DIY Strategy Health Check

Getting a health check is always a good thing. It can tell you whether you’re in good shape or if you need to give attention to things before they get worse.

It’s the same with strategy. A health check can tell whether your strategy is in good shape or if action is needed to put it back on track. While you could get an external consultant to undertake it for you, it’s something you can easily do yourself if you have the right tools. Better still, if your colleagues also undertook the health check you could compare the results and see how aligned you are. It’s a very effective way of gaining insight into the health of your strategy and what actions, if any, need to be taken.

Health warning

By definition, a health check assesses the health of something against a predefined criterion. If checked against the wrong criterion then the results could be misleading and result in the wrong actions being taken. For example, a health check for an elderly person is based upon a different criterion to that for a new-born baby. It’s the same when undertaking a strategy health check. If the focus is on the strategy, as opposed to how it’s executed, the criterion will be different. It’s therefore important to be clear about what health you’re checking.

Beyond Default health checks

Like a medical health check that looks at a number of different things such as weight, height, blood pressure, cholesterol and glucose levels, and alcohol consumption, the Beyond Default® health checks look at a number of different facets of strategy. We call these facets the critical conditions for success (CfS), the logic being that if these conditions are in place then the strategy is in good health and the intended outcomes are more likely to be achieved.

The central premise of the Beyond Default® approach to strategy is that all organisations are on a trajectory to their default future, which is the place they will end up if its leaders take no action, other than that currently planned. The essential purpose of any strategy is to understand the default future and, if it’s unacceptable, decide what actions need to be taken to put the organisation on a different trajectory – one that leads to an improved future. A strategy health check is simply a means of assessing whether the necessary conditions for achieving this change in trajectory are in place.

There are two Beyond Default® health checks: one focusing on strategy development and the other on strategy execution. While some of the conditions for success are the same for both health checks, others are different, simply because they’re assessing the health of different things.

This health check focuses on strategy development. It can either be undertaken online or by answering the questions below. The online version can also compare the health of your strategy to that of other similar organisations. If your colleagues also complete the online version we can provide an assessment of how aligned your thinking is. A commentary on the results is also given.

Assessing the degree to which the CfS are in place

The degree to which each condition for success is in place is based upon the following six-point scale:
0. Importance of the condition is not recognised and therefore no action is being taken to put it in place.
1. Importance of the condition is recognised, but little progress has been made to put it in place.
2. Condition for success is being put in place, but has yet to reach a level where it is having a positive impact.
3. Condition for success has reached a level where it is having a positive impact.
4. Condition for success is being put in place, but is not yet sufficiently robust.
5. Condition for success is in place and has achieved the necessary level of robustness.

When completing the assessment base your judgement on what you instinctively believe to be the case. Don’t be too analytical as what we aim to capture is what you believe to be the case. This is where this health check differs from medical health checks, which focus on measurements and tests.

Conditions for success

The health check looks at the following 10 conditions for success, assessed on the above scale of 0 to 5. They are defined as if they are already in place – rather than as actions required to put them in place. Articulating them in this way encourages people to mentally model the future state and then ask themselves what needs to be done to put them in place. This technique is often described as ‘managing the present as a past condition of the future’. It’s when you imagine you’re in a future state, look back at the present and ask yourself, “What do I need to do to get to where, hypothetically, I am now?”. Defining them this way enables colleagues to exercise their judgement, apply their experience and use their expertise to put the conditions in place, thereby increasing the chances of success.

For each of the following 10 conditions for success rate the degree to which you think they are in place based upon the above 0 to 5 scale.

  1. Common language
    You and your leadership colleagues have a shared understanding of what strategy is, what it comprises and what good strategy looks like. This is supported by a common language based upon a shared definition of terms used to describe the strategy.
  2. Default future
    You and your leadership colleagues understand what the default future of your organisation might be. Collectively you are prepared to confront it.

    Note: All organisations, whether they are a private or publicly-quoted company, a not-for-profit organisation or government agency, an established organisation or one that is relatively young, are on a trajectory towards their default future – which is where they will end up if no action is taken other than that currently planned.

  3. Strategic context
    The influence of exogenous forces is understood, both in terms of how they define the context within which your organisation currently operates and how they might change the context over time. How these changing exogenous forces are opening up new strategic opportunities and closing down others has been assessed. There is alignment across the leadership on how and why the context is changing.

    Note: Exogenous forces originate from outside an organisation and determine the context within which it operates. You cannot control these forces, only respond to them. Examples of exogenous forces that could profoundly change the context for many organisations include central bank digital currencies, the economic growth of China and Asia, economics of mutuality, climate change, consumer demand for ethical sourcing, the breaking down of the regulatory frameworks of nation states, the push-back against globalisation resulting from its impact on the globe’s carbon footprint, and the expectations of the younger generation to take a more proactive approach to protecting the planet. Not forgetting the actions of your competitors.

  4. Strategic intent
    The strategy has a clear strategic intent on which the leadership is aligned.

    Note: Strategic intent is what an organisation aims to achieve or become. It is different to vision, which defines an end-state as its focus is more on trajectory, as in ‘trajectory of strategic intent’.

