Never Underestimate the Analysis Phase in Strategic Work

A thorough preliminary analysis does more than deliver data—it broadens the organization’s perspective on its future tasks and responsibilities. That’s according to Morten Søtofte, CFO at KommuneKredit, who shares insights into the organization’s collaboration with CfL, led by Michael Tolstrup, Head of Leadership Consulting.

By Kirsten Weiss, Journalist, October 2024

When KommuneKredit last developed a new strategy, the process was more top-down than intended. The pandemic effectively shut down the world outside—and with it, the opportunity for open, wide-reaching dialogue. As a result, the leadership team at this member-owned financial association, which strongly identifies with the public good, had to accept a strategy process shaped by fewer voices, developed largely behind closed doors.

This time, things are different. Determined to proceed with a thorough, analytical approach, KommuneKredit has based its strategic work on a robust initial analysis phase, creating space for input from a broad range of stakeholders.

“As an organization, it’s vital not to assume you have all the answers,” says CFO Morten Søtofte. “We chose a comprehensive preliminary analysis that gave us not only extensive data but, more importantly, a much larger perspective on our future role and responsibilities.”

He adds: “We wouldn’t have received the same insights if we hadn’t asked so many stakeholders for their input. The analysis really does form a solid foundation for our new strategy.”

A No-Nonsense Proposal from CfL

With more than 125 years of experience providing low-cost, efficient financing solutions for Danish municipalities and regions, KommuneKredit is deeply rooted in serving the public sector.

Before embarking on its strategy work, the association invited several consulting firms—including traditional auditing firms—to propose processes for developing a new strategy. It was essential that the chosen consultants understand KommuneKredit’s public-sector focus and the challenges facing municipalities, regions, and a politically appointed board of directors.

KommuneKredit ultimately chose CfL. According to Morten Søtofte, the decision reflected an “intellectual kinship” with CfL—also member-owned—as well as the “no-nonsense” approach presented by CfL’s Head of Leadership Consulting, Michael Tolstrup, regarding what robust strategy work should look like.

Every Strategy Process is Unique

Working together, KommuneKredit and CfL opted for a four-phase strategic approach:

• Analysis
• Development
• Planning
• Execution

The recently concluded analysis phase aimed to ensure knowledge, representation, ownership, and legitimacy. As Tolstrup points out, the entire process rests on the principle that every strategic effort is unique, and the guiding principles must be adapted to the organization’s specific context.

For KommuneKredit, this means recognizing its legally regulated structure, its clear operating parameters, and a board of directors primarily comprised of politically appointed members.

“It’s important to understand that this organizational structure influences the strategy work—even in the analysis phase,” says Michael Tolstrup. “Our intention was to gather insight from the organization’s stakeholders. From experience, we know that interviews and workshops work well in this stage, so we chose that route.”

“We conduct a form of scanning: first collecting as much data as possible, then analyzing it. We look for patterns and themes, and present them to the board and executive management.”

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Like Harry Potter’s Invisibility Cloak

In the initial workshops, employees and managers shared their past experiences with strategy—what worked, what didn’t. CfL’s consultants focused on open-ended questions and active listening, aiming to understand not just how participants viewed strategy, but also what else people were talking about within the organization.

One mid-level manager likened the previous strategy to being wrapped in a “Harry Potter invisibility cloak”: after an initial wave of conversation, talk of the strategy gradually disappeared, almost imperceptibly.

“The association wants a living strategy, so transparency emerged as a clear principle,” says Michael Tolstrup. “We’ve made a point of using the management system to inform everyone about the strategy process and its underlying principles. Several morning meetings offered opportunities to discuss and question the strategic work.”

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Early Involvement of the Board

By centering the process on workshops and interviews, KommuneKredit ensured that a variety of stakeholders could contribute their perspectives on the association’s current and future role. This robust analysis not only delivers insights but also helps build legitimacy and stakeholder buy-in for the strategy’s eventual execution.

Early on, the chairmanship was interviewed for their views on the most critical elements of the strategic process. Ultimately, the aim was to secure the board’s support from the outset. As MIchael Tolstrup notes, a board and an executive management team might not always highlight the same priorities. An external consultant can raise topics that may be tricky for an executive team to address directly with the board.

In addition to employees and board members, KommuneKredit’s customers were also interviewed. Questions included: How do you, as customers, perceive value? How do you experience working with KommuneKredit?

Valid Data as a Basis for Decision-Making

“As consultants, we don’t take a stand. Of course, we can’t deliver 100% insight, but we present a data-based picture solid enough for the board and management to make informed decisions,” says Michael Tolstrup.

“This comprehensive preliminary analysis aims to deliver a fact-based foundation for the subsequent phases of strategy work. We’ve seen that this approach makes strategy development more grounded in concrete facts.”

In the analysis phase, for example, it emerged that some customers and stakeholders view KommuneKredit’s systems and collaboration processes as somewhat old-fashioned and bureaucratic—despite generally seeing the association as a near-collegial partner.

CfL collected and analyzed these perspectives from interviews and workshops, identifying patterns and themes. The findings were then presented in a final report and at a workshop with the board. The subsequent steps in the strategy process were also discussed, and the final report was presented in two separate meetings with the leadership group and employees.

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A Need for Greater Customer Focus

One conclusion was that KommuneKredit should shift from an “inside-out” perspective to an “outside-in” approach. In other words, the organization should adopt a more customer-focused mindset, paying closer attention to how customers experience its offerings.

Morten Søtofte explains: “The smartest move we made was to gather a bottom-up perspective, asking a wide range of employees and customers for input. Later, we layered on an outside-in perspective, which really opened our eyes.”

“Simply defining the perspective allows us to consider changing it. We asked for suggestions on what we need to be especially mindful of in our strategy process, and that in itself is invaluable.”

A Strong Basis for a More Efficient Process

According to the CFO, the next step is to act on what the organization has learned.

“You can’t just say, ‘Okay, we asked—this is what they think.’ Are we willing to change something based on what we learned?”

“The challenging part isn’t the asking; it’s overcoming your own preconceptions about what’s good for others,” Morten Søtofte notes. He emphasizes that the groundwork is now solidly in place and hopes this will positively influence the next strategic phase.

“We’re still in the early stages of the process, but with a 360-degree analysis involving employees and customers, plus thorough involvement of our board, I believe we can move forward more quickly,” he says.

“A solid foundation might shorten some discussions because we can refer back to validated facts and statements, hopefully making the process more efficient.”

KommuneKredit will continue its strategic work in collaboration with CfL.