A Point of View: Let’s Hear It for Strategic Commitment

BENJAMIN B. TREGOE AND PETER M. TOBIA

When the management history of the past decade has been written, the focus on commitment undoubtedly will emerge as one of the blockbuster contributions. Empowerment, shared management, Theory Z, quality circles, and countless other sorties flown over the management terrain aim at engaging the head and heart, as well as the hands of every employee.

With all the hubbub over commitment, one would think that the issue has been pretty well exhausted. Not true. Most discussions on the subject focus on gaining commitment to the “how we do things” dimension, such as improving productivity, quality, delivery time, and the treatment of em- ployees. Far less attention has been paid to gaining commitment to the “what we do,” or strategic, dimension. Putting people behind an organization’s vision is equally as important as whipping up enthusiasm for productivity. Without being well-directcd, being well-run can get you into serious trouble.

The U.K. tractor division of the Toronto-based Varity Corporation (formerly Massey-Ferguson) offers a good example of the corrosive effect of lack of strategic commitment. The tractor division set strategy and spent lots of time and effort implementing the new direction throughout its European offices. Everything was done by the book. Yet, the strategy failed because a few divisional managers sandbagged the effort by with- holding commitment. The strategy-and the organization-went no- where.

But what causes lack of strategic commitment? In our work with organizations of every size and type over the last twcnty years, we have observed four major reasons.

REASON 1: LACK OF STRATEGIC UNDERSTANDING It is difficult to commit to something you do not understand. This sounds

rather self-evident, but it is important to remember, especially when the goal is fostering strategic understanding. Strategy is not unusually difficult to grasp. Rather, so little time is spent on thinking through strategic issues that, even within the top management team, the overall strategy is often Benjamin B. Tregoe is chairman and chief executive oficer and Peter M. Tobia L vice president of Kepner-Tregoe, Inc., a Princeton, New Jersey, consulting firm specializing in strategic and operational decision making. Their book Vision in Actim , co-authored with John W . Zimmerman and Ronald A . Smith, was recenily published by S i m n & Schuster. National Productivity ReviewlVol. 9, No. 3lSummer 1990 253

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misunderstood. Nothing kills strategic understanding more quickly than a strategy that

is too complex or too long. Telephone book strategies are difficult to retain and tend not to be used in the rough and tumble of day-to-day decision making. And, they often confuse strategic, or “what,” elements with operational, or “how to get there,” issues and plans. This adds yet another roadblock to commitment. After all, what are we really being asked to believe?

Powerful visions are simple and clearly told. Just think of the Ten Commandments, the Declaration of Independence, The Communist Muni- f e w , or a Winston Churchill World War I1 speech. All of these present messages that are so simple and direct you can almost touch them. Our corporate strategies should be equally compelling. Otherwise, they will not speak to the imagination or the heart. To test whether or not your company’s or unit’s strategy is clear, ask yourself if you can specifically answer these five questions:

What is the thrust or focus for future business development? What is the scope of products and markets that will and will not be considered? What is the future emphasis (or priority) and mix for products and markets that fall within that scope? What key capabilities are required to make strategic vision happen? What does this vision imply for growth and return expectations?

REASON 2: STRATEGIC IRRELEVANCE Is the strategy realistic and appropriate to meet whatever changes lie

ahead? While it is true that a person’s reach ought to exceed his or her grasp, the strategy has to be rooted in reality. Who can get excited about a strategy that is too far afield to work? For example, Charles W. Parry, former CEO of Alcoa, had an unrealistic goal of expanding non-aluminum production to 50 percent of Alcoa’s business. Not surprisingly, Pany and his strategy are gone. Western Union provides a good example of strategic shortsight- edness. More than one hundred years ago, Western Union turned down the rights to Alexander Graham Bell’s telephone. More recently, the company was blindsided by the fax machine. Now, Western Union is sadly in need of life support as it struggles to survive. Unrealism and shortsightedness as long-term strategic postures breed defeatism, not commitment.

