Strategic Step 3 - Draw the Lines

Go to a white board or take a blank piece of paper. Draw a line vertically from top to bottom. Put arrow tips at each end of the line. On the left-had side of that line, at the top, write three words: “Maximum Sustainable Advantage.” On the bottom of the vertical line (board / page), write the words “No Requirement, No Advantage”. In between those two phrases write the words: “Required, No Advantage.”

On a separate board or piece of paper, write down all the things that your department does. Payroll, OD, T&D, etc. Get as detailed as you can given the time you have. Include everything that others do for you (other departments, HROs, vendors, etc.) Your list should include everything that your department is responsible for or oversees, and it should be as complete as possible.

Now, take each of those items on your list and place them in the right place on the first line. Organizational development? Done right, it provides a lot of sustainable advantage. So write that near the top. Payroll? Has to be done, but doesn‘t provide any advantage. Write that in the middle. Encouraging employees to vent their spleens to generalists. Write that at the bottom. Remember, your placement is prioritized - the item at the very top of the list provides the most advantage, and the one at the bottom provides the least.

Once you have placed every item from your list, draw two more lines. The first line is drawn between the items that provide sustainable advantage and those items that are required but provide no advantage. Everything above this line (we will call this the “Value Line”) is strategic. It is where most of your “Strategic Resources” (time, talent, capital, materials, tools, creativity, learning and attention) should be spent. The assumption is that the better you execute the tasks and projects above the Value Line, the greater the wealth returned to the investors. In other words, there is a direct link between doing these items well and your business continuing to grow and prosper.

Now draw a line between all the items that are “Required, No Advantage” and “No Requirement, No Advantage.” We will call this the “Work Line”. Everything above the work line but below the value line should be outsourced. Everything below the work line should be discarded. Get rid of it.

Deciding where you put the Value Line and where you put the Work Line requires an act of courage. It will affect people’s futures and their jobs. It may be the most important thing you can do as a leader, for it requires foresight, political skill and the drive to pull it off.

Your job as a functional and / or executive leader is to:

1. Draw the lines in a way that is consistent with your corporate strategy and framework.

2. Get alignment from all core constituents about where the lines belong and what that means as far as tactics, metrics and processes.

3. Enforce the tough choices and take the bullet if you did it wrong.

4. Constantly and relentlessly keep moving the two lines up. Each time you move the Value Line up, figure out something else to put above it. These are your long-term strategic initiatives.

Your organization has eight components to success in your business: time, talent, capital, materials, tools, creativity, learning and attention. These are the strategic resources you have at your disposal. Allocation of those resources directly impacts how well you can execute your corporate and function / division strategy (as well as the strategy itself). You only want to invest these resources where you have the greatest probability of maximizing wealth creation for all investors. (Remember: I define “return to investors” as the “exchange of mutually acceptable value between the company and those people contributing their strategic resource.) If you take these resources and invest them in work above the Value Line, you should get a better return for your investors than if you invested those same resources anywhere else.

The stuff below the Value Line but above the Work Line is the work that you have to do to survive as a business. They are not core to who you are or what you do, so find a vendor whose strategy and competency is to excel at that work and outsource it to them.

Everything below the Work line is the accumulated junk that builds up inside of companies, like plaque on teeth. Get rid of it before your strategic teeth rot right out of your business head.

How does everything below the work line accumulate? Easy – the lines keep moving up. It used to be that pension administration was strategic: there was a time when you couldn’t build a workforce without it, and there weren’t a lot of companies that did it right. Now pensions are being replaced by 401(k)s. Things change, and the lines move up. Leadership’s job is to keep the Work and Value Lines moving up, but also to clean the plaque – to demand that stuff below the work line is chucked as quickly and efficiently as possible.