Is your think­ing flawed?

Robin Spec­u­land, founder and CEO of Bridges Busi­ness Con­sul­tancy Int, dis­pels myths sur­round­ing strat­egy ex­e­cu­tion.

The Smart Manager - - Contents -

Why do many fail at strat­egy ex­e­cu­tion? Robin Spec­u­land, au­thor of Ex­cel­lence in Ex­e­cu­tion, chal­lenges your be­liefs.

With more strat­egy ex­e­cu­tions fail­ing than suc­ceed­ing—67% suc­ceed ac­cord­ing to our 2016 re­search—my aim is to chal­lenge your be­liefs. Why? Be­cause if we con­stantly fail at some­thing more than we suc­ceed there must be a flaw in our think­ing.

I have been re­search­ing and con­sult­ing com­pa­nies in strat­egy ex­e­cu­tion for seven­teen years and over that time I have seen lead­ers ha­bit­u­ally re­peat the same mis­takes. Strat­egy ex­e­cu­tion is in its in­fancy but is be­com­ing more im­por­tant in busi­ness as or­ga­ni­za­tional and strat­egy life cy­cles are be­com­ing shorter. In the 1950s the av­er­age com­pany would live for 61 years, to­day it is eigh­teen years. Al­most 52% of the For­tune 500 com­pa­nies since 2000 are gone. Ac­cord­ing to Pro­fes­sor Richard Foster from Yale, “By 2020, more than three-quar­ters of the S&P 500 will be com­pa­nies that we have not heard of yet.”

Just 20 years ago it was not unusual to have a strat­egy for 10 years. To­day, the av­er­age strat­egy is three to five years. These short­ened life cy­cles mean that when a com­pany plans a new strat­egy, the pres­sure is to de­liver on its prom­ises to stake­hold­ers by do­ing it right the first time, and for that to hap­pen, five key be­liefs have to change.

01 ex­e­cu­tion plan­ning is done af­ter strat­egy plan­ning

Strat­egy plan­ning was in­tro­duced as a dis­ci­pline in the mid-1960s. Since then, or­ga­ni­za­tions are striv­ing to de­velop their abil­ity to craft strat­egy and we are still learn­ing. For ex­am­ple, we un­der­stand the word ‘strat­egy,’ but we do not have a com­mon global def­i­ni­tion for it.

In its re­port Why Good Strate­gies Fail, the Econ­o­mist In­tel­li­gence Unit re­ported in Lessons for the C-Suite that se­nior ex­ec­u­tives rec­og­nize the im­por­tance of strat­egy im­ple­men­ta­tion. Yet a ma­jor­ity of ex­ec­u­tives ad­mit their com­pa­nies fall short. They ac­knowl­edge a dis­con­nect be­tween strat­egy for­mu­la­tion and im­ple­men­ta­tion.

Paul Lein­wand, Ce­sare Mainardi, and Art Kleiner stated in their 2015 Har­vard Busi­ness Re­view ar­ti­cle that only 8% of lead­ers are ef­fec­tive at both cre­at­ing good strate­gies and ex­e­cut­ing them.

In achiev­ing ex­cel­lence in ex­e­cu­tion, ex­e­cu­tion is planned as part of the or­ga­ni­za­tion’s strat­egy plan­ning and pre­pared be­fore it is launched. Tak­ing time to de­velop your ex­e­cu­tion plan does not di­lute from the strat­egy plan­ning. Rather, it adds tremen­dous long-term value.

02 change man­age­ment is the right ap­proach for im­ple­ment­ing strat­egy

Change man­age­ment has fre­quently been the de­fault ap­proach for ex­e­cut­ing strat­egy. It works well for projects and ini­tia­tives within de­part­ments and di­vi­sions but not for a cor­po­rate-wide ex­e­cu­tion of a strat­egy. If it did, there would not be such a high fail­ure rate. Change man­age­ment is a ‘com­po­nent’ of strat­egy ex­e­cu­tion and should not be used for ex­e­cut­ing it.

It also does not work be­cause achiev­ing ex­cel­lence in ex­e­cu­tion re­quires trans­for­ma­tion from the core. Change man­age­ment typ­i­cally in­volves only change around the core. Trans­for­ma­tion has to come from the heart of the busi­ness, not pe­riph­eral change. De­cod­ing the ex­e­cu­tion chal­lenge re­quires that lead­ers of each or­ga­ni­za­tion make it their own.

03 fo­cus­ing on more, we achieve more

How many strat­egy ob­jec­tives should a com­pany fo­cus on in a year? If it fo­cuses on three, it will achieve three. If it fo­cuses on four to ten, it will achieve one or two. If it fo­cuses on 11-20, it will achieve none.

