Four - Scenarios - For - How - Cios Can Clarify or Deduce Their Business Strategies

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Four Scenarios for How CIOs Can Clarify or

Deduce Their Business Strategies
Published: 28 April 2017 ID: G00326306
Analyst(s): Betsy Burton, Christie Struckman, Jenny Beresford
Organizations that do not have an actionable business strategy significantly

increase their risks of wasted investments. Moreover, the strategy is often ill-
defined. These four scenarios outline opportunities that empower CIOs to
lead innovation and strategic business change.
Key Findings
■ Scenario 1: Organizations have a clearly defined and actionable business strategy statement.
CIOs who document the next level of detail of their business strategies dramatically increase
their organizations' ability to successfully deliver measurable business outcomes.
■ Scenario 2: Organizations have a fragmented business strategy. Leading CIOs help the
business and IT peers understand where the strategies are related and different to maximize
investment value across the organization.
■ Scenario 3: Organizations lack an actionable business strategy. Leading CIOs work toward
understanding the business strategy, and work with business and IT leaders to document and
refine this understanding.
■ Scenario 4: Organizations do not have any strategic guidance, but have a clear set of projects.
Leading CIOs deduce their business strategies by looking at the target business outcomes.
Recommendations
To lead innovation and strategic business change:
■ Scenario 1: CIOs must work with their teams and business peers to evolve the business
strategy to the next level by documenting detailed impacts, constraints, friction points and risks.
■ Scenario 2: CIOs and their teams must facilitate business and IT peers through recognizing,
articulating and documenting their strategic plans, including intended, deliberate and emergent
strategies.

■ Scenario 3: CIOs and their teams must do some investigative work first, seeking available
documents and resources, to make an informed thesis about the business strategy. Then, CIOs
must review and revise the business strategy through discussions with the business.
■ Scenario 4: CIOs and their teams must make best efforts to deduce the strategy by looking at
the current performance metrics and business objectives. Then, CIOs must review and revise
the business strategy through discussions with the business.
Analysis
To make the right investment decisions and deliver the right business value outcomes for their
organizations, CIOs must ensure their technology investments enable the business strategy. This
doesn't mean that CIOs do only strategic work, but rather, that CIOs are pursuing both strategic and
tactical projects in a manner that is consistent with the business strategy.
David Norton, author of the Balanced Scorecard methodology, states that, "85% to 90% of
organizations fail to execute on their strategy." This is most often due to: (1) the inability to focus on
a limited number of key strategic initiatives; and (2) the lack of a clear articulation of the corporate
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strategy and measures.
CIOs often find themselves in one of four scenarios. The first scenario is when the business has a
strategy that is clear and actionable. In this case, CIOs can move forward with the strategic
planning process by exploring the next level of detail. The second scenario is when the business
has the strategy defined for business lines, geographies or divisions separately, or the strategy is
not yet actionable. In this case, CIOs need to integrate the disparate strategies to ensure that
resources, assets and time are not wasted. The third scenario is when the business has defined its
business goals, but the business has not defined an actionable strategy on how it will achieve the
goals. The fourth scenario is where there is no business strategic guidance (see Table 1).
Table 1. Actionable Strategy Scenarios
Scenario Action
1 Clear and actionable strategy Determine the next level of detail (the implications, risks, constraints and
exists friction points).
2 Fragmented strategy exists Facilitate business and IT leaders through the process of recognizing,
articulating and documenting their strategic plans.
3 Defined goals, but not an Seek available sources of information to serve as a starting point for drafting
actionable strategy, exist a business strategy and direction.
4 No strategic guidance or direction Do your best to deduce the business strategy, based on current operational
exists performance and the business outcomes.
Source: Gartner (April 2017)
Page 2 of 11 Gartner, Inc. | G00326306

Given that the majority of CIOs aspire to influence the enterprise response to disruptive trends, they
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must not stall for lack of a clear business strategy. CIOs have an opportunity to help lead, facilitate
or collaborate with business and IT peers on the evolving and emerging business strategy. CIOs
should identify the scenario that best illustrates the current situation, validate the assumptions that
match their challenges, and apply the actions to resolve and move forward.
Scenario 1: Clear and Actionable Strategy Exists

