Creating a strategic plan that propels your organisation forward requires a clear distinction between operational imperatives and strategic choices.
Roger Martin, a renowned strategy author whose work I closely follow, provides a valuable framework to achieve this clarity. Here, I’d like to share his insights and how we apply them at Waterfield to ensure our clients' strategies are both truly strategic and actionable.
Operational Imperatives vs Strategic Choices
Martin offers a simple yet powerful test to differentiate between operational imperatives and strategic choices: ask yourself, "Is it stupid not to do it?" If the answer is yes, then it's an operational imperative—essential and non-negotiable. For example, ensuring the safety of your workers is an operational imperative.
In contrast, a strategic choice involves deciding among various viable options. Consider a construction company that offers a ten-year guarantee on its buildings, exceeding the standard seven-year legislative requirement. This is a strategic choice because it’s one possible path among many reasonable options.
An Easy Analogy
Operational Imperatives: Keep the car running smoothly.
Strategic Choices: Decide where the car is headed.
The Importance of Creativity and Uniqueness
When making strategic choices, focus on creativity and uniqueness to carve out a distinct market position. Operational imperatives, on the other hand, should be about replication—adopting and implementing best practices observed elsewhere.
Limit Your Strategic Choices
Martin also emphasises the importance of limiting strategic choices—an approach we strongly believe fosters focused outcomes and have seen succeed firsthand with our clients. By narrowing focus to three to five strategic choices, while allowing five to ten operational imperatives, we’ve seen this balance greatly enhance the effectiveness and clarity of our clients' strategies.
The 60/40 Ratio in Practice
At Waterfield, we've conducted thousands of strategy development projects over the past three decades. Analysing our last 100 strategic assignments, we observed a consistent 60/40 ratio of operational imperatives to strategic choices, aligning closely with Martin's insights.
Applying the 60/40 Ratio to Your Strategic Plan
To ensure your strategic plan is balanced and truly strategic, we recommend examining it through the lens of the 60/40 ratio. Here’s how:
Audit Your Plan: List all elements of your strategic plan and categorise them as either operational imperatives or strategic choices.
Assess the Balance: Check if your plan aligns with the 60/40 ratio. Too many operational imperatives may indicate a robust operation but lack clear strategic direction. Conversely, an excess of strategic choices can scatter your efforts and hinder goal achievement.
Adjust Accordingly: If your plan deviates from the 60/40 ratio, consider re-evaluating the elements. Are there operational tasks masquerading as strategic choices? Or are there too many strategic options diluting your focus?
Avoid Strategy-Operations Confusion
Often, what is labelled as strategic planning is actually operational improvement—fine-tuning existing processes rather than making strategic choices that will propel your business forward. The 60/40 ratio helps distinguish between these two, ensuring your strategy is genuinely strategic.
Achieving Balance for Success
The 60/40 ratio is more than just a guideline; it’s a valuable test for assessing the alignment of your strategy with its potential for successful implementation. Deviations from this ratio should prompt a deeper examination of your strategy's logic and its ability to meet organisational goals.
By balancing strategic choices with operational imperatives, you can create a strategic plan that is both visionary and executable, driving your organisation toward sustained success.
Example: Applying the 60/40 Ratio in Retail Expansion
Consider a mid-sized retail chain looking to expand its market presence while maintaining operational efficiency and high customer satisfaction. Here’s how elements of their strategy could be categorised within the two areas.
Ready to Unlock Your Strategy Using the 60/40 Ratio?
At Waterfield, we specialise in helping organisations achieve the ideal balance between operational imperatives and strategic choices by applying the 60/40 ratio. Across numerous strategic assignments, we’ve empowered our clients to develop and execute strategies that are innovative, actionable, and aligned with their goals.
Get in touch to explore how we can help you design a strategy that effectively aligns operational imperatives with strategic choices, driving your organisation toward future success.
Kevin Nuttall,
Director of Waterfield.
Clear strategic direction & action
Services for outcomes:
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