When you have too many ac­tions to do, it be­comes hard to fo­cus on any one. Also, your re­sources such as fund­ing and time are stretched. The out­come in this sit­u­a­tion can be that noth­ing gets done. If you try and im­ple­ment too many strat­egy ob­jec­tives, then you end up do­ing less, and some­times noth­ing.

The aim is: ‘less is more.’ By fo­cus­ing on less you send a stronger mes­sage, al­low for re­al­lo­ca­tion of re­sources to the right ac­tions, and cre­ate a more fo­cused com­pany.

04 money is the pri­mary mo­ti­va­tor of peo­ple at work

Many lead­ers be­lieve money is the num­ber one mo­ti­va­tor of peo­ple at work, but in most sit­u­a­tions, it is not. In­stead, re­ceiv­ing the right kind of ap­pre­ci­a­tion at the right time in­spires peo­ple. Em­ploy­ees pay at­ten­tion to what gets re­in­forced more than what is said. They also share with each other the recog­ni­tion they re­ceive. “Money mo­ti­vates nei­ther the best peo­ple nor the best in peo­ple. Pur­pose does,” says Nilofer Mer­chant, a busi­ness in­no­va­tor.

A study con­ducted at Mas­sachusetts In­sti­tute of Technology and funded by the US Fed­eral Re­serve Bank re­vealed many sur­pris­ing find­ings. It demon­strated that, for straight­for­ward tasks with­out much cog­ni­tive ap­pli­ca­tion, money mo­ti­vated the worker. How­ever, as soon as cog­ni­tive ap­pli­ca­tion was re­quired, pay­ing peo­ple more ac­tu­ally had a star­tling ef­fect on their per­for­mance. A larger re­ward led to poorer per­for­mance!

A sense of pur­pose is of­ten the pri­mary mo­ti­va­tor of peo­ple at work, es­pe­cially among mil­len­ni­als.

05 strat­egy ex­e­cu­tion needs to be only re­viewed once or twice a year

Reg­u­lar re­views sus­tain the ex­e­cu­tion. Ex­e­cut­ing the strat­egy re­quires mov­ing from the­ory to prac­tice, from con­cept to con­cep­tu­al­iza­tion, and from for­mu­la­tion to ex­e­cu­tion. Re­views sup­port suc­cess by mak­ing small but of­ten crit­i­cal corrections along the way. These corrections have a dis­pro­por­tional ef­fect on the out­comes. It is like when as­tro­nauts fly a space­ship to the moon, the small­est cor­rec­tion can make the dif­fer­ence be­tween land­ing on the moon and com­pletely miss­ing it. Along the way, as­tro­nauts have to check the space­ship’s lo­ca­tion in outer space rel­a­tive to where it is head­ing. Sim­i­larly, you check your or­ga­ni­za­tion’s lo­ca­tion on the im­ple­men­ta­tion jour­ney rel­a­tive to its strat­egy ob­jec­tives.

Un­be­liev­ably, many lead­ers do not con­duct re­views fre­quently enough. As a re­sult, by the time they do check on progress, it can be too late to get back on track. Small prob­lems can turn into large prob­lems, cre­at­ing a snow­ball ef­fect.

Achiev­ing ex­cel­lence in ex­e­cu­tion de­mands con­duct­ing reg­u­lar re­views. Also, the only way you know a strat­egy is good or bad is by ex­e­cut­ing, test­ing, and re­view­ing it. Yet, the Bridges’ 2016 sur­vey re­vealed that al­most 50% of or­ga­ni­za­tions re­view their strat­egy ex­e­cu­tion fewer than three times a year, while only one in five re­view it once a month.

So how of­ten should you re­view strat­egy ex­e­cu­tion? I sug­gest lead­ers ask their peo­ple ev­ery week what they are do­ing to con­trib­ute to the ex­e­cu­tion. Then ev­ery two weeks, they con­duct re­views in each busi­ness ver­ti­cal to ex­am­ine dif­fer­ent com­po­nents of the ex­e­cu­tion. That way, by the end of ev­ery quar­ter, they have a com­plete as­sess­ment of the ex­e­cu­tion progress. Then they would re­view the over­all per­for­mance once a year.

It takes dis­ci­pline to change the di­a­log across an or­ga­ni­za­tion. Lead­ers are re­spon­si­ble for cre­at­ing the space for the re­views first on their own cal­en­dars. Com­monly, they find this dif­fi­cult be­cause they get swept along by the cur­rent of ev­ery­day ac­tiv­i­ties. ■

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