CIOs who document the next level of detail of their business strategies (for example, the
implications, risks, constraints and friction points) dramatically increase their organizations' ability to
successfully deliver measurable business outcomes.
This level of detail should include the impacts, constraints, friction points and risks to the business
design, people, process, information and technology (see Note 1). These implications may include
external disruptions (for example, technology, environmental, political and economic disruptions), as
well as internal disruptions (for example, aging workforce, legacy IT landscape, organization
structure and culture). It is not very likely that organizations could — nor should try to — document
all the implications of the business strategy.
However, by documenting the implications of the strategy at a reasonable level of detail (for
example, the top five to 10 implications), CIOs can help their business and IT leaders to make
investments, define solutions, and explore scenarios that are more likely to have a higher and
broader impact on the business. In addition, by documenting the implications of the strategy,
organizations can increase their ability to pre-emptively track and catch changes that could affect
their requirements, before they become a requirement.
Recommended Actions:
To have a continuous long-term impact, CIOs must assign their teams, including enterprise
architecture (EA) and strategic planning teams, key responsibilities. These include detailing the
documented implications, constraints, risks and interdependencies of their business strategies, as
well as updating and revising these details as disruptive trends and opportunities evolve:
■ Document the top five to 10 implications, constraints, risks and interdependencies of the
business strategy.
■ Work with business and IT peers to determine the critical friction areas and key questions that
senior managers are asking, or should be asking, to address these issues.
■ Use these issue questions to determine the actionable and diagnostic deliverables that the
CIO's teams should be delivering.
Scenario 2: Fragmented Strategy Exists

Leading CIOs help the business and IT peers understand where the strategies are related and
different to maximize investment value across the organization.
Gartner, Inc. | G00326306 Page 3 of 11

Many CIOs work in businesses where the operating model of the business is highly fragmented.
Decentralization can be formal or informal. Formal decentralization is a common situation in
organizations that are operationally highly dispersed, are in dynamically changing markets, or have
gone through a significant business change, such as a merger. Informal decentralization is common
in organizations that lack a strong strategic planning discipline, or where there is a blurring between
3,4
deliberate and emergent strategies.
If the diverse strategies are in no way related, it is likely a situation of significant political upheaval
and lack of collaboration. CIOs may need to draft what they think the real intended strategy is, and
operate based on these assumptions, while working across business and IT teams to reconcile the
fragmented strategy. If the political culture of the organization is such that this fragmented strategy
can't come together, CIOs should still try to deduce and draft a business planning assumption
statement (see the recommendations below), and use it to help guide their efforts — rather than to
not have this perspective to balance investments.
If the strategies are somewhat related, CIOs and their key resources should take these critical
actions:
■ Facilitate business and IT leaders through the process of recognizing, articulating and
documenting their strategic plans, including intended, deliberate and emergent strategies.
■ Do not just consider a top-down approach. Look for strategic opportunities that may be
emergent from the business units and from the overall business strategy.
■ Identify for business and IT leaders what parts of the strategies are most likely to be unrealized.
Scenario 3: Defined Goals, but No Defined Actionable Strategy, Exist

Leading CIOs work toward understanding the business strategy, and work with business and IT
leaders to document and refine this understanding.
Many organizations have well-defined business goals and objectives, but not a clearly defined and
5
actionable business strategy. CIOs may struggle to understand the strategy or to get their
organizations to define an actionable business strategy, due to management's unwillingness or
inability to take on strategic planning. It is important for CIOs to not insist on or wait for a defined
strategy to be in place to deliver business value. CIOs' teams should try to glean their direction from
public statements (such as financial filings and annual reports), management presentations, press
releases and public records.
A business strategy statement does not need to be an extensive effort or a comprehensive

6
deliverable. Its purpose is to develop a common understanding between CIOs and their business
and IT stakeholders as to the longer-term direction. A best practice for CIOs is to go to their
business counterparts with their best understanding of the business strategy, based on both public
and internal statements. CIOs can then ask for their business peers' help in clarifying or correcting
the draft, rather than going to them with a blank slate.

