Stuart Crainer and Des Dearlove ask whether strategy away days deliver tangible results or just piles of used flip charts.
To many in the business world, strategy formulation remains the pinnacle of corporate endeavour. Yet, as business becomes ever more competitive, and growth more elusive, finding time and space for strategic reflection or to identify important changes occurring in the marketplace is increasingly hard. So how do companies and CEOs actually come up with their strategies?
The answer, if you come from the rationalist end of the strategy world, is that they ponder long and hard; they analyse and crunch the numbers. The more creative strategists have a different response: strategy emerges naturally and creatively, helped along the way by a little corporate midwifery.
The trouble is the reality is somewhat different. Strategy creation is a combination of the analytical, the creative and the social. If a company wants a strategy makeover, it books its top management team into a decent hotel, hires a strategy guru to guide them along the way and expects the strategy to emerge after one or two days of introspection over some rich food and a few bottles of wine. Hotel flip charts the world over are filled with the strategic ruminations of a thousand strategy workshops.
The number of companies holding strategy away days is impressive. According to new research by the UK's Advanced Institute for Management Research (AIM), almost 80% of UK organisations host workshops at regular intervals. Of over 1,300 executives covered by the research, nearly half (46%) claim they occur at least once a year. That accounts for an awful lot of flip chart paper and a lot of suites in out-of-town hotels.
But what happens next? Having gorged themselves intellectually, the executives return to the workplace holding a piece of paper in their hands or a laptop containing the Powerpoint presentation of their strategy. They can rest easy, safe in the knowledge that they have delivered. The trouble is that often little or nothing happens.
Despite their frequency, four out of ten respondents to the AIM survey suggest workshops have no clear-cut impact on productivity and profitability, and only one-third think that strategy workshops improve innovation.
For all the time and money spent on strategy workshops by senior management teams, few measure their impact. Given that what gets measured usually does get done, it is not surprising that many respondents report that these away days fall short of expectations: 10% say the workshop they last attended failed to meet its objectives and over 40% report either a negative impact on a range of measurable outcomes, including productivity, profitability and innovation.
This is deeply disturbing. It appears that companies spend a lot of money on events that are supposed to establish their direction and focus but have no impact whatsoever. If a group of sales reps have a sales conference, senior managers would expect sales to improve or a least a coherent strategy to emerge. Yet, the same rigour is not applied to senior managers' trips.
As the AIM research makes clear, strategy workshops are an expensive business. Estimates of the cost of strategy workshops range between £10,000 and £50,000. Professor Gerard P Hodgkinson, who led the study, says: 'Organisations are clearly investing considerable time and resources in strategy workshops as a means of challenging and developing their strategies, and with this comes high expectations. If the UK is to remain competitive, it is essential that this trend should continue. However, the low levels of preparation and the need to involve a wider range of participants than the most senior managers need to be addressed if organisations are going to get better value from the process.'
Senior AIM fellow Gerry Johnson provides another take on the research: 'Strategy workshops are really rituals. If I am going away on a tribal ritual, that is very different from my everyday experience; why would I seek to link the two on my return?'
But does it matter if strategy workshops do not lead directly to new strategic directions? In his book Only the Paranoid Survive, Andy Grove, former CEO of the silicon chip maker Intel, talks about strategic inflection points. These are times at which the game changes, and the balance of power in an industry can shift. Such moments, says Grove, are: 'the point at which a company must alter the path it's on – adapting to a new situation – or risk going into decline'.
Failure to recognise strategic inflection points and take corrective action can be fatal. Strategic away days that do not result in action are a distraction at best, and at worst a symptom of terminal illness.
Further research into workshops is now underway from the AIM research team. In the meantime, the good news from them is that, with sufficient planning, workshops can have a positive impact on business development.
To maximise the workshop's impact, AIM first suggests that companies prepare properly. The amount of time spent preparing for workshops is usually limited. Participants rely heavily on their existing managerial experience when attending. As many as 37.2% invest no more than a few hours preparing, and some 8.4% no time at all. Some simply check their supply of golf balls.
The second key to success is participation. Senior managers make up the majority of attendees at strategic workshops – 76% of workshops are attended by this group. But only 33% of workshops are attended by line managers and even fewer (22%) by employee representatives. This tends to reinforce the elitist and ritualistic element in the workshops.
This is self-defeating, as there is clear evidence that, in many cases, workshops are helpful in improving relationships with various internal groups. It is difficult to get an employee to buy into a strategy cooked up in a luxurious hotel at an event to which they were not invited to contribute or participate.
Gerry Johnson suggests that the most powerful workshops have a high emotional content. Pure rationality is unlikely to ignite passionate belief in the way forward. 'Typically there is a cathartic event, something which allows individuals or the group as a whole to reach a realization of something which is emotional rather than rational,' he says.
'The question is how this can this be translated back into the workplace? The trouble is that if it touches some very raw spots, it becomes more difficult to translate back when the executives return. A common phenomenon I have seen is that people are very enthused by the workshop and agree what needs to be done and so on. But when they return to reality they do not carry this through. There is very active engagement at the time, but when they return they are more equivocal.'
The final key is a sense of purpose. The AIM research uncovered a variety of reasons and triggers for holding workshops. It needs to be clear why the event is happening and what is expected to be produced. Without this strategy workshops run the risk of 'away daze'.