  5. Endogenous forces
    The influence of endogenous forces were taken into consideration when deciding the strategic intent. There is shared understanding across leadership on which of these forces could anchor your organisation to its current trajectory and which could pull it onto its trajectory of strategic intent.

    Note: Endogenous forces originate from within the organisation and to a large degree are the result of past management decisions and actions. Examples include organisational structure, roles and responsibilities, process design, sourcing agreements, recognition and reward systems, performance management systems, IT systems, governance and culture. They can either anchor an organisation to its current trajectory or ‘pull’ it onto its target trajectory (of strategic intent). As they originate from within the organisation they are – in theory – within the control of management.

  6. Strategic signature
    The strategic axes (sources of value) and target strategic signature has been explicitly defined. For each strategic axis there is a sub-strategy. There is alignment on the target strategic signature across the leadership.

    Note: A strategic axis represents a source of value that an organisation delivers to its stakeholders. They define not only what an organisation does, but also the extent to which it does it. The outcomes (of value) for each strategic axis are distinctively different, and the capabilities needed to execute them are different. For example, in financial services a mortgage strategic axis requires different competencies, processes and technology to that of a strategic axis providing current/checking accounts. The outcomes of each strategic axis contribute to realising the strategic intent. As organisations in the same sector could potentially operate on the same strategic axes, where they choose to position themselves on each axis is likely to be different. This uniqueness defines their strategic signature.

  7. Strategic decisions
    The strategic decisions have been identified and explicitly defined. There is a clear distinction between strategic decisions and other decisions. The implications of getting the strategic decisions wrong is clearly understood. There is alignment across the leadership on the strategic decisions and the resultant risk.

    Note: Strategic decisions are those that, once executed, are difficult, if not impossible, to reverse or undue. All other decisions are essentially planning decisions that can be changed – albeit at a cost.

  8. Operating principles
    The operating principles defining how the organisation should operate in order to change its trajectory are clearly defined. They are articulated in a way that can be easily understood and executed by colleagues across the organisation. The implications of operating to these principles has been assessed and where management needs to focus identified. There is alignment across the leadership on the operating principles.

    Note: An operating principle is a ‘conscious choice between two equally valid alternatives’. At one level, they are constraining as they define how the organisation should, and should not, operate in the future. But on another level, they are principles and not practices, and how operating principles are operationalised depends on the context within which they’re being applied. The translation of a principle into one or more practices enables people to become engaged in turning strategic intent into operational reality.

  9. Execution approach
    Different approaches to executing the strategy have been considered and one has been chosen. The principles of the chosen approach have been defined and the implications understood. There is alignment across the leadership on the chosen approach.

    Note: There are many approaches to executing strategy, but the essential difference is between pushing an organisation onto its trajectory of strategic intent and pulling it. Strategy implementation, as it’s generally practised, is about pushing the present into the future rather than pulling the present into the future. The push approach is predicated on the assumption that successful implementation is achieved through the execution of a series of steps – essentially implementation of a predefined plan, where the completion of each step takes the organisation closer to its target state. The pull approach takes a different perspective, creating a context where colleagues can exercise their judgement, apply their experience and use their expertise to pull the organisation from its current trajectory to the one required to achieve its strategic intent.

  10. Collective leadership
    Collective leadership is the predominant leadership model, where colleagues put time and effort into being aligned in their thinking and behaviour. The leadership also takes collective action and accepts collective accountability.

    Note: Collective leadership is where members of a leadership team pursue a collective agenda, rather than their individual agendas. It’s where individuals exercise their leadership roles within a group – and then the entire group provides leadership to the wider organisation. It’s a fluid and flexible approach to leadership, where roles and resultant accountabilities evolve in response to changing circumstances.

Having completed the assessment you may think that other important conditions for success like sponsorship, funding, communication, commitment and resources are missing. As these conditions need to be in place for all forms of change programme we’ve excluded them here, but that’s not to say they aren’t important and need to be in place.

Interpreting the results

As previously mentioned, all assessments are made against a criterion, in this case the Beyond Default® approach to developing strategy. Therefore, if the majority of your answers are between 0 and 2, it doesn’t necessarily mean that your strategy won’t be success, it just means that you’ve not given consideration to the factors that the Beyond Default® approach considers important.

Whatever the results, the hope is that they will trigger a constructive conversation with your leadership colleagues, one in which you ask, “have we missed anything?” and “are these conditions for success something we should have considered?”.

That’s why our health checks are based upon dialogic assessments rather than audits. Over the years we’ve found that while people don’t like being assessed, they do want to be part of the assessment process! People like to know how they and their organisation are doing, but are sceptical of outside consultants coming in to ‘assess’ them. Self-assessments not only allow those involved to retain ownership, they also motivate resultant action, especially when they are transparent. Like any meaningful study, the process should be repeated periodically with consistent, comparable results. In fact, repetition over time is important in order to track progress.

Finally, why not complete the health check online and get your leadership colleagues to do it as well? We can then tell you how aligned you are and how the health of your strategy compares with other similar organisations.

I welcome your thoughts.

David Trafford
Co-author of Beyond Default and Managing Director of Formicio, a strategy and change management consultancy