Even in cases where CIOs have limited or no access to business strategist colleagues, CIOs can
work toward increasing their interfacing and collaboration with business and IT leaders, by starting
with their "best" understanding of their business strategy and operations, using their business
language and addressing their business issues and opportunities. Even if these informed drafts are
not completely correct, approved or ratified, it is better for CIOs to operate based on what they
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believe the business strategy is than to fall into an uninformed, reactive mode of operations. This
"informed draft" approach is the most effective way to increase the engagement of business and IT
leaders, and creates the opportunity to get to a common position.
To ensure a business strategy that can be executed on, CIOs must assign their teams, including EA
and strategic planning teams, to flesh out an actionable strategy:
■ Use investigative skills to see if available sources of information can serve as a starting point for
drafting a business strategy and direction. See Table 2 for a list of potential sources, depending
on whether the business is publicly held or privately held, or is a government organization (see
"Toolkit: How to Develop a One-Page Business Strategy").
■ Pull together the "best" understanding of the strategy, and validate this with the leadership team
of the business. Ask for clarification if the best information you could pull together is not clear.
■ Craft collateral that facilitates the organization's learning about the strategy, using tools like a
one-page strategy (see "Toolkit: How to Develop a One-Page Business Strategy") or a
communications plan.

Table 2. Resources to Extract a Business Strategy
Publicly held ■ Check your company website for any public documents, such as financial filings and annual
companies reports.
■ Look for any management presentations to investors, board members and industry analysts.
In addition, look for management statements about the company strategy in press releases.
■ Determine the key performance indicators (KPIs) that your executives are being held to, as
these are or should be linked to the directional focus on the organization.
Privately held ■ Look for communications from the CEO about the CEO's vision for the future.
companies
■ Understand the metrics that your executives are being compensated to deliver.
■ Locate any presentations made to capital investors.
Government ■ Look for any public records of your agencies' stated strategy or mission statements.
organizations
■ Find statements (press articles, committee reports and speeches) by both elected and
appointed officials about your organization.
■ Identify any strategy statements from connected or related agencies. For example, a regional
police agency might look at other police agencies in its region, as well as at federal agencies.
That agency might also look for related agencies (such as justice, and health and human
services).
Scenario 4: No Strategic Guidance Exists

Leading CIOs deduce the business strategy by looking at the target business outcomes.
CIOs can attempt to deduce the business strategy by starting with information that they should
know or is from the resources outlined in Table 2. CIOs know the current organizational performance
measures, as they are held accountable for at least a few of those.
We spoke with a CIO and chief architect at a global hospitality organization (hotel, resort and
restaurant) who were trying to help the IT organization prioritize a plethora of programs and projects.
The chief architect told us that the company didn't have a defined business strategy that they could
use to guide investment decisions. The company had grown very quickly, and had never developed
a strategic planning discipline within either the business or IT. When we asked how the company
made investment decisions, the chief architect's response was that the IT organization tactically
worked with its business counterparts on scoping and justifying various programs, and used these
to drive investment decisions on supporting solutions, technologies and so on. It didn't have a
longer-term vision or future-state business model. In a case such as this, CIOs can take a
leadership role in helping their organizations understand the value of having a clearly defined and
actionable business strategy by deducing the strategy, and then using the strategy as a basis for
discussions with business and IT leaders.

This relationship between the strategy, current operations and outcomes can be viewed as the
Pythagorean Theorem equation of a right triangle (see Figure 1). In a right triangle, when the lengths
of two sides are known, the length of the third can be derived. Most CIOs will know the current
performance information, so that is a given in this model. This means that CIOs should be able to
deduce the target outcomes from the current business operations and the business strategy, if the
organization has a clearly defined business strategy. Equally, CIOs should be able to deduce the
business strategy from the outcomes that business peers are asking the CIOs to deliver on, even if
the organization does not have a clearly defined business strategy. The one thing for CIOs to keep
in mind when using this concept to derive the business strategy is that business disruptions
(market, economic, social, political and environmental disruptions) can have a positive or negative
impact on current business operations, strategy and outcomes, that need to be factored into the
equation.
Figure 1. Relationship Between the Strategy, Current Operations and Outcomes
This integrative picture of business direction is composed of:
■ Current business operations — This is the set of all current day-to-day activities that are
involved in running, growing and transforming the business.
■ Business strategy — Business strategy is the summary of intentions and actionable plans to
significantly change or augment the business direction.
■ Business outcomes — A business outcome is a specific and measurable result that: (1)
includes measurable business benefit; (2) is achieved within a time frame; and (3) is in support
of the business strategy and objectives. A business outcome is most often in response to a

