importance of thinking through a strategy and the implications for an organisation. Without clarity and sufficient nuance, good intention may get in the way of realising outcomes.

The reality of strategy

Organisations are complex adaptive systems; publishing a strategy on a yearly basis and expecting it to happen without involving the people doing the work creates ambiguity and can lead to teams mis-interpreting the strategy and heading in the “wrong” direction. The strategy should enable a process of alignment.
Strategies are not static, mechanical, or deterministic; organisations need to adapt as they learn from each other, customers, competitors and the market.
Organisations are a network of teams and people working together to achieve outcomes, larger than the sum of its parts. If the strategy is only happening top down, it is likely to lead to the wrong behaviours and outcomes. People in teams building products and services have incredible insight and are a huge source of opportunity and innovation. Strategy to execution is bidirectional, it cannot work effectively top down (aka one way). As teams realise outcomes through their work, outcomes inform strategy and higher-level outcomes that span a longer horizon.
Strategies are based on assumptions and happen at a level of granularity that is different from those doing the work to make it a reality. For organisations to get the most out of their teams, teams need a sense of purpose, identity, and ownership over outcomes they can contribute to. Team level outcomes link back to the organisations broader outcomes that tie into the strategy.

Strategy to Execution Considerations

Cadence and sequence of events:
- What is the process for communicating the strategy across the organisation?
- How do you invite contribution and collaboration around strategy?
- How do you plan to validate that the strategy is understood?
- Is the strategy measurable and outcome based?
Artefacts used for strategy and outcomes:
- How do you measure the outcomes you are heading for?
- How are you validating the strategy with data?
Connected strategy:
- Are you able to link strategy to execution / delivery?
- You might think you have the best strategy in the world, if no one understands it, then your strategy won't get you very far.

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Strategy and Outcome considerations

Visualise and connect the strategy through the organisation with goals / outcomes, work, teams etc.

Think about outcomes that are both shorter and longer term, with leading and lagging measures.

Outcomes and other outcomes

e.g. a strategic outcome aligned to a division, product outcomes over a quarter, team outcomes etc.
How do other parts of the organisation contribute to a shared outcome? (e.g. Sales, Finance, Compliance, People, Technology etc.)
Do teams create their own outcomes, do they link their outcomes to yours?
Do they link planned work to yours, do you need to plan and collaborate on the approach, the work etc.?
What happens if there are steps required that need coordinating?
Can step 2 be delivered before step 1?
The further an outcome can be sliced, the more achievable the chance of realising it.
Smaller outcomes typically require less overall coordination. The Checkbox project highlights an extreme case of when this type of situation seems simple but requires significant coordination cost to a large organisation.

Outcomes and teams

Who (if anyone) is aligned to the outcomes?
Do your teams find purpose in their work, and can they connect to the outcomes?
Do your teams have their own outcomes that they can connect with?

Outcomes and work

How are teams slicing outcomes, are they able to slice outcomes into smaller outcomes that are still valuable?
If teams only slice activities or tasks, this can be dangerous and lead to an attitude of "throwing work over the fence" (creating handovers).
Only slicing work and not outcomes, can lead to blocking flow due to unnecessary dependencies and high coordination costs.
Do teams still have some of their work not linked to outcomes?

Wiring the strategy to the organisation

Prompt: What information would let you know if the organisation is heading in the wrong direction?

The concept of the “Golden Thread” used at Nationwide and other places, enables a level of transparency and governance around the investment of strategy, outcomes, work, and releases. The example below is based on a large financial services organisation with approximately 100k people. Small or larger organisations will have less or more layers and potentially different investment horizons.

How can different layers span investment horizons?

This comes down to having faster feedback loops to learn, which gives you the ability to:

learn and uncover underlying assumptions you made in the strategy
adapt from learnings – are we building the right thing? do we need more, or different teams involved?
have conversations earlier on to make sure the organisation is providing what you need (decisions, capacity allocation, support from other teams, etc)
longer horizon outcomes often reference lagging indicators that are outside of a team's direct influence. In larger organisations with hundreds / thousands of teams, it might not be clear how a team's contributions lead to lagging results. e.g. a single team in a large organisation may have trouble directly affecting profitability or at least not in the short term, teams can however target user's experience and behaviour to increase adoption and utilisation.

Layers of goals / outcomes - that is up to you and your organisation, rather than forcing an absolute number, being flexible to consider a maximum is safer. There are plenty of great resources on OKRs, so we will not cover that here.

Numbers of goals / outcomes (OKRs) - the general rule of thumb is 1-3 OKRs (Os) per level, and each OKR has 3-5 (KRs). Any more than that and you lose the whole point of OKRs which is to create focus and alignment on outcome. More OKRs means less focus, which means less chance of success.

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Next up

The next article will cover work breakdown and right sizing of work to enable a more effective management of work as a portfolio with a focus on learning and finishing work, before starting more.

Additional resources

Strategy and goal frameworks

Strategy Frameworks (Objectives, Goals, Strategies & Measures (OGSM), Balanced Scorecard, V2MOM, Hoshin Kanri)
Karl Scotland - Strategy Deployment
Flight Levels Learn Flight Levels - Flight Levels Academy ‍
Comparison of three strategy alignment frameworks – OKRs, Spotify Rhythm and Art of Action Strategy Briefing - Crisp's Blog ‍
6 ways to close the gap between Strategy and Execution