As a strategy consultant, I am all too aware of the enormous amount of time and money companies invest drafting strategy documents, only for them to languish in drives. Winning strategies change the fates of organizations and bringing them to life is something I am passionate about.
The authors of ‘Strategy that Works,’ Paul Leinwand and Cesare Mainardi say this is an unnecessary occurrence and there are steps leaders can take to close the strategy design and execution gap.
How execution plays out in the real world
In studying lessons from companies which have closed this gap including IKEA, Natura, Pfizer, Starbucks and Apple, Leinwand and Mainardi discovered that the best companies manage themselves through a set of differentiating capabilities.
IKEA is an example of a business that is committed to its value proposition, of being accessible and providing quality products. The capabilities it brings together include a deep understanding of how customers live at home, which influences the design. The company offers affordable prices and creates a customer experience that keep buyers coming back for more pieces.
Connecting all these elements is an expression of the company’s strategy to be a leading global brand in furniture. IKEA expertly aligns its design, partnerships and culture to its line up with its capabilities. It has recently done the same in its digital journey where it revamped everything around customer interaction and new purchasing journeys.
Red flags leaders should look for
Some of the most telling signs that execution is in trouble include the idea that leaders do strategy and managers execute.
The best leaders both set the strategy and get their hands dirty in seeing it through.
Another red flag is when companies don’t introspect, and then don’t match strategy with strengths. A mismatch of design and the capability to execute almost guarantees that the strategy will gather dust.
Coherence and capability gap
The authors say capabilities and coherence are the keys to closing the strategy-to-execution gap. Capabilities are what the company does best and Coherence creates an environment where every employee understands those strengths and is directed by them.
However, there are some generally accepted business practices that sound productive, but can lead to a lack of coherence and can unintentionally drive a wedge between strategy and execution, these are:
· Focus on growth
This sounds reasonable, but many organizations fall into the trap of blindly chasing opportunities they have no right to win in. As a result, they get busy chasing new markets, products and trends and pursuing areas where they lack the right strengths and capabilities to succeed.
· Pursue functional excellence
Trying to be the best in everything leads to not succeeding very well in anything. Rather, narrow your focus so that you move towards create unique and distinct capabilities.
· Reorganize to drive change
What many organizations do after a strategy session is quickly re-organize to fix whatever they think is missing. However, and this is mostly done in vain because it ignores the company’s greatest asset, which is its culture. If leaders cannot leverage behaviours to drive toward intended direction, then they will always be moving people around, but not getting very far.
· Going lean
Sometimes leaders cut costs to preserve margin but may shave off key capabilities instead of pruning on bad costs. Also, since many organizations don’t study themselves internally, so they aren’t always clear about what to cut and what to invest in further.
· Becoming agile and resilient
This also sounds good but may lead to the danger of responding too quickly to things rather than building on core capabilities. It is driven by misguided belief that if you listen hard and move fast, you will survive. As a leader, you want to shape your own future, figure out what your capabilities and create your own demand.
How leaders can close the gap
To close the execution gap, some of the behaviours leaders should reinforce include:
Commit to an identity
That is, expressing what a company does exceptionally well and why it matters. A question for leaders to ask themselves is, where you have chosen to play to today and do you have the right to win in that market? If the answer isn’t clear, review your strengths, capabilities and culture and go after the things you have the right to win in.
Translate to everyday practice
As a leader, maintain focus on what your company does better than anyone else on a daily basis. You need to reflect this in your people, processes, technology and how the organization is set up.
Put your culture to work
Closing the gap between strategy and execution often involves telling new stories that reinforce coherence. Because culture is built over time, you need to infuse a narrative that will drive emotional commitment and accountability. Additionally, to alter the culture, pull in colleagues that others look up to and follow so they can model desired behaviours.
Be selective when cutting costs
Make sure that spending drives your strategy into execution. Do away with costs that don’t align to your ambitions so that you can double down on things that make you unique and move you forward. Think of every spend as an investment; if it’s not taking you further, it should not be there.
Shape your future
Leaders who execute on strategy are bold and stay committed to the direction they have chosen. Many leaders falter because of the fear that they will be judged for doubling down on a specific area. So, what they do instead is get busy with tasks that don’t make inroads. In today’s world of constant distraction, leaders need to avoid shiny ball syndrome, and develop the capabilities in themselves and their teams to work towards a bigger future.
My wish is to see fewer and fewer strategy documents languish in top drawers and see that investment translate into what the company does every day.
What we learn from companies that execute is that their value proposition is clear. So as a leader, ask yourself how you create value in the market and whether that is expressed from your strategy through to your everyday actions.