business direction (or a change in business direction), or to a business disruption (or a set of
business disruptions).
■ Business disruptions — Business disruptions are changes in the business environment that
can present threats or opportunities that could have positive or negative impacts on business
operations and the business strategy (thus, the two red arrows above and below current
business operations).
In the case of the hospitality CIO, he deduced and documented the business strategy, based on the
new or changed capabilities that the programs and projects (long-term and short-term) were to
deliver. He then brought this strategy summary to his business and IT stakeholders, and humbly told
them that this was his understanding of the business strategy, based on the projects and programs
that he was being asked to deliver. If the strategy summary was right, then it confirmed he was
working on the right efforts. If the strategy summary was wrong or needed changes, then the
business and IT stakeholders had the opportunity to rethink and reprioritize some of their
investments. The CIO also took this opportunity to point out that some programs could be stopped
or reprioritized, because they were in direct conflict with other programs that were more closely
aligned with his understanding of the business strategy.
In organizations where a business strategy is not defined, CIOs should consider these actions:
■ Don't wait for the business to deliver the business strategy to you. Pull together the information
about the current operational performance and the business outcomes that the organization is
held accountable for.
■ Do your best to determine, deduce or infer the business strategy to create future-state anchor
models that can help inform investment decisions, and to initiate engagement with business
leaders.
■ Use your deduced strategy document to discuss and validate with business leaders as a means
of increasing engagement, demonstrating value and ensuring that IT activities support the
desires of senior management.
Bottom Line
Regardless of the level of engagement with business leaders, the maturity or longevity of the
organization, or the state of the business strategy, CIOs must focus on the context of their current
operations and future business strategy. Even if CIOs have little to no access to or engagement with
business leaders, having this focus is critical to guiding investment and prioritization decisions, and
can be a tool for increasing business engagement and support over time. CIOs must focus on
taking action to understand, deduce, clarify and detail the business strategies, based on their
business scenarios, culture and environment.

Gartner Recommended Reading

"Toolkit: How to Develop a One-Page Business Strategy"
"Toolkit: Business Outcome Statements Deliver Value to Your Business and Guidance for EA"
"The CIO's New Digital Business Advisor: A Resurgent EA Team"
"Toolkit: Template for Creating an IT Operational Plan"
"Master Four Types of Strategy to Perfect Your Digital Transformation"
Evidence
1D. Norton. "Strategy Execution: A Competency That Creates Competitive Advantage." Palladium
Group. 2007.
2 "The Case for Change: Why Digital Business Needs a New Approach to Strategy."
3K. Moore. "Porter or Mintzberg: Whose View of Strategy Is the Most Relevant Today?"
Forbes.com. 28 March 2011.
4 G. Alagirisamy. "Henry Mintzberg on Strategic Management."
5 R.
Rumelt. "Good Strategy/Bad Strategy: The Difference and Why It Matters." Crown Business.
2011.
6 "Toolkit: Business Outcome Statements Deliver Value to Your Business and Guidance for EA."
7 "How the CIO Can Influence Enterprise Strategy."
Note 1 Business Strategy Versus Goals

(Based on Richard Rumelt's "Good Strategy/Bad Strategy" and "Coherent Action Is a Competitive
Advantage: How CIOs Can Help.")
A common confusion is that of mixing business "strategy" with "goals." The core difference is that a
goal is a target of the long-term vision for your business (typically, at least four to five years,
depending on the maturity of your organization, industry and markets). For example:
■ Our goal is to become one of the nation's largest bank-based financial services companies, with
assets exceeding $70 billion.
■ Our goal is to be one of the top five safest cities in Europe for visitors, residents and
businesses.

Strategy is specifically focused on what actions the organization will take to achieve the goals.
According to Richard Rumelt, a good business strategy contains three core elements: a diagnosis,
guiding policies and a set of coherent actions:
■ Diagnosis is analysis that identifies the mechanisms that lie behind the current situation.
■ Guiding policies provide a guide to action, enabling the behaviors that are needed to move the
organization forward through a set of coherent actions.
■ A good strategy is:
■ Clear in its direction — which choices are approved and which are excluded
■ Cognizant of internal and external circumstances
■ Compact and prioritized
■ Logically consistent in terms of connecting actions with outcomes
■ Coherently executed
An ill-defined strategy focuses solely on goals, without any specific actions or plans. In other words,
a good strategy must include specific actionable direction that illustrates how the business goals
will be achieved and address challenges, disruptions or constraints that may affect how the strategy
is supported. If a "business strategy statement" does not include some actionable statement, such
as "by doing X, Y and not Z," it is not a strategy, but rather, a goal or mission statement.
More on This Topic

This is part of an in-depth collection of research. See the collection:
■ Strategic Planning Essentials in the Digital Age

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