What is your strategy, actually? Reading it from what the business does

Every business has a strategy, whether or not anyone has written one. Its strategy is the pattern in where the money, the people and the leadership's attention went over the last few years. That pattern is the enacted strategy, and the document on the shared drive is the stated one.

Before designing a new strategy, write down the one you have. The gap between the two is the most useful finding a strategy review produces.

Most businesses under-invest in this step. They go straight from "we need a new strategy" to options and workshops. The process can spend its first month arguing about a starting point nobody has described. An afternoon reading the enacted strategy from the evidence saves that month and usually changes the question.

Why start with the strategy you have

Three reasons. First, the organisation will keep executing the enacted strategy while the new one is written, and for up to a year after. That strategy is worth knowing.

Second, the exercise brings out the tensions: the places where the business says one thing and does another. Those tensions are where the real choices sit. A strategy process that starts from them stays focused.

Third, it is cheap. The evidence is already in the accounts, the org chart and the board papers.

Where to read it

The enacted strategy leaves marks in six places. Read all six for the last three years before writing anything.

Where the capital went. Capex and acquisitions by business, segment and purpose. If the stated strategy is growth in a new segment and the capital went to the old plant, the enacted strategy is the old plant.

Who was hired, promoted and let go. The senior appointments say what capabilities the business valued. A "digital first" strategy with no senior digital hire is a slogan.

Which customers and products were accepted and declined. Look at the bids the business chased, the customers it took on at thin margins, the products it kept in the range. These are the where-to-play choices it made.

What was exited. Or, more often, what was not. A stated focus with nothing exited is an enacted strategy of doing everything.

Where the leadership's time went. Board agendas and executive calendars for a year. Time is the scarcest resource and the most honest.

How prices and discounts behaved. The enacted pricing strategy is in the invoices, not the policy. A premium positioning with discounts that grew every year is a volume strategy.

Example: A services group's stated strategy is "premium advice for complex clients". Look at its three-year record. The largest capital item was a low-cost processing centre. Its two senior hires were in operations. Its fastest-growing revenue line is a commoditised service sold on price.

The enacted strategy is scale in the low end. Neither strategy is wrong. The trouble is that the business runs one and describes the other.

Write it up as the cascade it is

Put what the evidence shows into the same shape you would use for a strategy on a page. What is the business evidently trying to become? Where does it compete, and how does it win? Which capabilities has it built, and which initiatives got resourced?

Write it in plain declarative sentences, as if describing a competitor from the outside. It should fit on a page. A sceptical outsider looking at the same evidence should recognise it.

Then put the stated strategy beside it.

Reading the gap

The two pages differ in one of three ways, and each calls for a different response.

The business has no stated strategy to compare with. The enacted one is the strategy. Writing it down produces the first real strategy document the business has had. Test it as you would any other: does it face the real challenge, does it make choices, does the where fit the how?

The stated and enacted strategies differ. This is the common case. Name each tension and diagnose it, because tensions have different causes.

Some are misunderstanding. Different people mean different things by the same word in the strategy. The fix is to describe the choice and its consequences precisely.

Some are lack of belief. People were never convinced the stated strategy would pay. The fix is evidence, gathered or created.

Some are crossed incentives: the strategy says one thing and the incentives pay for another. The fix is the incentives.

Some are resources. Everyone agrees and nobody was given the people. The fix is to reallocate.

And some are natural. Two legitimate aims sit in permanent tension. No decision resolves them, so they need a stated balance.

The enacted strategy is better than the stated one. It happens more than anyone admits. The business found its way to a sound position through a thousand operating decisions. Meanwhile the document described an ambition nobody pursued. Write the enacted strategy up properly, keep it, and retire the document.

Example: An equipment distributor's strategy says "become the service leader". Read from the evidence, its enacted strategy is a parts-and-consumables business with excellent availability. Its service arm has been starved for three years.

Availability is a real advantage with evidence behind it. Service leadership is a hope. The review started by asking whether to invest in service. Reading the current strategy reframed the question: whether to stop pretending.

The five stages of strategy becoming action

Whether strategy becomes action is one of the practices in the execution-and-adaptation dimension of a Stages of Excellence strategy assessment. The five stages read:

• Lagging: The strategy document and what people actually do each week are unrelated.
• Basic: Translation happened once into a plan nobody has opened since.
• Competent: Strategic priorities appear in team plans and goals with dates and owners.
• Advanced: Every strategic theme has a concrete action program whose progress is visible monthly.
• Leading: Strategy-to-action is so tight that watching what the business does reveals the strategy.

The last stage is the point of this page read backwards. In a business at that stage, the enacted and stated strategies are the same page. An outsider could reconstruct the strategy from the accounts.

Frequently asked questions

How long does reading the enacted strategy take? An afternoon with the accounts, the org chart and a year of board papers, and a morning to write it up. It should not become a project.

Who should do it? Someone who will be believed and is not defending a department. Often that is the finance lead and one outsider. Then the top team argues with the page.

Is this the same as a strategy audit? The reading is the first half of one. A full audit also tests whether the enacted strategy is any good: the diagnosis, the choices, the evidence for the advantage. This step only establishes what it is.

What if leaders disagree about what the evidence shows? That disagreement is a finding. Record where they differ and why. The strategy process will need to resolve it, and it is better resolved on evidence now than on opinion in a workshop.

Does the momentum case belong here? Yes, as the second half of the same afternoon. The enacted strategy says what the business is doing. The momentum case says where that leads in five years. Together they are the diagnosis a new strategy starts from.

• Would an outsider recognise your strategy from your accounts? Take the check.
• The Stages of Excellence in strategy
• Creating a good strategy on a page