Communicating your strategy: Creating a shared understanding

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Different firms have different perspectives on the extent to which the firm’s strategy should be communicated within the firm. Some keep all high-level decisions confined to top management (or even just in the CEO’s mind). Others communicate the approach that the firm is taking more widely within the organization – potentially even going as far as involving employees in the formation of the strategy  This article explores the benefits of communicating the strategy within the firm, and how to do so.

Reasons for communicating the strategy

Getting employees on board with the strategy

One of the key reasons for communicating your strategy within your firm is to get employees on board. Having a direction can unite the organization, and keeping everyone informed of the decisions that are being taken can increase motivation within the firm.  

Ensuring decisions are made consistent with the strategy

Another key reason for communicating the strategy is to help ensure that decisions within the firm align with one another and the overall direction that the firm is taking. While it is possible for the top management to be involved in all decisions in small firms, as the company grows, an increasing number of decisions will need taking at lower levels within the organization. If everyone in the firm knows the direction that the company is taking, decisions can be made consistently across different parts of the firm – without an awareness of an overarching direction, individuals may start pulling the firm in competing directions.

Get feedback and suggestions

Communicating the approach that the firm is taking can also help gain feedback from employees – or suggestions of changes that can be made to better execute the strategy. If everything is kept secret – known only to the CEO or senior management – you lose the ability to gain feedback from employees that are closer to the ground and may have better approaches to implement.

Keeping communications simple

When communicating the strategy of the firm, it is important to keep it simple – to distill the essence of how the firm is competing down, and make sure that these key points are widely shared.

Communicating the essence of what is important to the success of the firm in a few sentences (not dissimilar from an elevator pitch that you may communicate with an investor), can be much more powerful than trying to communicate long implementation-specific details.

Easy to understand

Distilling the strategy down to its core essence first makes it easy for employees in the firm to be able to understand, and see why it makes sense to be doing activities in a particular way. This can improve buy-in – if employees believe that what they are doing makes sense, they are likely to be more committed to the activity than if it seems like wasted time or effort.

Memorable

Keeping the strategy simple also helps makes it memorable. If you have a long, elaborate strategy, it can be difficult to remember parts of it. If you have a long, many-page strategy, with lots of different parts to it, it can be very difficult to remember the details – making it difficult to actually implement.

Helps ensure consistency between employees in their interpretation

In part, because it is easy to understand and remember, having a simple strategy helps ensure that the strategy is understood consistently across managers and employees. If the strategy is complex, poorly understood, and memorable, then it is almost inevitable that different individuals in the firm will have very different views on what the company’s approach is. This in turn makes it hard to gain consistency in implementation – every individual will be pulling in different directions.  

Easy to make decisions against

The final benefit of keeping it simple is that it makes it easier to make consistent decisions throughout the organization that are in line with this strategy. If there are lots of components, details, caveats, and conditions to the strategy, it is can be difficult to know whether to take a particular action or not. By distilling the essence of the company’s approach, and making it clear to employees what is important to the firm, this helps drive action – now decisions can be easily taken, that reinforce the company’s overall approach.

The litmus test: Can everyone write the strategy down in one paragraph

The litmus test of whether you have a shared understanding of the firm’s strategy is whether all employees and top management can write down concisely how the firm is competing. When employees and management all have a good understanding of the firm and how it is competing, there should be strong consistency in what they write down. If on the other hand, there is very little consistency – managers all having a different take on how the company is competing, then it indicates that the strategy is not widely held.

Seeing a big discrepancy between different individual’s interpretations of the strategy can be a wake-up call. If individuals in the firm do not have a consistent understanding of how the firm is competing it can make the implementation of the strategy very difficult. If individuals don’t know what to prioritize, then getting consistent decision-making within the firm is likely to be a lot harder to achieve.

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