Compiled & Insights from Ashfaq Zaman, CPA
Despite all the progress made in the last few decades in strategy management, organizations are still failing to get things done in lieu with strategic vision & objectives. As per the Economist Intelligence Unit survey, 90% of the senior executives admitted globally they are failing to meet 20% of their strategic long-term objectives. The situation is direr in our country as strong strategic objectives are missing in the first place for many organizations, let alone achieving it. This results into the organizational boom & bust- riding its fate like a roller coaster. When the economic conditions are good, the organizations have a very escalating ride and when the economic macro factors become unfavorable- it collapses along with a country’s economy. In the current situation, everything seems to be going into a dream world- but we must embrace for what can be a dangerous future as well.
The big breakthrough on strategic management was led by Harvard Business School’s Michael Porter, who translated an industrial economics framework in business strategy context. Porter was big on seriousness & rationality. Highly researched & determinedly logical, Porter linked success to market positioning. He ground down the competitive environment into five forces that firms should attend to and offered some thoughts about how firms might use an assessment of these five forces to adapt a strategy that would secure better commercial advantage. Porter also included the notion of value chain, a common business concept today.
So how can big corporations attain strategic management excellence in this Era? Well, every company has its core competencies. It is just a question of working out exactly what those core competencies were and then building & utilizing them to the best advantage. After a lot of tested & trialed periods of strategic management theories, strategic development has returned full circle to its ancient roots, looking at strategy in the context of governments & nations. This time, however, instead of applying to military conflict, it is applied to the struggle for economic power & prosperity. Thus, Porter, Hamel, D’Aveni, Pankaj Ghemawat and others have considered the competitive strategy of nations, and political & economic systems. The world is strategic.
As Columbian professor Rita McGrath told us, “Strategy is really struggling both in the field and in the real world. You are seeing a bit of a gap. Porte’s Five Forces, The BCG Matrix, SWOT analysis, a lot of those tools came from an era when the competition was much less vigorous. They are great tools in the context in which they were developed. If you’ve got a stable industry structure and you’ve got things that you can actually measure, they still work. But, today we’re seeing industries competing with industries, different arenas when competition manifests itself.” “Strategy, entrepreneurship, and innovation are all bleeding into each other,” McGrath observed. And as they bleed into each other, so we are witnessing the emergence of new ideas and models.
TEN QUESTIONS TO HELP YOU TURN STRATEGY INTO REALITY
Sustainable growth depends on delivering the right strategies in the right way. Yet this is something that organizations appear ill-equipped to do. One suggestion is that business leaders need to answer ten key questions for their strategies to more effectively make the leap from design to delivery.
- IS DELIVERY AS IMPORTANT TO YOU AS DESIGN?
Strategy design can be an exciting process. It is cerebral, based on marshaling facts and figures, views and opinions, hunches and suggestions. Creating a coherent and persuasive strategy is part art and part science. It is demanding, difficult and vitally important, but without implementation it is nothing. In a 2017 Economist Intelligence Unit global survey of 500 senior corporate executives, over 90 percent admitted they failed to reach all of their strategic goals because of flawed implementation.
- DOES THE LEADERSHIP TEAM TAKE RESPONSIBILITY FOR DELIVERY TOO?
Once you have defined and clearly communicated the strategy, your responsibility shifts to tracking implementation. You need to know where in your organization change happens and who manages the programmes that drive change. You should proactively address emerging gaps and challenges that may impact delivery. Without this discipline, your strategy has little chance of success.
- DO YOU MOBILIZE THE RIGHT RESOURCES?
Consulting firms and more fluid organizations are adept at ensuring that their best people are working on the projects that need them most. In contrast, hierarchical and other organizational structures can limit mobility and many organizations struggle to release their best minds to become involved with implementing key strategies. “Always put your best talent on critical initiatives and make sure that you reward them accordingly, but more importantly make sure that they will have roles after the completion of the assignment,” advises David Marlow, company transformation lead at Bristol-Myers Squibb.
- DO YOU LEVERAGE INSIGHTS ON CUSTOMERS AND COMPETITORS?
Organizations atrophy when they lose touch with their customers, whereas the best leaders are constantly seeking insights from customers and competitors. In the EIU survey, 53 percent of companies said that changing customer expectations/demands impeded implementation. As a result, the majority monitored customer trends. But only one in five reported having effective feedback loops to use all of these data in strategy delivery. In a Harvard Business Review article, Amy Edmondson and Paul Verdin argue that customer input – at all stages – is a vital lubricant of strategy and execution. It creates what they call “strategy as learning”.
- IS YOUR IMPLEMENTATION BOLD, FOCUSED AND AS SIMPLE AS POSSIBLE?
Delivery is complex – often global, always interconnected. To succeed, the constant emphasis must be on boldness, focus and simplicity. The Boston Consulting Group talks of “smart simplicity”. This involves empowering people sufficiently for the requirements of their jobs by giving them the right resources, removing unnecessary constraints, and aligning interests by consequences to actions and results.
- DO YOU PROMOTE TEAM ENGAGEMENT AND CROSS-BUSINESS COOPERATION?
Support and understanding of the strategy throughout the organization is vital: Middle and line managers must be engaged and activated as strategy champions rather than just as managers and supervisors. In the EIU survey, 62 percent of respondents said that lack of buy-in from middle managers, line managers or both created a significant barrier to strategy implementation at their organizations. Second the understanding that teams are the means by which strategies are delivered. The Boston Consulting Group refers to performance integrity. By this, it means a highly motivated and thoughtful project team with a bias for action, clear on its objectives, with a strong leader and sufficient member resources, plus the right mix of skills for the effort.
- DO YOU OWN THE DECISIONS YOU MAKE?
