The Board sits at the head of the table studying the quarterly results. Is the revenue is growing, and the delivery channels especially branches, mobile app and agents are busy. Departments proudly present green dashboards. The Head of Sales is sitting straight as the reports show targets are being exceeded. Operations reports efficiency gains. Human Resources celebrates training numbers and everyone is happy because technology is delivering projects on time.
Everything looks impressive yet profits are shrinking. Customers are leaving quietly. Decisions take forever, don’t forget competitors are moving faster. The organisation resembles a busy highway where every vehicle is speeding, except nobody notices they are driving in different directions.
That is the real tragedy of strategy. Most organisations do not fail because they have a bad strategy but because every department creates its own version of success.
Mr Strategy says this bluntly:
“A strategy that belongs to the CEO alone is not strategy, it is a speech.”
I remember sitting with an executive team at a regional financial institution. The Board had approved an ambitious five-year strategy. Market share growth, digital leadership, customer intimacy and higher profitability.
Three years later, little had changed. At a pre-strategy meeting, I asked two questions that challenge the status quo “How does the procurement department contribute to customer growth?” “How does Human Resources recruit for the future capabilities the strategy requires?”
Based on our diagnosis, the problem was not execution. The problem was ownership. Most leaders make a dangerous assumption. They believe departments exist to perform functions. That is a lie. Departments exist to create strategic value.
The finance department is not there to produce reports. It exists to allocate capital to winning opportunities. It is so annoying to find a CFO swinging in their Chair, but cannot make such strategic moves or make board papers that show where strategic value is being suffocated.
Human Resources is not there to hire people. It exists to build future capabilities.
Technology is not there to automate processes, it exists to create competitive advantage. Risk is not there to stop business. It exists to protect strategic ambition. Every department must answer one question.
“If we disappeared tomorrow, what strategic outcome would weaken?”
If the answer is unclear, the department has become busy rather than valuable.
This is what Mr Strategy calls The Strategic Contribution Chain. Strategy must cascade through five connected questions.
- what are the few outcomes the organisation must achieve?
- what capabilities are required to achieve them?
- which department owns each capability?
- how will success be measured?
- what behaviour must leaders reward daily?
Tomorrow will not reward organisations for what they currently do well.
- Artificial intelligence is changing work.
- Cybersecurity is becoming a board issue.
- Customers are moving into digital ecosystems.
- Data is becoming more valuable than physical assets.
- Climate risks are affecting capital allocation.
- Demographic shifts are changing customer expectations.
The question is no longer: “How well is your department performing?”
The better question is: “Is your department building the capabilities the future demands?”
A manufacturing company I advised learned this painfully.
- Production managers focused on efficiency.
- Sales teams chased volume.
- Finance reduced costs aggressively.
Mr Strategy calls this Strategic Blindness.
When departments optimise their own success rather than enterprise success, organisations create what appears to be progress but is actually coordinated decline.
The cure is simple but difficult. Every department must have three scorecards.
The first measures operational excellence.
The second measures strategic contribution.
The third measures future readiness.
Because profit without resilience is borrowed success and departmental excellence without strategic alignment is simply expensive activity. Leaders must stop rewarding isolated achievements.
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