Even a smartly formulated strategy does not necessarily engender commitment unless those down the line can relate it to their job situation. “What are the implications of the vision for my area of responsibility?” Getting everyone to ask and answer this question is an important step in having employees lay claim to the strategic vision.

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A POINT OF VIEW

REASON 3: LACK OF INVOLVEMENT There was a time, not very long ago, when strategy was considered the

private sport of the CEO and a few of the star players on his or her squad. But when company after company lost ground to more strategically sawy competitors, forward-thinking senior executives began to ask: How can we become more effective in implementing the overall strategy?

Answer: Open up the strategy process to the entire organization. That is the best way to gain everyone’s commitment to strategic action. Not that strategy is a “one person-one vote”exercise. Strategy formulation remains the unique responsibility of the CEO and top executives. But the key to making strategy work is to convert the top team’s strategy to “our” strategy. Commitment is a more powerful motivator than compliance.

There are many ways to involve a broad number of employees in the strategic process. For example, in our consulting work, we first ask the top team to consider the organization’s basic beliefs. These “self-evident truths” can exercise a gravitational pull on the strategy. They must be made explicit so that they can be revised or reaffirmed to square with the strategic direction. Once there is agreement on the basic beliefs or values of the or- ganization, the next question becomes, “Are we living up to these beliefs?” At the Washington Mutual Financial Group in Seattle, Washington, chair- man Lou Pepper formed a committee on values and staffed it with middle managers. The committee’s charge is to take a tough look at the organiza- tion to uncover any gaps between rhetoric and reality. When the two diverge, the committee then reports back directly to Pepper and changes are made swiftly. Given this involvement, are managers and employees at Washington Mutual committed to the organization’s values? Your bet they are. Strategic involvement breeds operational excellence. When thinking through the issue of strategic involvement, keep these points in mind:

Relying solely on outside consultants to determine strategy makes the consultants-and not those in the organization-the owners of the vision. Viewing the CEO as superman corrodes commitment. The world is too complex for omniscient heroes. Strategy is a team sport. Middle managers complaining that they cannot set strategy for their unit until senior managers get their strategy act together are copping out. Anyone managing resources must set a direction, even if those higher up have shirked their responsibility.

REASON 4: THE FAILURE TO COMMUNICATE Not long ago, Roger Smith of General Motors lamented in Fortune, “I

sure wish I’d done abetterjob communicating with GM people. I’d do that differently a second time around and make sure they understand and shared my vision for the company.” Doing a “better job” involves hard work and National Productivity RcvicwlVol. 9, No. 3lSummer 1990 255

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an ongoing effort to bring to life the five essential components for effec- tively communicating strategy: a common strategic language; simplicity/ specificity; repetition; relevance; and testing for understanding. When an organization clearly and specifically formulates strategy; shares that strat- egy with others using a common language or process; tests everyone’s understanding; repeats the message at every opportunity; and helps manag- ers and key contributors to see how the strategy makes a difference to them-when strategy becomes part of the working dialogue-it is effec- tively communicating the strategic message.

TESTING YOUR STRATEGIC COMMITMENT

organization’s strategy, ask yourself and your colleagues: If you want to take a reading of the level of commitment to your

Was the strategy developed by the top team? Are the middle- or lower-level managers involved in collecting information needed for reviewing or modifying the strategy or testing the reality of the key assumptions on which the strategy is based? Is the board of directors involved in the strategy formulation process in any way before being asked to approve it? Are task groups representing a cross section of the organization used to address critical issues regarding strategy implementation? Are the initiatives of the line and staff groups consistent with the strategy? Are there relatively few conflicts among higher-level managers over resource allocation among line and staff units? Are meetings held at all levels in the line and staff groups to allow discussion of the implications of the strategy for each group? Does every manager have an agreed-upon role in communicating and discussing the strategy with subordinates? Does management continually repeat and reinforce the strategy at every opportunity? Is the strategy communicated to or discussed with external stockholders, such as the investment community, suppliers. dis- tributors, unions, and customers?

The more questions answered “yes,” the greater the probability that all employees stand behind their organization’s future vision-and the greater the likelihood that the future they want will be the future they inherit.

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