Micro-politics and strategy formation in SMEs

Micro-politics and strategy formation in SMEs
Lawrence C. Bellamy; George Lodorfos; Léo-Paul Dana
International Journal of Entrepreneurship and Small Business, Vol. 20, No. 3 (2013) pp. 326 – 341
This paper aims to examine the strategy formation process in SMEs with reference to the impact of the micro-politics of ownership and control. Based on 34 semi-structured, in-depth interviews with senior managers from nine small firms during the course of three years, this article examines issues of ownership and control and the resulting punctuation upon strategy formation processes that occurs when these issues are in disequilibrium. The paper begins to redress the imbalance in the literature that has neglected the impact of micro-politics in SMEs’ strategy formation processes. The authors then argue that – during periods when power positions are evolving – a key factor is the duration for the power structure to settle. Whilst accepting that these shifts are inevitable in organisations, an extended period of redistribution of power – and the politics associated with that – can cause strategic drift.

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Closing the Chasm Between Strategy and Execution

Setting strategy is elegant. It’s a clean and sophisticated process of collecting and analyzing data, generating insights, and identifying smart paths forward. Done at arm’s length in an academic fashion, tight logic is the only glue needed to hold ideas together. The output is a smooth narrative in a professional-looking document made up of Venn diagrams, 2×2 matrices, and high-level plans of attack. Jettison this business. Focus efforts here. Build up this organizational capability. Executives buy into the plan. The strategists, confident in their intellectual prowess, quietly recede into the background.

Then the trouble starts. Execution is a minefield. The clean and elegant logic of strategy gets dirty in the real world. Agendas compete. Priorities clash. Decisions stall. Communication breaks down. Timelines get blown. It’s never a question of if these problems will happen; it’s a question of when and to what degree. Managing these challenges takes street smarts and muscle. Overwhelming success means you take a few punches, but still make the plan happen. The process is always a little ugly. The executors’ dirt-in-the-fingernails view on the ground is much different from the strategists’ high-minded view from the air.

The implication is obvious — strategists and executors must work together better to bridge these two worlds. It’s common sense. Unfortunately, it’s far from common practice. What typically happens is an awkward hand-off between the two. In the worst cases the strategists adopt an elitist, disconnected mindset: We’re the idea people, someone else will make it happen. They don’t bother to truly understand what it takes to implement the ideas. They don’t engage the executors early and ask, “How will this actually work?” The executors contribute to the trouble as well. Often they don’t truly understand the thinking behind the strategy. They take it at face value and don’t ask enough tough questions.

When things fall apart, each points a finger at the other side.

The easy solutions for this divide are the process solutions: better project management, clearer rules of engagement, and tighter operating policies. The tougher (and more powerful) solutions are the cultural solutions: getting each side to actually care about what the other side is doing. Not just from a lip-service perspective, but from a fundamental-belief-that-my-success-is-inextricably-tied-to-your-success-so-I-better-engage-with-you perspective.

Strategy and execution is a false dichotomy, unnaturally sheared apart in order to divide labor in increasingly complex organizations. It’s an efficient approach. Alone, the shearing isn’t a problem. The problem is that both sides don’t see it as their responsibility to intelligently pull the two sides back together again. They leave a chasm, hoping that it will miraculously close on its own. It never does. Things just fall through it.

The best strategists and executors don’t see a hand-off between strategy and execution. They see an integrated whole. They continuously hand ideas back and forth throughout all phases of a project, strengthening them together. They fight to bring each other closer. Over the years, I’ve noticed that the best strategists and executors believe certain things that drive their success — things that the mediocre strategists and executors don’t believe.

The best strategists believe:

    • If I can’t see and articulate how we’re actually going to make this strategy work, it probably won’t work. Smart strategists know that there are a lot of gaps, holes, and challenges in their strategies. They tirelessly keep a critical eye on the viability of their plans and stay curious — continuously asking themselves and others, how will this really work? When they find issues, they team up with the executors and get out in front of them.

 

    • While it’s painful to integrate execution planning into my strategizing, it’s even more painful to watch my strategies fail. Most strategists dislike execution planning. It’s a tedious process for someone who likes to think about big ideas. But good strategists understand that they have unique insights into the strategy that executors will miss, usually to disastrous ends. So they stay engaged.

 

    • Sounding smart is overrated. Doing smart is where the real value lies. Effective strategists aren’t full of themselves. They realize their ideas are just that — ideas. They know that if they’re not executed well, their strategies are nothing more than daydreams.

 

    • I’m just as responsible for strong execution as the executor is. Is this actually true? Likely not. But it’s a powerful mindset to hold. The best strategists see themselves as leaders, not merely thinkers. They feel their job is to deliver results, not just ideas.

 

The best executors believe:

    • I need to be involved in the strategy process early — even if that means I have to artfully push my way into it. It’d be easy if executors naturally had a seat at the strategy table. Unfortunately, they often don’t. Many still receive strategies as a hand-off. Smart executors don’t take this sitting down. They figure out how to get into the strategy process early.

 

    • I need to be perceived as relevant and valuable to the strategy process. Smart executors know that they must earn a seat at the strategy table by actually adding value. They must move things forward by providing relevant and thoughtful considerations that strengthen the strategy. They can’t show up and “just listen” in strategy meetings or else they won’t be invited back.

 

    • I need to know the “whys” behind the strategy. Smart executors want to know the intent behind the strategy. They want to know the thinking that drove certain choices. They know that this knowledge is crucial to making tough judgment calls when circumstances change down the implementation road (as they inevitably do).

 

    • I’m just as responsible for strong strategy as the strategist is. Again, is this actually true? Probably not. But that’s irrelevant. The best executors see themselves as leaders, not merely implementers. They feel their job is to deliver strategic advantage for the organization, not just a project.

 

You can see a clear thread of responsibility running throughout all the beliefs above. Not responsibility for a given task, but rather responsibility for the not-given tasks — the messy spots in the middle where it’s not clear who should own something. The best strategists, executors, and leaders stand up and say, “I’m responsible for it” even if it isn’t in their job description. It’s doubly powerful when both strategists and executors do this, meeting in the middle. That’s true collaborative leadership. When these spots go unwatched, un-owned, and unaddressed, they bring down projects and eventually whole companies.


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Quality vs Frequency: What’s Your Mobile Strategy?

Your customers are in the midst of a mind shift. First they get a smartphone. Then they learn that they can ask for any information and get an instant result. What’s the weather forecast? Is this dishwasher highly rated, and is it available more cheaply elsewhere? What’s the song playing on the radio in the deli? Mobile answers all these requests and reinforces, in a Pavolovian way, the concept that we call the mobile mind shift: the expectation that any desired information or service is available, on any appropriate device, in context, at a person’s moment of need. Read more

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‘Growth Through Innovation’: Toward a Competitiveness Consensus

In geometry, three points define a plane. In journalism, three events establish a trend. In public policy, three strategy forums might not conclusively confirm a consensus – but a recent think-tank trifecta suggests that a dramatic change is taking shape in the policy community’s thinking about economic competitiveness. Read more

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Designing the Right Supply Chain

When a company’s supply chain practices are directly aligned with its enterprise strategy, the result is superior performance and a strong market position. And yet, a true strategic fit between enterprise and supply chain strategy is all too rare in the business world. This article describes how to marry your strategic goals with your operational capabilities.


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Implementation of product strategy with differentiated standards

This paper examines the relationships between mobile communication standards and product development strategy from a product architecture perspective. A product architecture model is useful in analysing research issues related to mobile phone product development. Samsung Electronics (SE)’s unique organisational capabilities are essential components of its product architecture strategy. Read more

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