What do strategy, engagement, and culture have in common?
These words are frequently used in the boardrooms of companies in Fortune 500 America. At best, they mean different things to different people, and at worst, they mean nothing because they’re over-used when talking about corporate strategy execution.
Once decoded, corporate strategy execution is really about a focused effort at all levels of the business on how we’ll win in the marketplace. When done effectively, the ability to rally thousands of employees around a common strategic direction becomes a point of competitive differentiation.
In working with Fortune 500 executive teams to align on and execute strategies, the organizations that effectively bring corporate strategies to life share a few common beliefs. And in organizations where strategy begins and ends with a PowerPoint presentation to the board, at least one of these beliefs is lacking.
The Five Fundamental Truths
1. Strategy is about trade-offs.
It’s just as important to decide what you will not do or stop doing as what you will start doing. At your next strategic planning session, ask yourself, “Am I as clear about what we are not going to do as to what we are going to do?” If the answer is no, you’re not yet equipped to execute strategy. The output of your “stop doing” sessions can be as simple as not running an internal report that you aren’t sure anyone is reading. Or it can be as mission-critical as which markets you won’t focus on. In fact, Jim Collins has been practicing this in his personal life for years. jimcollins.com
2. Strategy shouldn’t be created via democracy.
By definition, strategy should be controversial. Many leaders over-value alignment, wanting everyone to agree on what the business should do. If everyone agrees, it’s likely not that controversial and may not provide a competitive advantage. The leadership teams who truly understand this reality have created planning processes and cultural environments that foster intense debate and disagreement. Then, they hold each other rigorously accountable to supporting the decision once it has been made.
3. Strategy is a look forward, not a look back, and that’s what makes it so difficult.
The balancedscorecard that measures involuntary turnover and yieldis a look back at the health of an organization, a measureof your “blood pressure” and “cholesterol.” Strategy,however, is a look forward into uncertainty, your workoutplan for the future. You need both, but don’t mistakeyour balanced scorecard for your strategy direction.
4. Most companies spend hours defining a strategy, but far too few hours focusing on execution.
Consider how much time goes into building your strategic plan. Once it’s complete, if it’s shared at all, it’s at a town hall meeting or passed on by middle management via PowerPoint. If goals are developed based on the strategy and are cascaded through the organization, everyone will be rowing in the same strategic direction – right? This belief assumes that the employees who are responsible for executing the strategy understand it and have the capabilities to execute it. The most effective organizations continually communicate the corporate strategy, assess the organizational capabilities to execute it, and develop training programs to bridge capability gaps.
5. To create relevant strategies, your entire executive team needs to spend time in the marketplace.
This seems fairly obvious. However, the next time you sit in a strategic planning session, look around the room and ask yourself how many people have spent time assessing the competition, identifying emerging trends, or meeting with customers. This knowledge is the “raw material” for strategy creation.
Ironically, this is the low-hanging fruit in many organizations; it’s just a matter of allocating time at the leadership level. Without the raw materials of a strategy that come from questioning your perceptions and being curious about your marketplace, it’s impossible to create a viable winning strategy. Shaun Rein, in Three Keys to Improving Your Strategic Thinking, gets at the concept of questioning your thinking, and the best place to shake up your perspective is not at your desk, but in the market: businessweek.com
Corporate Strategy Execution Requires Time
Many of these beliefs make a lot of sense when taught in top business schools. Yet, given the intense quarterly pressure of Wall Street, we take revenue wherever we can get it, and we don’t have time to think years ahead. Over the last decade, the one consistency I’ve seen in best-in-class Fortune 1000 organizations is that they found the time, were steadfast in these beliefs, and dealt with today’s fire drills while building tomorrow’s value proposition.