Making and implementing strategic decisions

In addition to facts, companies' strategic decisions are always based on assumptions about the future - even more so than before in a VUCA world characterized by rapid change. Accordingly, such decisions must be planned and implemented professionally. Frank Ninnemann, Managing Partner at MTI, explains how companies make strategic decisions such as "We are restructuring" or "We are expanding our digital sales channels". Usually, one or two decision-makers initially have the feeling "We should do something, otherwise ..." For example, because they find certain (key) figures alarming. So they observe the development in question more closely and talk about it informally with colleagues or consultants. And are their assumptions confirmed? Then they officially put the issue on the company's agenda with the appeal: "We should do something. Otherwise ...".

Collect information and design scenarios

It is often not easy to communicate the need for decisions and action, even to a company's top team. This is because strategic decisions mentally anticipate the future. They are therefore also based on assumptions - for example, about how the market will develop. Or what will be technically possible in a few years' time. And these assumptions can only be backed up with figures, data and facts to a limited extent. This applies even more than before in a VUCA world characterized by rapid change and decreasing predictability, in which the digital transformation of the economy and society is also taking place.

Accordingly, the first reactions to an initiative are often reserved: "We should rethink our strategy" - for example, in order to be even more agile in the market. The spontaneous response is often: "Why? Our figures are good." This is why strategic decisions can often not be made by consensus. Instead, at some point, top managers have to take the reins and announce: "We're doing this - period."

Regardless of this, strategic decisions should be made by consensus, at least in the upper management circle, as far as possible, so that they have a solid basis. It is therefore important to gather as much evidence as possible in advance that a change of course is necessary. After all, how can the need for change be communicated to employees if not even all top managers can see it?

Creating a solid basis for decision-making

If there is a consensus that "we have to do something", this is by no means the basis for a sound decision. This is because the data and facts from which certain forecasts are derived are often contradictory. It is therefore important to determine not only which developments are possible in principle, but also which are likely - for example, due to the digital transformation of the economy. Options for action can then be determined on this basis.

Once the options are clear, future scenarios can be designed. Those responsible can therefore ask themselves:

Companies often find it difficult to design such scenarios - also because the people involved usually evaluate the same data and information differently due to their experience and function in the organization.

In addition, every social system develops certain mechanisms for processing and evaluating information over time. This is why it prefers certain solutions, while (quickly) discarding or not seeing others. This is why, when strategic decisions have to be made, company managers often engage external consultants to provide impetus and moderate the opinion-forming and decision-making process.

Planning the implementation

Making strategic (fundamental) decisions is usually a lengthy process. This is why top managers often breathe a sigh of relief once they have been made and lean back. However, the real work is only just beginning. After all, a decision that has been made is far from being communicated and implemented.

Making a strategic decision is inextricably linked to the task of forging an architecture that is communicated to (operational) managers and employees,

It is also important to forge an architecture for deriving and coordinating the necessary follow-up decisions from the fundamental decision across hierarchies, divisions and functions and, in turn, the necessary action plans.

In large companies, the task of designing this architecture is usually delegated to a steering team. Although the company management is represented on this team, its members are otherwise largely made up of representatives from the departments concerned and organizational developers. However, this does not relieve top management of responsibility for the success of the overall process - not least because the behavior of employees depends heavily on how committed management is to achieving the goals. This is why top management must be present.

Creating the necessary framework conditions

At the same time, it is important to create the organizational framework conditions so that employees can demonstrate the desired behavior; moreover, so that they feel: If I do not change my behavior, this will also have consequences for me. For example, a company that wants to become the "market leader in service" should not only work with its employees to achieve this,

This is important. At the same time, however, the company must ensure that employees have sufficient time to provide the desired service. And how should sales staff be paid? It should no longer be based purely on the turnover they generate.

Managing the change process

Generally speaking, the question of whether the necessary follow-up decisions are made must not be left to chance. This requires institutionalized control. This can be done at divisional level by the steering team.

And at store floor or operational level? Here, management can be controlled by managers regularly talking to their employees to find out what they have done to contribute to achieving the overall goal. There should also be an information system that provides management and employees with regular feedback on what has changed in the company as a whole and in the divisions since the start of the project. Reflection loops should also be integrated into the process in which it is determined: Are we (still) on the right track or are course corrections necessary in our approach?

This is particularly important for projects that also require a cultural change - such as many digital transformation projects in companies and projects that aim to increase agility. This is because the culture of a company only changes slowly, in small steps. As a result, those involved sometimes get the impression that "we've been trying for ages, but nothing is changing". The result: frustration spreads. This is why the management team should also regularly communicate to employees: "We have already made a lot of progress and are on the right track" - so that their energy for change is maintained.

WE BRING YOUR STRATEGY TO LIFE

Setting the strategic course - professionally and sustainably. In the VUCA world, decisions are always linked to assumptions about the future and therefore require particular care. In order to successfully implement changes such as digital transformation or new market strategies, clear management, regular reflection loops and communication that provides orientation and maintains the energy for change are required. MTI supports companies in effectively implementing strategies and shaping cultural change step by step. If you are considering how you can position your company for the future with professional strategy work, please contact us - together we will develop solutions that make an impact.

You can find out what this can look like here: Case studies & experience reports