Entrepreneurial teams are often trapped in the need to balance long-term thinking (strategy) with the short-term demands of the business. Resources are tight, time is tight and daily demands are exceedingly high for small to mid-size organizations. This tension exists for all entrepreneurial teams. Recall from a previous post (https://ventrek.com/latest-news/what-is-entrepreneurial-strategy/) that for entrepreneurs, “strategy is the allocation of resources toward activities that achieve a desired outcome.” In this case, the allocation of resources is time and money (and people of course!). If a team is unable to carve out time for “strategic activities”, then they are unable to move the ship forward.
For most entrepreneurial teams, time and money is first allocated to BAU – business as usual activities. These are such things as tending to customer/client demands, bookkeeping, getting the job done, baseline marketing activities, dealing with key stakeholders and more. If a company only does BAU activities for the next 12 months, changes are pretty good they will end up in about the same spot they are today. They will not be strategically advancing the company by focusing solely on BAU activities.
However, great companies deliberately carve out time and money to work “on” the business, to advance the business. This is strategy!
Try to think of allocating time to strategy vs. BAU activities in terms of 100 hour, 100 dollars or 100 percent. We call this the “100”. Every person in the organizat
ion has so many hours in the day or week or month. Similarly, organizations only have so much money to spend in any given time frame – day, week or month. Think of the 100 as a bucket of hours and or money in any given time period – 100%. For example, say Joe in accounting works 40 hours per week – that is his “100” for the week. A total of 40 hours. If Joe spent his full 40 hours working only “in” the business and not “on” the business, he would be 100% BAU and 0% strategy.
Similarly, if the business has revenue of $10m per year, how are expenses appropriately allocated after Business As Usual expenses (rent, labour, cost of goods, etc.)? This is the “100” again. If all expenses were allocated to BAU stuff such as labour, rent, marketing, etc., and no money on moving the business forward – say, R&D expenses or exploring new markets or undertaking pricing surveys – then the ratio of strategy to BAU would be 100% on BAU and 0% on strategy.
Thinking of time and money this way enables entrepreneurs to determine how much time, and money, can be allocated to Business As Usual (BAU) activities versus strategic activities – working “on” versus working “in” the business.
Take a look at the BAU vs Strategy graphic. The top axis indicates time – think of it in terms of % of time up to 100%.
On the left axis is typical positions within a given company. Ideally, as you rise in the business the percent of your time working “on” the business (strategy) versus working “in” the business (business-as-usual) should rise. Ventrek has literally thousands of data points from our clients as we measure this every quarter with every client for every leader. We have yet to come across a “right” allocation between strategy and BAU. It is also highly dependent upon the quarter and what is happening in the business. For example, a leader in the agriculture industry might have a high BAU quarter when seeding and harvest is occurring but higher strategy quarter during the off season.
In addition, some entrepreneurial clients will deliberately allocate more strategy time to certain quarters for the leadership team versus other quarters. For example, one client of ours has stated that Q3 (July – September) is their heavy strategy quarter where a lot of strategic activities (rocks) occur. This is a deliberate allocation of resources toward strategic activities.
The key then to gain solid traction for entrepreneurs and their strategy is to measure the entire leadership team every quarter in terms of their allocation of working “on” (strategy) versus working “in” (BAU) the business. If you take a look at the graphic exam
ple, the three leadership team members are asked at the end of each quarter “what was your allocation over the past 90 days?”. In our example, you can see that John slid from 25% in Q1 working on strategy to 5% in Q3 whereas Judy remained relatively stable and Susie increased her percent of working “on” the business. Remember: this is NOT about judging what is “right” or “wrong” in terms of allocation. This simply states the way things are.
What you do each quarter with this data becomes important. For example, we would ask John why his time spent working “on” the business has decreased. This could be a myriad of reasons but our job is to try to determine John’s correct “on” versus “in” ratio and find ways to resolve that.
For entrepreneurs, tracking strategy versus business as usual is a critical tool in gaining greater traction in the business and advancing strategy.