All organisation have a stated strategy – one that they would like to execute on. However, most organisations are not able to execute the stated strategy, which leads to the organisation not being able to live up to its potential and deliver what they promise to their stakeholders. So, where do things go wrong?
For any strategy to get executed, there are a series of things need to happen:
Strategy definition process (ongoing):
The process used to define the strategy needs to take into account the current reality of the organisation – its strengths and weaknesses, the prevalent culture, internal power structures, external power structures (competition – direct/indirect, customers, partners, etc). All of these need to be accounted for when the strategy is being defined or tweaked.
Suppose that the organisation has a history of not being able to come up with breakthrough innovations, cant suddenly develop them. So, any strategy that is defined that requires the organisation to come up with breakthrough innovations most likely will not work.
If the organisation has a history of acquiring new companies and selling them off at a later time at a discount cant suddenly expect that their next acquisition will be different, unless there is a fundamental change in how they approach integrating the acquired companies or products. These are nothing but wishes and will lead to the same kind of results that were achieved in the past. The people who define strategy should also look at the skills gap, the culture gap and the execution gaps of the past, see if there is anything that has or is expected to change, owing to specific decisions made by the executives before defining their strategy.
The result of the strategy process needs to be able to identify a keystone behaviour or a metric that everyone in the organisation can measure and act upon. Like Southwest Airlines’ obsession on being the lowest cost airlines or Alcoa’s obsession of having zero incidents in their factories or Amazon’s obsession on serving the customer what they want (even if they themselves don’t know what they want) or Apple’s obsession on design.
Most organisations get this step wrong. They spend a lot of time detailing the strategy in such detail, that they need at least a 10 page powerpoint presentation to explain all of it. The moment this happens, most of the employees are no longer able to remember the strategy of the organisation and how they can bring the strategy to life. Each one of them will make decisions based on what they think is the strategy. This is where misalignment starts and when everyone in the organisation is doing this, the result is a list of limiting tactics and no longer is strategy.
What is worse is the following – when you ask employees about their companies stated strategy, and they rattle out the goals (20, 10, 10 – become a 20 billion dollar company in the next 10 years with a 10 billion dollar in profits). We need to understand that these easy to remember goals are not the strategy. The strategy is the how part. How will the company go about achieving these goals?
Converting Strategy to behaviour:
If the strategy development process results in a 10 slide powerpoint to explain the strategy, we can be sure that the execution of that strategy is going to be challenging. A good strategy is one that can be explained in a short 3-4 sentences. Great examples are the one’s that I have mentioned above (Alcoa, Southwest Airline, Apple or Amazon)
Will it be by building new products, addressing new markets, acquiring new companies, expanding into new territories, being obsessive about our customers success or a combination of these?
The strategy needs to be clear enough for every single employee to be able to use it in their regular decision making process – will this decision align with the company’s strategy or not? Even if it takes my company closer to the goal, it still needs to align with the stated strategy and if it doesn’t, the action is not justified.
Organisations that are able to execute on their strategies usually are those that allow the definition and the choice of the tactic to the operational people, who make day-to-day decisions that run the organisation. They need to hire good people, ensure that they know what the organisations’s strategy is and trust them to pick the right tactic or decision to bring the strategy to life. This is how you can convert a stated strategy to expected behaviours that bring the strategy to life.
If the strategy definition process was done well and the strategy is clearly and succinctly defined and all employees know the strategy, then the role of line managers is to ensure that they are able to provide constant, consistent feedback to their employees on whether the tactic they used to bring the strategy alive was one that worked or not.
There will be times when the frontline employees will make mistakes on the tactic employed in a given situation. It is then their manager’s responsibility to point this out and sit down with them and discuss on what other tactics could they have used instead of the one they picked. Explain why the chosen one was not the right or the best tactic in the given situation such that they understand the thinking behind how not to chose a tactic.
They can learn from this so that the next time around, they get better at this. This is how the line managers can help in bringing the strategy alive. Not by enforcing tactics but by allowing the tactics to emerge based on the need in a given situation. This is also how an organisation can ensure that they are agile and can respond to the market in real-time and potentially.
In the past, it was okay for the headquarters to define not only the strategy but also dictate the tactics of execution, as the market conditions remained stable for long stretches of time.
Given the volatility of the markets, geo-political situation, interconnectedness of the world economy, swift changes in technology, global availability of capital and extremely fast growing startups, it is critical for any large organisation to enable their frontline managers to define the tactics of engagement.
It is also important for these frontline managers to consistently provide feedback to the strategy development team on the effectiveness of the strategy and the changes in the ground reality. This back and forth between the teams that execute the strategy and the teams that define the strategy is critical for the strategy to be effective, even if it gets executed correctly.
This ability of the frontline managers to respond to changes in the market dynamics independently and in alignment of the organisations stated strategy makes an organisation an “intelligent enterprise”!