Strategy Execution is one of the focus areas at the STRIM group of companies. Our evidence shows that leadership / culture of leadership is key to motivate employees, to innovate and to execute strategy.
Therefore I´d like to share a blog post by Roger Trapp, published in Forbes on March, 23.
One of the enduring truths of business is the difficulty so many organizations have in turning their strategies into action. Of course, many enterprises run into difficulties because they either start with the wrong strategy or find themselves caught with a model that no longer works. But even having a well thought-out and plausible strategy is far from a recipe for success. According to Ashley Unwin, U.K. & EMEA Consulting Leader at the professional services firm PwC, there are a number of reasons for this. First, organizations are often structured in a way that separates responsibility for setting strategy from the responsibility for its implementation. The former is the responsibility of the center (the office of the CEO or the corporate strategy unit, say), while the latter is the responsibility of the business in the shape of divisional, functional or geographic heads. At the same time, the consulting profession has developed in a way where this gap existed among the service providers. The differences have existed primarily between the strategy houses and the management consultants/technology companies. In this situation the former have been the “blue sky” thinkers and the latter those that implement. Finally, strategy development has historically been a linear process, focused on the long term, static and heavily informed by an external (market and competitor) perspective. However, says Unwin, this gap will close, both within organizations and among professional advisers, who will increasingly build capability to both develop and execute strategy for their clients. “In an increasingly complex and fast-changing environment, strategy development and execution must be dynamic, near term, iterative and about a constant cycle of trying, failing and learning fast” he adds.
But for the moment the gap is very much apparent – and has serious consequences. In a recent interview about Strategy That Works (Harvard Business Review Press), the book he has co-authored with Cesare Mainardi, a colleague at Strategy&, a management consultancy within the PwC network, Paul Leinwand described two of the most serious manifestations of the problem. “Strategies are often very generic – maybe because the company does way too many things,” he said. But even where the strategy was more specific, there frequently was not as much thought as was needed in order to execute it successfully.
Nor is it just the consultants who have their doubts. Their research shows that more than half of the 4,400 senior executives they have questioned in recent years did not think their organizations had a winning strategy. About two-thirds said that their companies’ capabilities did not support the way they created value in the market. In another survey of more than 500 senior executives around the world, just 8% said the top leaders of their enterprises excelled at both strategy and execution.
Like their colleague Unwin, Leinwand and Mainardi believe that the pressure of competing in an increasingly fast-paced world will help drive strategy setting and execution closer together. But that is not the whole story. Organizations have to become a lot better at devising strategies that are right for them and their customers and they need to have the confidence to drive them forward rather than just responding to new trends or to what competitors are doing. Leinwand, global managing director for capabilities-driven strategy and growth for Strategy&, and Mainardi, the firm’s former CEO, have carried out detailed research on a number of companies – including IKEA and Lego from Europe and the Brazilian cosmetics group Natura as well as more predictable US names, such as Amazon, Apple and Starbucks – in developing a notion that they believe explains consistent success. At its heart is the conviction that companies that were effective at executing great strategies focused their efforts on areas where they were equipped to win, using things that they already did exceptionally well. In the way of these things, this conviction has been developed into the Five Acts of Unconventional Leadership. These are not to be picked and chosen as practitioners wish, warn Leinwand and Mainardi. They are all facets of a single approach. “If they lead you to business success, that’s because they all help you do the same thing: close the gap between strategy and execution through the everyday work your company does and the capabilities that distinguish you,” they write.
The five acts are:
1. Commit to an identity. Companies become coherent by making choices about who they are. They define and develop a value proposition that distinguishes them from others and they decide on a few capabilities that will enable them to be better at what they do than competitors.
2. Translate the strategic into the everyday. This involves a company creating a template around its most distinctive capabilities. It builds and refines them and then ensures that they can be applied across the enterprise and so deliver on strategic intent.
3. Put your culture to work. Highly coherent companies view their culture as their greatest asset.
4. Cut costs to grow stronger. Companies that are successful in implementing their strategies spend more than their competitors do on the things that are most important to them and as little as possible on everything else.
5. Shape your future. Highly coherent companies find that focusing on what they are best at enables them to develop capabilities that go beyond their original goals. They realize that they are no longer constrained by their environment and can instead control their fate.
As Leinwand and Mainardi point out, these principles tend to fly in the face of conventional wisdom. But they stress that adhering to them instead of continuing with the usual focus on growth, pursuit of functional excellence, reorganizing to drive change, cutting costs across the business in pursuit of “lean” and concentrating on becoming agile and resilient is much more likely to close the strategy-to-execution gap. Indeed, they suggest that each of the usual approaches has unintended consequences that widen rather than close the gap.
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