Commit to making strategic decisions rapidly. Move quickly to correct your course, reprioritize, and remove roadblocks. Accept that you likely won’t have all the information you want, and rely on those you can trust to deliver sufficient reliable input to allow thoughtful decisions. Consider and address risks and interdependencies explicitly – both upfront and regularly throughout delivery. Build a lean and powerful governance structure to reinforce accountability, ownership, and a bias towards action, based on agreed metrics and milestones.
- DO YOU CHECK ONGOING INITIATIVES BEFORE COMMITTING TO NEW ONES?
Organizations tend to overburden people with strategic initiatives of one form or another, creating change fatigue. You must regularly evaluate your portfolio of strategic initiatives. Add new initiatives in response to new opportunities, but first, focus and be sure you understand both the existing portfolio and your organization’s capacity to deliver change. Agility, the organizational capability to quickly adapt strategy in response to external and internal changes, plays an important role in both the governance and management of any portfolio of strategic initiatives.
- DO YOU DEVELOP ROBUST PLANS BUT ALLOW FOR MISSTEPS?
We live in fast-moving times. Even the most far-reaching and elaborate strategies must contain room for learning and realignment. Strategy planning cycles are more rapid, dynamic, and agile than in the past. Delivery teams must be able to experiment and learn in an environment where it is safe to fail fast. In practice, this means you must discuss challenges openly, and adjust the plan as needed for success. Learn to reward failure, or at least accept it as a valuable input. In agile organizations, it is common to have frequent interactions between teams and leaders, to review and understand what went wrong, what worked well and what needs to be improved. It is a powerful iterative process. This is not simply about communication, it is about interaction up, down and across the company. Interestingly, what appears to be evolving is acceptance of the need for a hybrid approach to strategy. The intention is to manage the current business and operations while dynamically seeking out the next disruptive idea. This can be seen at Volkswagen Group. The company’s chief strategy officer, Thomas Sedran, talks of a “two-speed organization” – “One part goes with proven processes that lead to reliable products. This is necessary for those developing vehicles because delivering an unsafe one can cost you the company. For the other part, where you need to be much quicker, but where the impact of a failure is less severe, you need to be agile and have different planning and execution processes.”
- DO YOU CELEBRATE SUCCESS AND RECOGNIZE THOSE WHO HAVE DONE GOOD WORK? HOW MUCH HUMAN FACTOR IS INVOLVED?
Success in organizations is often whispered rather than celebrated. If strategy delivery is to become embedded in any organizational culture, successes must be widely and wildly celebrated. It is notable how adept the best business leaders are at acknowledging good work. They tend to have developed a personal means of communicating great work – a handwritten note, a phone call. Any leader who can answer these ten questions in the affirmative is well placed to translate strategy into delivery. Even failing to deal with the issues raised by one of the questions can fatally handicap even the most brilliant strategy.
Besides the other 9 questions, we need to really understand the Human factor. Over the last two decades, the world has changed almost beyond recognition. Economic, political and technological transformations have had a huge impact. Often in this side of world we include false successes, where an organization’s good fortune is explained more by economic and social circumstances than by effective strategy execution, the picture is quite depressing. The simple fact is that the vast majority of organizations predictably fail to execute on their strategies.
Organizations are essentially human creations. As such they are not purely cognitive machines, but also emotional communities. They are affected by, among other things, the passion and ambition of their founders and leaders, the bonds developed with clients, the experiences they offer, and the engagement of their employees. As human creations, too, they carry a lot of the capabilities and fragility found in individuals and groups. These include the ability to: dream and imagine futures; create new products and services; engage with groups; and influence, be influenced and transform over time. These organizations contain possibilities that would be unimaginable even a few decades ago. However, all this creative and prosperous power coexists with our human limitations – such is the nature of the human condition.
A good analogy about how our limitations can interfere in the way we define and act in the world comes from the advent of behavioural economics. The work of Nobel laureate psychologists Daniel Kahneman and Amos Tversky has raised questions about the fundamentals of economic science. Human beings can no longer be seen as predominantly logical entities seeking to maximize utility in their decisions (something most people already knew intuitively). We carry as a result of our evolution several biases in our behaviours and decision-making processes. For example, we are often risk-seeking in dealing with improbable gains and risk-averse in coping with unlikely losses; we make complex decisions based on remembered outcomes of entirely different situations and contexts; we are overconfident about our judgments and capabilities more than any objective analysis; we interpret risk and benefits as negative correlates.
People have concerns that go beyond helping the execution of an organization’s strategy to achieve its goal. Our interests are diverse and mutant. We want to belong, to grow, to gain more, to take care of our children, to save the world, and those interests change throughout our lives as we discover or face new realities. People act predominantly in their own self-interest (even if it is in pursuing an altruistic purpose). It is difficult to perfectly align those interests with those of the organization. Moreover, their actions are influenced by positive emotions – joy, desire and passion – as well as negative ones like anger, fear and anxiety. The simple reality is that as human beings, we are much more diverse, unpredictable and complex than strategies would like us to be. Our capabilities, as well as biases and emotional condition, affect our successes or failures. As we clearly need to protect ourselves from our “design failures”, we also have massive opportunities to leverage our potential as human beings, something that current practices still limit us to do.
Human nature is at the heart of this reality. People are at the centre of organizational dynamics. Processes, technologies and management models should exist to preserve and augment and not to condition and limit our human capabilities. Successful strategies are, ultimately, human accomplishments. But first thing first, we need to use that one thing, which differentiates us from other animals – our conscience and thought process!
References: LSE Business Review, Harvard Business Review, Economic Intelligence Unit
He is currently the partner of a leading international Legal, Management & Professional Consultancy firm with 230 offices worldwide. He is also a Mentor & Advisor of the British Queen Young Leaders Programme, as well as a TED Educator.