Functional Strategy
Do functions need strategies of their own? Yes, says Martin, with three distinct jobs, each subordinate to the business cascade.
The three jobs, in order of priority. Serve the business units. The function's first Where to Play is the internal customer, and its How to Win is enabling the business unit's strategy better than an outsourced alternative could. That comparison is deliberately uncomfortable: a function that cannot beat the outsourced alternative at supporting the strategy is a cost centre with tenure. Leverage across units. Find the capability investments no single unit would fund but that strengthen several, shared must-have capabilities, which is the genuine economic argument for having central functions at all. Create future options. Build ahead of need in areas where the corporate strategy will plausibly go, so that when the cascade turns, the muscle already exists.
The anti-pattern
Functions that import "best practice" wholesale: generic excellence disconnected from any specific strategy, the functional version of Operational Excellence Is Not Strategy. Best practice is by definition what everyone does, and a function assembled from it serves the industry average, not your cascade. The tell is usually linguistic, beware the strategic adjective, Strategy Impostors: "strategic HR" that cannot name which strategic choice it enables is important-sounding, not important.
The systems consequence
A function's systems and metrics are part of the company's enabling management systems whether anyone designed them that way or not. Designed locally, in good faith, one policy at a time, they accumulate into contradictory signals, which is why integration of the systems layer belongs to the CEO as chief system designer rather than to each function separately.
How this connects to OKRs
Functional OKRs inherit the three jobs directly: a healthy functional portfolio shows service bets traced to a business unit's strategy, shared-capability bets traced to the cascade, and the occasional option-building bet, each with Key Results its internal customers would recognise as their own success. A functional OKR set that reads like the industry's best-practice checklist has answered the wrong question, however well it scores.
One line to keep: A function that cannot beat the outsourced alternative at enabling the strategy is a cost centre with tenure.
Our synthesis of Roger Martin’s published work, sources credited. Read the originals: they’re excellent.
Do functions need their own strategy? +
Yes, with three subordinate jobs: serve the business units better than an outsourced alternative could, leverage shared capabilities no single unit would fund, and build future options ahead of need. Each is subordinate to the business cascade, not a parallel one.
What does a healthy functional OKR set look like? +
Service bets traced to a business unit's strategy, shared-capability bets traced to the cascade, and the occasional option-building bet, each with Key Results the internal customers would recognise as their own success. A best-practice checklist has answered the wrong question.
Reading about method is not the same as running it. We install this system and build the capability that stays.
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