value insights

Challenge Driven Enterprise Strategy – Valutrics

Modern corporations are expected to design their strategy
processes to anticipate the future, identifying new opportunities to
drive profits, investing in high return initiatives, disinvesting in low-
performing businesses or programs, and ensuring the best returns on
capital for shareholders. And some firms do an excellent job of methodically
decomposing their broad goals into discrete strategies and tactics
and may go even further to define clear measures of success. Done
properly, these approaches identify gaps and opportunities for exploitation
and prompt the organization to constantly rethink assumptions
and model outcomes, and to manage their portfolio of possibilities—all
to generate the best business outcomes for stakeholders. This approach
to strategy can be highly effective but requires a process discipline
and organizational transparency absent in many businesses. It also
demands absolute honesty and willingness to look past the status quo,
existing power structures, organizational politics, and so on. For a big
organization, ignoring these pillars of corporate culture is exceedingly
difficult. And therefore, incrementalism and bureaucracy are the –
organizational norms. The result is that in too many firms, corporate strategy
is actually just a form of annual corporate planning in which
resources are added or subtracted based upon growth rates and departments‘
designations as profit or cost centers, or simply to provide justification
for increasing or sustaining headcount or budget. A truly
challenge-driven approach will shake the status quo to its foundations
as its only allegiance is to outcomes and delivering performance –
excellence. The status quo and existing power structures have no –
entitlements in a Challenge Driven Enterprise.
Proper strategy requires this absolute transparency and honesty
in managing the needs of the organization. By engaging head-on in
this process and treating every Challenge as an opportunity to
improve the business, organizations link what they do with why they
are doing it. There is a top-down and bottom-up triangulation around  identified Challenges that is particularly instructive. High-level strategies
should be meticulously defined in the language of Challenges,
which may be further decomposed as needed. Similarly, new initiatives
in lower levels of the organization should be articulated as Challenges,
presumably in support of high-level business strategies. By applying a
discipline and a rigor, Challenges drive a richer understanding of the
business and bring clarity to the prioritization process. Poorly defined
Challenges are not likely to support key business strategies. By –
institutionalizing this approach at all levels of the organization, businesses may
better tie activities to strategic goals and in the process foster the development
of improved administration and problem solving across the
organization. Again, use of a challenge-based approach is good management
practice in any event, but should be viewed most importantly as a
powerful discipline that enables more effective and open business
rather than simply a cost-effective approach to solving problems.

Elements of the Challenge Driven Enterprise
A great number of behaviors and competencies will describe the Challenge Driven Enterprise, but three in particular distinguish this form from most existing businesses:

• “Open” Business Model:

Businesses focus their attention on their true core competencies, orchestration and strategy, to deliver against their missions. They orchestrate networks and ecosystems of customers, employees, partners, and markets.
These models are highly virtualized in order to maximize – innovation, agility, capital flexibility, and shareholder returns. The formation of new businesses and entrants naturally utilize these principles. Established firms must adapt to compete effectively.

• Talent Management:

Think strategic virtual Human Resource Management. Businesses not only understand, but embrace key trends such as globalization, social networking, generational shifts, and project based work. Further, they recognize  the importance of engagement with all their communities and the whole world to drive new ideas, product development, innovation, and even production capacity. This 21st-century evolution of HR makes it more strategic than ever before and vital to the success of the business.

• Challenge Culture:

Challenges are integrated into the culture at all levels and in all functions. The needs and barriers are well-articulated and, where possible, portable. Executives, managers, and team members are trained and empowered to identify critical problems and issues and to systematically manage these Challenges through to closure for the benefit of shareholders. They can be tackled internally or externally as conditions best dictate. Challenge cultures care only that -problems are solved. Who solves them and how is secondary to advancing the business mission every day. Politics, NIH, and bureaucracy are not tolerated and eliminated as inefficient and wasteful. Transparency, process integrity, and measurement are vital and hold accountable all significant projects, – initiatives, and investments. Recognition, reward, and promotion systems are aligned. Orchestration skills are evident.