Which comes first: strategy or capacity?

That’s the chicken-and-egg dilemma most strategists face sooner or later: Do you develop the strategy you need, despite lacking the capacity to implement that strategy?  Or do you develop the strategy that you can implement, even if it’s not really the strategy you need? And how do you tell your CEO that you could have a brilliant strategy but it would require massive changes to build capacity? As companies emerge from the recession and struggle to thrive in an uncertain and uneven recovery, this dilemma is becoming acute.

It would be nice if you could do this in stages: first develop the right strategy for your organization, then neatly build the capacity the strategy requires, and only then implement the strategy.  That’s how the books say to do it.  And if time and resources allow, that’s certainly the best way to go.

In reality, there are a lot of reasons why you may not have that luxury:

  • You may have no resources.  The capacity issues may be in your own organization: Do you have the right people for the strategy you may need?  Perhaps not, but you have the people you have. In corporate EHS groups, that means they’re probably technical people, probably strong in compliance with US regulatory requirements. Your strategic needs, though, may be international, supply chain upstream or product issues downstream. Your team may have been great for the last decade’s needs, but for the next decade?  Not so much.  But budgets are tight.  You may not be able to add staff. Even if you make the difficult decision to lay off your own people to make room for new hires, you may not be able to keep the headcount.
  • You may have no leverage.  Some things are just outside your control.   The capacity issues may be above you: Does your company have the right senior team for the strategy you need?  Do you have a great financial control/execution team when you need a team of inspirational leaders?  Do you have the generals to fight the last war?  If so, you’re not likely to have much chance to change that.
  • You may have no time.  Turmoil (like recessions and recoveries), transitions, transactions or even transgressions may all require a change in strategy NOW.  Your only choice is to work with what you have.

As the saying goes, sometimes you have to go to war with the army you have, not the army you want.  (We won’t explore the source of that quote right now.) So what do you do?

  • Go with the best achievable strategy considering the capacity you have.  This will be frustrating but at times it may be necessary.  A good strategy you can implement is better than a perfect one on the shelf.
  • Use the strategy development process to educate and expand the capacity of the team you have.  You can’t coach height but can teach people to jump higher and to find ladders.  Interestingly, this approach sometimes can work both looking upward in the organization or downward.
  • Use the strategy implementation process to change out roles if not people.  If people buy into the strategy, they may be willing to buy into a redistribution of roles and responsibilities to implement that strategy – a redistribution that may put people in the roles they’re best suited to play.

It’s also useful to keep a little bit of skepticism about capacity for yourself.  If you and your senior management disagree about your assessment of strategy and capacity, don’t assume that you’re right and senior management is wrong. CEOs are usually pretty smart and didn’t get where they are without a strategy of their own – as well as shrewd assessments of capacity.  If the CEO disagrees with your strategic trade-off, don’t assume it’s because the CEO doesn’t have the capacity to understand or implement your strategy.  The CEO may understand exactly what you mean and be perfectly able to carry it out, but just choose not to.  Making those choices about what NOT to do is part of what got CEOs where they are.

Of course, CEOs often bring some caution to their role that can frustrate strategists.  As one CEO told me when I proposed a growth strategy that was more aggressive than felt comfortable to him: “They usually only let you run one of these things once in your life, and even that’s not guaranteed.  If you get that chance, you really don’t want to screw it up.”

There is no perfect answer to the strategy-and-capacity question.  But asking the question is better than charging ahead blindly.