In our recent client work, one question has emerged repeatedly in the context of strategy updates: how strong is your organisation’s capacity to achieve the strategic objectives it has set?
The question spans both strategy and the organisation responsible for delivering it. It requires examining the strategic objectives and the assumptions on which they are based. It also requires assessing whether the strategic choices and actions are sufficient to achieve those objectives. The organisation itself needs to be considered as well: whether it has the capabilities it needs, whether resources and management attention follow strategic priorities, and whether the management system and strategic follow-up support progress towards the objectives. Taken together, these provide a broader view of the organisation’s capacity to turn strategic intent into results.
Taken together, these provide a broader view of the organisation’s capacity to turn strategic intent into results.
As strategic ambition increases, so do the demands placed on the organisation. Higher growth aspirations, new strategic positions or significant changes in the business model may require different capabilities, greater concentration of resources, changes in management attention and new ways of tracking strategic progress. Yet these organisational implications are not always examined with the same rigour as the strategic objectives themselves.
This makes the organisation’s capacity to achieve its objectives an important question in its own right.
Objectives depend on assumptions
Strategic objectives are never independent of the assumptions on which they are built. Growth expectations reflect assumptions about markets and customers. Profitability targets may depend on assumptions about pricing, productivity or scale. New strategic positions may require changes in customer behaviour, technology, regulation or competitive dynamics. Some of these assumptions are explicit, while many remain implicit.
This makes them important to revisit when strategy is updated. Which assumptions are most critical to achieving the objectives? What has changed since they were originally made? Where is uncertainty greatest, and what would it mean for the strategy if an important assumption proved wrong? The purpose is not to make strategy conditional on certainty. Strategic choices are inevitably made with incomplete information. Rather, the purpose is to understand how robust the foundations of the objectives are and where they may require particular attention.
Strategic priorities require real concentration
The next question is whether the strategic choices and actions are sufficient in relation to the objectives. This is more demanding than asking whether the organisation has initiatives linked to its strategic priorities. The relevant question is one of scale and impact: are the actions significant enough to produce the change the objectives require?
This also brings attention to what the organisation chooses not to do. New strategic priorities are often added to an already full agenda. Existing activities continue, new initiatives are introduced and management attention becomes distributed across an increasing number of priorities. The result may be considerable activity without corresponding strategic concentration. Real prioritisation therefore requires explicit non-choices. What will receive less attention? What will no longer be pursued? Where is the organisation willing to accept less in order to concentrate on what matters most?
Resource allocation makes these choices tangible. Strategic priorities should ultimately be visible in the allocation of capital, people, time and management attention. If priorities change but resource allocation does not, the organisation may struggle to create the concentration required to achieve its ambitions.
Capabilities need to be identified and managed
Strategic choices also create capability requirements. An organisation pursuing new forms of growth may need different commercial capabilities. A change in business model may require new technology, data or partnership capabilities. Improvements in productivity may depend on capabilities that cut across organisational boundaries rather than reside within a single function.
Identifying these requirements is an important part of assessing the organisation’s capacity to achieve its objectives. Which capabilities are critical? How strong are they today? Where are the most significant gaps? But capabilities do not develop simply because they have been identified as strategically important. They need to be managed. This means making deliberate choices about how critical capabilities are built, developed and deployed over time. It also means considering whether the organisation’s leadership capabilities and management system support their development and effective use.
Responsibilities, decision rights and management forums matter here. Strategically important issues need clear ownership and a place in the organisation’s management processes. Otherwise, even recognised capability gaps can remain unresolved while operational demands continue to dominate attention.
Strategic progress needs to be visible
Finally, an organisation needs to be able to see whether the strategy is progressing as expected. Performance measures are an obvious part of this, but the issue is broader than selecting a set of KPIs. Measures need to provide meaningful evidence of progress towards strategic objectives. Some will capture outcomes, while others need to indicate whether the underlying drivers of those outcomes are developing in the intended direction.
Timing matters as well. A measure that reveals a problem only after an objective has been missed has limited value for strategic steering. This makes the management process around measurement equally important. How frequently is strategic progress discussed? What happens when development differs from expectations? Can the organisation distinguish temporary deviation from a more fundamental problem in an assumption, action or capability?
The purpose of strategic follow-up is not simply to establish whether the organisation is on plan. It is to create the information and dialogue needed to steer the strategy as circumstances and understanding evolve.
Looking at the broader conditions for strategic success
None of these questions exists in isolation. An objective may be well founded, while the actions behind it remain too limited. The right priorities may have been identified, while resources continue to be dispersed elsewhere. A critical capability may be recognised, but not systematically developed. Measures may exist, while providing little insight into whether strategic progress is actually being made.
Risks, dependencies and potential gaps run through all of these areas. They may originate in external assumptions, internal choices, capability gaps, the management system or the way progress is monitored. Assessing the prospects of achieving strategic objectives therefore requires looking beyond individual elements and considering how strategic choices, resources, capabilities, management and follow-up reinforce — or constrain — one another.
The greater the change implied by the strategy, the more important it becomes to examine whether the organisation is evolving accordingly. A strategy update therefore provides a valuable opportunity to assess whether resources, capabilities, the management system and strategic follow-up are developing in ways that match the organisation’s strategic ambition.
This provides a broader understanding of the conditions for strategic success. It makes visible not only what the organisation intends to achieve, but also what achieving those objectives requires from the organisation itself.
The underlying question remains: How strong is our organisation’s capacity to achieve the strategic objectives we have set — and where does that capacity still need to be strengthened?
Curious how this applies to your organisation? Contact us – we’d be happy to discuss it.
References:
Kolehmainen, K. (2010). Dynamic Strategic Performance Measurement Systems: Balancing Empowerment and Alignment. Long Range Planning, 43(4), 527–554.
Lafley, A. G. & Martin, R. L. (2013). Playing to Win: How Strategy Really Works. Harvard Business Review Press.
Malmi, T., Kolehmainen, K. & Granlund, M. (2023). Explaining the Unintended Consequences of Management Control Systems: Managerial Cognitions and Inertia in the Case of Nokia Mobile Phones. Contemporary Accounting Research, 40(2), 1013–1045.
