A challenge that confronts every company at some point is: How do you give employees clear strategic direction whilst at the same time inspiring flexibility and risk taking?
Successful companies do this through a strategic principle which is an actionable phrase that distills a company's corporate strategy into its unique essence that is then able to be clearly communicated throughout the organization. A strategic principle is not a mission statement. It drives the company's strategy; it is action oriented and it enables frontline employees to act quickly by giving them explicit guidance to make strategically consistent choices.
In their article "Transforming Corner-Office Strategy into Frontline Action" (Gadiesh.O; Gilbert. J.L; Harvard Business Review; May 2001), the authors suggest that a strategic principle has 3 defining attributes:
- It forces trade-offs between competing resource demands;
- It tests the strategic soundness of a particular action; and
- It sets clear boundaries within which employees must operate while granting them freedom experiment within those constraints
Examples of strategic principles from well-known successful companies are:
- Dell : Be direct
- eBay : Focus on trading communities
- GE : Be number one or number two in every industry in which we compete, or get out
- Wal-Mart : Low prices, every day
And then there is our own at Valufacture Solutions which is to 'Create outstanding value.'
Now, more than ever where competitive advantage rests with a company's talent, the creation of a strategic principle and then communicating it throughout the organization is crucial to a company's success. So, how clear is your strategic principle to your employees?
Yours in execution.
ian
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