Decoding Strategy – In Conversation with Prof Vedavyas – Part I
What exactly is strategy? Is it the shiny thing to be put up as a plaque on top of the reception board? Is it a part of your vision statement? Is it the vision statement? Is it the decision to launch or not launch a campaign? Is it the course corrections you do everyday? While strategy is probably the most used term in corporate corridors, it is also one of the least understood. We often confuse strategy with corporate goals, daily tactical plans and several other concepts or issues that are addressed by strategy but not core to it.
To decode what strategy really is, we caught up with Professor Vedavyas who has spent a long and successful career in building and executing strategy for global enterprises. We will run this as a two-part interview which deep dives into what strategy really is and attempts to demystify it. It also builds in the important connectors for middle management as most corporates struggle with the classic gap between executive strategy and the on-ground implementation.
Q1. Strategy is a often misunderstood concept. How do you define strategy? How can we explain it in simple terms to every team member?
Yes, strategy is a misunderstood concept. Before using any technical terms, let me start with an anecdote that shows what is not strategy. When I was studying, my college was known for Table Tennis among other things. The college champion was selected for the national team to represent India in the world championships. Those days, the Swedes were, by far, world champions. After the team returned, roundly defeated by the Swedes, this friend of mine was recounting what happened in the championship. Asked what the 'strategy' should be for beating the Swedes, the coach apparently said - 'look the strategy is very simple - always make sure you are at least two points ahead of your opponent'!!!
Do you see why that sentence does not constitute strategy? It talks about being two points ahead, but does not answer 'how?'. Being two points ahead is a necessary goal, but does not constitute strategy. It is akin to saying 'my strategy is to beat all competitors' - that is not strategy.
Strategy is about answering the 'how' questions - how do we beat competition?, how do we gain market share?, how do we increase customer satisfaction?, how do we please investors? how do we ....?. how do we...? etc etc. A company without a strategy is like a ship without a rudder. It will meander into the waters and end up going nowhere.
To answer these 'how' questions, you need a coordinated set of plans which when executed properly achieves the goals you have set for yourself. That is when you have achieved your strategy.
When you take a simple question like 'how do I beat the competition', you will realize that the answer to this may keep changing with time - the answer depends on what competition is doing at different points in time, how new competitors are entering etc. As you analyse each 'how' questions, you will realize that strategy is not something that is thought up once and then executed. It is something that needs to be fine-tuned continuously depending on external conditions, industry environment and internal situation. It is not time-invariant.
Q2. You have played key leadership roles for large IT organizations. Have you felt a gap in the way top management and middle management view strategy?
In most cases, yes. There is a gap between top and middle management in terms of strategic thinking. The top three causes in my view are -
1. Understanding of strategy - Many middle managers reach there due to years of service and/or performance. Most are very strong in execution, but due to lack of training on strategy, they end up having gaps in what is actually possible in the market versus what they can come up with. In several cases, the leadership fails to involve middle managers in formulating strategy. And in many cases, communication is lacking. These can lead to major gaps in understanding between middle management and top leadership.
2. Understanding stakeholder expectations - Generally, the top management has better understanding of investor expectations, while middle managers are closer to the customer and understand them better. When the customer wants something that is not in the interest of the investor, what do you do? In one of my previous organizations, we wanted to do a lot more of System Integration work as that is what my customer wanted. That would increase revenue, but reduce margins. Now, higher margins are important for EPS and hence to the share price. In such cases, it is essential for the middle management and top management to sit together and work out a strategy based on market conditions, potential for growth and such other factors.
Q3. Do you think Indian organizations are often more focused on day to day operations and miss strategic direction? What can we do to correct this?
While day-to-day operations are very important and those are the ones that make the strategy work, it may lead to 'missing the woods for the trees'. Most managers would like to spend time on strategy, but end up saying 'where is the time?'. This kind of thinking is counter productive. It only makes the future worse and the competition stronger. Every manager has to continuously ask the questions,
This kind of thinking can only come by understanding what strategy is all about and how it is important for the survival and growth of the company. To start with, I would strongly recommend a training program on familiarising oneself with strategy and its tools. Armed with these, a manager starts looking at the happenings around him with a new perspective and therefore add value to his firm.
3. Empowerment - When one becomes responsible for running the P&L, no matter how small the scope is, it makes people feel empowered and hence responsible. What I find is that in organizations where middle managers are empowered and asked to run their businesses like CEOs, the strategic alignment between top and middle managers is quite close.
Q4. What are the key steps that organizations can take to ensure middle management is aligned with corporate vision and strategy?
In my view, the three key aspects to focus on in order to ensure middle management's alignment with corporate vision are Identity, Information and Involvement.
It is important to create a culture where middle management identifies itself with the organization. That means 'pride' in working for it. Any word against the company should invoke a sense of defence and shame at the same time. Defence to defend the company, like a mother would defend her child; a sense of shame that the company is being bandied about. Identifying with the company requires the leadership to look at every middle manager, in fact every employee, as a brand ambassador. This is possible only through career building and transparency, which leads us to the second key aspect.
Information and communication of that information to the middle management is critical to alignment. Middle management should not come to know about company plans from an external source or from competition. There is nothing like 'over communication'. If you want your middle management to execute your strategy, keep them informed of the good, bad and ugly news. Just the fact that you are taking them into your confidence will usually make them loyal and ready to give their best for the company. Make them feel wanted - that leads us to the third of the key aspects. Inform them about what is expected of them in executing strategy, how they will be measured and how they will be rewarded.
Make sure your middle management is involved in the decision making. It does not mean that you have a jumbo meeting to decide every key twist and turn of the decision. Make sure you take their inputs in coming up with strategy. Communicate with them why you have taken the decision that you have taken. I know Japanese companies that take a long time (some times - years) to decide on an offshore partner because the senior team wants to involve not just middle management but also lower management in choosing the vendor. The reason is simple. They expect the partner to have a long term relationship - that means today's middle management will have to deal with them many years from now when they become senior management. That is the kind of long term vision and related set of actions that one needs to take while formulating business strategy. The strategic direction you set today will have to be executed in the long term by today's middle management.
Prof. Vedavyas has more than 25 years of industry experience. He was the Regional Head of TCS in Birmingham, UK and was Senior Vice-President at Tech Mahindra (earlier Mahindra Satyam) responsible for global Telecom business before moving to academics.
He studied B.Sc., from the National College, Bangalore and went on to complete his B.E., in Electronics and Communication Engineering from Indian Institute of Science. He completed his MBA from the Indian Institute of Management, Bangalore.