Overview of Strategy 

As management systems are designed, implemented, and executed, consideration should be given to how the management system integrates and aligns with the organization’s strategy. To understand how a management system may integrate and align to an organization’s strategy, it is important to define and discuss the purpose of strategy.    

This section is not meant to be an exhaustive review of business strategy. Rather, this section is meant to expose users of ANSI Z10 to the concept and factors related to strategy and to hopefully prompt the user to explore both their organization’s strategy and the large body of work which exists about strategy.

Strategy is a term derived from the ancient Greek word, “strategos”, which roughly translates to “general’s wisdom”.  Strategy evolved from the need to fight and win wars.  

While the historical context is important, the modern definition of strategy, especially as it applies in a business and organizational context, encompasses how an organization wins.  Winning can mean different things to different organizations. For a for-profit enterprise, winning might mean winning customers and generating profits.  However, a for-profit enterprise may also consider its social and environmental responsibilities as part of winning.   Not-for-profit organizations may have a specific impact the organization wants to achieve, such as finding a cure to a disease or meeting the needs of a disadvantaged group.  Strategy is not a plan – though plans are often created out of the strategy development process.  Strategy is a process to identify a critical point of focus for the organization so the organization wins in the arenas where the organization competes.   

The talent of the strategist is to identify the “decisive” point and to concentrate everything on it, removing forces from secondary fronts and ignoring lesser objections. Strategy is also a necessary organizational response to the reality of limited resources and the existence of competition.   It is about making choices on how to focus scarce resources on the few things that matter most.   The questions that strategy must answer are: 

• Where will the organization compete and what is our objective? 
• How will the organization win the competition for creating value? 
• What will be the organization’s key priorities? 

The key to success in strategy is a learning-based process for creating and adapting the strategies to an ever-changing environment. Whether an organization is large, medium, small, private, public, for-profit, or not-for-profit, a strategy is necessary for winning.  

VUCA 

One of the reasons strategies are so important is that the world is increasingly volatile, uncertain, complex, and ambiguous (VUCA).   VUCA is a concept developed by the US Military to describe the world.  Senior leaders and executives of organizations are constantly challenged to navigate and help their organizations succeed in a VUCA world.  Consider the opportunities and challenges created by such factors as globalization, interconnected markets, technological advances, complex supply changes, and most recently, a global pandemic. 

PDCA and VUCA 

Occupational Health and Safety professionals often advance through their careers in a Plan-Do-Check-Act (PDCA) world.  All management systems are rooted in the concept of PDCA.   Yet, most senior leaders and executives are navigating VUCA World.  Consider how the language of PDCA might be different from the language of VUCA.  Depending on the size and complexity of the organization, the need for OHS professionals to bridge the PDCA-VUCA communication gap may be critical to the implementation and effectiveness of an OHSMS.   

 Identifying ways an OHSMS may help an organization successfully navigate a VUCA world is a critical component of business integration.  

 

Example: A VUCA Situation and Showing Management How OHSMS Can be a Competitive Advantage 

An industrial construction company focused on steel fabrication and erection performs work in multiple states and has gained a well-earned reputation as a safe, on time, on budget, and easy to do business with contractor.  Over the last five years, the company’s compound annual growth rate of revenue is 37%.  This revenue growth has allowed it to increase capacity with new equipment, upgraded construction management systems, and adding additional staff.  The culture of has been one that values input from all workers and has history of being a good place to work.   

This small yet quickly growing company has a health and safety director who has been in the position for most of the five years of growth. The director has helped the company to significantly improve health and safety performance. This began with teaching front-line leaders how to properly perform incident investigations and root cause analysis.  Soon the focus shifted to jobsite leaders performing Job Hazard Analyses (JSAs) to be more pro-active. Emphasis was put on both the technical part of the JHA as well as connecting to why each worker works safely.   Over time, the culture began to shift from one that enforced health and safety rules to one where health and safety were more of a value.   

Because the company was known for being safe, on time, on budget, and easy to work with, several area general contractors would regularly encourage it to bid on jobs that were increasing in size and complexity. Triple-Delta bid on and successfully won contracts for many of these jobs.  The company grew the capability to deal with increasingly more complicated work. The growth challenged the team, but the team continually rose to the challenge, taking complicated work and making it predictable.     

Then the pandemic hit.  

At first, the pandemic was chaos. It shut some jobs down. Other jobs were deemed essential, and work continued. It was difficult to keep workers working while maintaining a healthy cashflow.  No one really knew what would come next. But it focused on being safe, planning for schedule and budget, and, even with all the uncertainty, to continue to be easy to work with. It was not easy, but it kept the lights on and people working in an uncertain world.   

The safety director had to become an expert on biological hazards and hazard controls very quickly. Within a few months, the chaos became more routine. Mitigation efforts were more predictable. The projects that were essential continued. Those projects that were not essential were delayed. This became a new normal.    

But the new normal would not last long.   

Two and a half years after the pandemic began and just as they began to emerge from the chaos, in the 200-mile radius around the company’s location, $40 billion dollars in industrial construction projects were announced over the course of four months. No one had ever seen this level of construction in the area.  And everyone scrambled.   

The companies that were coming to the area were big and sophisticated. These owner-companies hired some of the country’s largest general contractors. These general contractors spent a lot of time assessing contractors in the area and constantly heard of the company’s reputation.   

All the general contractors asked the company to bid on their projects.  And they got invited to “buy day” – the day the general contractor decides who wins the bid – on almost every project in the area.   But the company had not worked for large general contractors before, nor had they worked on projects with these sorts of sophisticated owners.    

The company president informed the safety director that they had been invited to another “buy day” bringing the total to four.   The company had the opportunity for four projects that were bigger than what they have ever done before.  The president was excited for the opportunity but had concerns. 

