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The ten-session strategy reboot

Sven Smit

Leads client service for McKinsey globally, codevelops the core of our Strategy & Corporate Finance Practice, and works with leading companies to implement strategies and transformations

Over the past few months, my colleagues Martin Hirt and Chris Bradley and I have been taking you through the eight shifts that can help you overcome the social games and corporate politics that doom so many hockey-stick strategies to failure. The final shift recommends getting the new plan under way by forcing the first step. To that end, I’ll propose a practical step here to help you put the new strategy process into action.

It’s really simple—I suggest that you reserve roughly eight to ten meetings per year for top-team conversations and introduce the eight shifts one at a time. Changing the approach to strategy development takes a real intervention to jolt your team into a new frame of mind, and breaking it into manageable pieces like this can help you get and keep traction from the start. If things go poorly during one session, you can correct the course during the next discussion.

If you discover at the end that you have not freed up all the resources needed to execute the new strategy, that’s OK. Take the resources you did free up and allocate them to the highest priorities that emerged from the conversations. You’ll have made progress—and, more importantly, your team will now understand what the new process is all about.

The key is to gradually fine-tune the decisions over successive meetings by diving deeper into one or two topics in each session and tracking the resulting decisions. You want to create an iterative process: at each meeting, you review what you had decided, the progress made on the agreed-upon steps, and any new developments since the previous session that may make those earlier decisions unsound now. In short, the agenda is dynamic.

Here is a sample ten-meeting schedule, which you can spread over a year or whatever period makes sense for your organization.

Session 1: Map your company’s competitive position

At the kickoff meeting, immerse your team in the fundamentals of the Power Curve of economic profit—the idea that success in strategy isn’t about beating your immediate competitors or improving on last year’s results but moving up on this curve, which reflects the broad corporate universe. Where does your company currently rank on the Power Curve? How far do you have to go to reach your destination (say, the top quintile)? Additionally, figure out what trends, both in your industry and your geographies, may help or hurt your efforts to reach that goal.

You should also start brainstorming which business units have the best shot at making a significant surge in performance, and what moves they would need to make to do so—say, a major geographic expansion or a productivity improvement through digitization. Based on these discussions, you can assess the amount and type of resources you’ll need for the planning cycle.

End the meeting by developing a list of broad strategic topics—potential moves by competitors, new growth areas to pursue, possible transactions—and sequence them across the following eight days.

Session 2: Analyze how your company makes money

You need to understand the cold hard facts about what really drives value. In this session, do a teardown of the company’s financial results to see the key factors behind your growth and return on capital—how much is due to things your team is doing and how much the result of forces (either positive or negative) beyond your control? This can prepare you to develop a momentum case that shows your company’s trajectory absent any major strategic moves.

Setting this baseline lets you calibrate your aspiration—both in terms of what’s reasonable and what it would take to accomplish. At the end of the meeting, update the list of strategic topics.

Session 3: Zero in on real alternatives at the corporate level

You’ve established some core benchmarks. Now it’s time to discuss what choices you need to make on each strategic topic. For example, if you plan to raise your exposure to emerging markets, do you pick 100 specific cities? Focus on China over India? If you’re thinking of making a big investment in digital, which aspects of your operation should get priority attention? You need to list real alternatives.

You should also continue debating which of the business units identified as prospects for breakout performance in Session 1 deserve backing with significant resources. It’s vital to invite candid debate on these issues, ensuring your team begins to weigh the pros and cons of the various realistic options. At the end of the meeting, update the list of strategic topics.

Session 4: Dig down into potential big moves by each business unit

After reviewing the earlier discussion about potential corporate-level priorities, go around the table unit by unit and ask each leader to describe possible big moves the business could make. You’re now looking beyond the business-unit level to specific investable pockets to develop a corporate opportunity map. You should also start freeing up resources that you can redeploy toward big moves later, so ask each business unit leader where they can find those pots of money.

Update the list of strategic topics and discussion sequence.

Session 5: Deepen the discussion on priority topics

You are half way through, so at this meeting do a second round of debate about which big moves to prioritize. For example, in the first session, you may have discussed four moves your rivals might make; now analyze the danger of each one occurring and its potential impact. Also, go deeper into the plans for freeing up resources and what priorities you envision for those resources.

You should also sort all the proposals according to their level of risk, from, say, P90 (for 90 percent chance of being achieved) to P50 percent and below. At this point, your team should be ready to start making choices informed by your earlier discussions, so hold a blind vote on which of the cells should have priority for resources (that is, become your one-in-ten bet)—you may be surprised by the level of agreement now that the team’s focus isn’t on each executive getting his or her share but on identifying the unit with the highest chance of a breakout. As before, update the list of strategic topics and discussion sequence.

Session 6: Rack up the big moves at the portfolio level

Now that you have zeroed in on the priority business in the voting session, it’s time again to take a portfolio-level view of the various options the business leaders have put forth, weighing the risk and potential gains for the company as a whole. Say each unit has proposed several moves, for a total of 30 moves under consideration. If capital spending is one of the moves being discussed, rank the various spending proposals based on their risk and returns. From among the productivity improvement proposals, which ones are the easiest to launch or have the lowest risk? You’re looking at the various proposals side by side, which may make some that sounded good before start to pale in comparison to other units’ plans.

Update the list of strategic topics and discussion sequence.

Session 7: Explore in detail the big moves each business could make

Having reached consensus on which business should be your one-in-ten, develop detailed scenarios for each of the five big strategic moves it could execute. You’re now exploring specific steps each move would require and committing to their execution.

Update the list of strategic topics and discussion sequence.

Sessions 8 and 9: Commit to the plan

Make sure the path you’ve chosen is the right one. Check whether the decisions from earlier months still make sense in light of any new developments, and that everyone remains comfortable with the business you have selected as the one with breakout potential. If not, what are the concerns and can they be mitigated? Say you were planning to make a series of acquisitions, but your main competitor has just started on a similar course. Should you shift focus to raising productivity? Consider doing a “pre-mortem”: an exercise where you assume the move didn’t work and analyze the likely reasons why.

Once you’ve settled on the operational plan, make sure everyone is committed to the decision and that their incentives are rooted in reaching the overall corporate goal, not their own unit’s targets.

Session 10: Decide on your first step

Your plan is in place, but how do you start? Zoom in on the details for the first six months. For example, if you want to have a major presence in Africa in five years, commit the team to opening a facility in Johannesburg by the end of the second quarter. You’re looking to set the key milestones—the proximate goals. Now take stock and update the ongoing list of strategic topics and discussion sequence. And then, celebrate.

Sven Smit is a senior partner in our Amsterdam office, leader of our client service globally, and co-author of Strategy Beyond the Hockey Stick with Martin Hirt and Chris Bradley.

This article originally appeared on LinkedIn.

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