Strategy is about making choices, but those choices only become meaningful when they change how an organisation invests, resources and prioritises. This article explores how organisational performance can help leaders decide what to back, what to change and, crucially, what to do less of.
Estimated reading time: 4 minutes
Most strategies are much clearer about what an organisation wants to do more of than what it is prepared to do less of. That creates an interesting problem.
A business might make a perfectly clear strategic choice – to accelerate in one market, build a new capability or place a bigger bet on a particular product. But unless that choice changes how the organisation allocates its finite resources, the old priorities don’t simply disappear. They remain in budgets, teams, initiatives and leadership agendas, while the new priorities are added alongside them. Over time, organisations accumulate layers of strategic intent.
So perhaps one of the more revealing tests of a strategy isn’t only whether the choices are clear. It’s whether we can see the consequences of those choices in the business itself: what is being backed more – and what is being backed less? And there is an important question before that, too: what can the performance of the organisation we already have tell us about which choices we should make in the first place?
We usually approach strategic choices by looking outwards – at our customers, competitors, and markets. But we should also look at the performance of the business we already have. Where are we creating value today? Where do we have an advantage worth building on? Where is investment creating the value or advantage we expected – and where isn’t it? What capabilities could give us an advantage in the future? And which parts of the business may have made sense historically, but are becoming less important to where we want to go?
These aren’t simply questions about performance or efficiency. They should help inform the strategic choices we make.
That doesn’t mean letting today’s organisation constrain tomorrow’s strategy. Sometimes the right strategic choice is precisely to build an advantage you don’t yet have. But understanding what you already have – and how it is performing – should be part of the evidence behind the choice.
And making the choice is only half of it. Once we’ve decided something matters more, can we see that choice being backed by the business? Is it reflected in where we invest? Where we put our strongest people? The capabilities we choose to build? Where leaders spend their time? And perhaps most importantly: what have we decided will matter less as a result?
Halfords provides an interesting example. As it accelerated its services-led strategy, with greater emphasis on growing its motoring businesses, it also made choices about where not to keep investing. In 2020, it exited Cycle Republic and the Boardman Performance Centre, describing the former as a low-returning, stock-intensive business. It redirected investment and resources towards its services strategy, while concentrating its performance-cycling proposition in Tredz.
It’s a particularly visible example of strategic prioritisation: backing one direction meant making an explicit choice to do less somewhere else.
For most organisations, of course, the choices won’t be as clear-cut as exiting an entire business. Deprioritisation might mean putting less investment into one product to accelerate another. Choosing not to replace roles in an area that is becoming less strategically important. Stopping an initiative. Building one capability while deciding not to build another. Or simply shifting leadership attention towards the few things that matter most.
The principle is clear – if our strategic priorities have changed, we should be able to see some consequence of that change in how the business is funded, resourced and prioritised.
Otherwise, organisations naturally accumulate. New priorities arrive faster than old ones disappear. Budgets roll forward, activities continue and capabilities built for an earlier strategy remain in place. Individually, those decisions can all make sense. Collectively, they can leave an organisation trying to deliver several generations of strategy at once. That’s why I think there is value in looking at organisational performance in two directions.
Firstly, as an input to strategy. What does the business we have today tell us about where we have an advantage, where we create value and which opportunities might we be particularly well placed to pursue?
And secondly, as a test of the choices we’ve made. Can we see those choices clearly in how the business is funded, resourced and prioritised – and can we see what has been deprioritised as a result?
Strategic choices should have consequences. If everything remains a priority, if resources remain broadly where they were, and if nothing becomes less important, it’s worth asking how much of a choice we’ve really made.
That’s one of the ideas behind our Organisation Performance Diagnostic: giving leaders a clearer view of the business they have, to help make sharper choices about what to back, what to change and what they want to build next.
We are all about organisational health, which separates good organisations from the great. Whether our clients are at the top of their game (and want to remain there) or are in ‘turnaround’ mode, we all need to work on our organisational health.
Whatever the situation, be it a strategic conundrum, a market opportunity, or an operational gripe, we combine the art and science of organisational health to help our clients improve and excel.
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