It was great for the team and for the company and they could certainly do the work but winning all four was going to be a test of their systems. All of the general contractors included elements of safety programs in their bid packages and expected things to be done differently. The president needed to understand what the new requirements were and was relying on the safety director to provide guidance. 

After reading the bid packages the safety director recognized that the requirements addressed things they had wanted to do for years but never felt the organization was ready.  What the general contractors were asking was for the company not just to work safely but to demonstrate great health and safety performance and compliance to standards.   The general contractors were also asking – albeit in different ways – for an effective occupational health and safety management system. And, if the company could not demonstrate the existence of this system, there was a very strong chance they would not be awarded the bids.   

The safety director had considered purchasing software that would allow the company to have OHSMS processes on mobile devices out in the field. This would have given site leaders and safety professionals immediate access to processes like JHAs, management of change, site safety plans and emergency action plans, permits, training, inspections, audits, incident investigation, root cause analysis, and corrective action. The software is mobile and cloud-based, and it does not require a ton of IT support. The general contractors used two construction management software platforms and the software integrates with both of them.  Yet, the financial challenges of the pandemic made buying the software platform too expensive, so they decided to wait. The circumstances of the pandemic and its resulting circumstances forced their decision. 

The software provided a big opportunity to engage site leaders and safety professionals while we have some time available. A small team was put together for each process to implement the software and the OHMS. The team mapped out the existing processes and then figured out what the new processes should look like. The teams presented to the other teams and got feedback.  

The safety director outlined the entire OHSMS structure for the buy-day presentations so that the general contractors understood the system.   

The software got the OHSMS process to the teams in the field and the safety professionals and leaders to improve our existing processes building ownership for the program. The software system integrated the ones used by all four projects’ planning software and paid for itself with winning just one bid.  More importantly it was a cornerstone of the new OHSMS and supported the business strategic objectives.  

Three Levels of Strategy 

There are three levels of business strategy and depending on the size and complexity of an organization, the organization may have strategies at all three levels or only two of the levels.   

The first level is Corporate (or Enterprise) Strategy. Larger, more complex organization will often have a corporate level strategy which may include: 

• Portfolio of businesses and identification of different markets where the organization is choosing to compete 
• Allocation of financial resources 
• Securing investment 
• Sustainability through environment, social, and governance (ESG) responsibilities 

Example 

A company decided to incorporate the principles of ESG into their business strategy in an effort to attract socially responsible investors, pension fund investors and allow them access to financial resources.  Some banks and investors use an ESG “Score” to evaluate companies for lending and investing.  In this case the company was able to secure funding and investment that it would not have access to without incorporating ESG into their business strategy. 

The second level is Market Strategy.  Market strategy defines: 

• How an organization will compete and win customers (or, for a not-for-profit, donors) within a specific market 

• What benefits, products, and services the organization will offer in the market that will create value Identify and define the competition within the market 

Example 

A manufacturing company realized the intrinsic value of sustainability and began to integrate the concept into their operating system (OpEx).  Their successes quickly began to mount up along with the recognition they received by Non-Government Organizations (NGOs) as well as their customer base.  Many of their products supported the overall sustainability efforts of their customers that allowed them to become a preferred supplier.  As their reputation grew and sales increased the company recognized the value of being a sustainable company and created a new division to focus on products and services that supported their customers’ efforts to protect the environment and their people. A new marketing strategy was developed to address this new avenue of product sales. 

Finally, the third level is Functional Strategy.  While the first two levels of strategy have focused on factors external to the organization, the Functional Strategy focuses on winning within the organization.  The Functional Strategy may focus on 

• Internal factors that enable market strategies 
• Engaging workers 
• Organizational change initiatives 

Example 

One company recognized the value of sustainability, including OHS, and began to leverage the successes for other disciplines within the organization.  Working with Human Resources (HR) they incorporated sustainability into the HR functional strategy for attracting and retaining top talent.  The head of EHS became a frequent participant in campus recruiting and communication related to EHS was included in company publications to make employees aware of the company’s efforts around ESG.  

Strategy Considerations in Business Integration 

OHS is a subset of an organization’s Functional Strategy and this is the level where most likely business integration will need to be considered.  

However, corporate and market level strategies may also impact OHS. For instance, if a corporation has decided to make human capital and sustainability a critical component of the corporate level strategy (increasingly a requirement from the investment community), the OHSMS will be a critical system in executing that strategy. In a market strategy, changes in product or service offerings may greatly impact the OHS business function. For instance, a maker of complex, highly automated conveyor systems may choose to expand its offering to include customer-location based service technicians as an alternative to customers using their own maintenance personnel.  While this additional offering may make sense commercially, imbedding service technicians within customer’s operations may introduce new risk and additional hazards to these workers.  It is critical that the OHS function is connected to the organization’s strategy so that risk can be identified early and mitigated effectively utilizing the OHSMS. In fact, a highly integrated OHSMS that is aligned to the organization’s strategies can even create a competitive advantage for the organization while reducing risk to workers’ health and safety.   

Within the organization’s Functional Strategy, consideration should be given to how the OHSMS impacts and is impacted by organizational factors.  Organizational factors may include: 

• The organization’s mission and values 

• The organization’s culture – Consideration should be given to both the organization’s espoused culture (i.e., what the organization claims its culture is) and the culture in use (what the culture actually is).  Risk can be amplified or reduced by an organization’s culture.  
• People and their capabilities – What skills and abilities exist within the organization.  Where are their gaps? What impact might leadership and management have in risk?  
• Processes and structures. – What other systems exist in the organization (e.g., human resource management, environmental and quality management systems, enterprise resource planning or ERP systems)?   How does the OHSMS integrate within these processes?  

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