Are you the Problem? – Strategy Execution in the Age of Disruption
I have spent much of my career helping organisations to execute strategy and have found that the execution of strategy is one of the most challenging things executives must do. The statistics are dire, most surveys put the success rate of well-intentioned strategy execution at 10-30%. Not encouraging. Why is it so difficult? One of my favorite books on the subject, “Strategy and the Fat Smoker”, by David Meister, makes a compelling argument that most executives know what to do, but just don’t do it. After all, every fat smoker knows that, to survive past 50, they need to quit smoking and start exercising. Easy right?
Having worked with hundreds of companies, I’ve observed that poor strategy execution usually can be traced back to one of the following five factors:
- You suck at your core business – while this may sound tongue and cheek, it isn’t. Often I find that bold strategies fail, not (just) because the organisation (or consultants) that developed them lacked imagination, but that these organisations overestimated their current value in the market (relative to customers or competitors). When it’s time to implement their bold strategies, they just aren’t good enough to make their existing strategy work, let alone their new, bold strategy. These companies become zombies, essentially coasting along as shadows of their former selves. Yahoo comes to mind here given their inability to compete with Google.
- You have the wrong strategy – In my experience this is one of the main execution killers. Often organisations develop strategies that are inconsistent with their positioning in the market or inconsistent with their customers’ expectations. They develop strategies that require too big of a stretch in terms of their license to play in the market. For example, a recent client in the rental car industry was failing to execute, what at face value was, a very logical strategy. When asked about the main problem in executing their strategy, the CEO was convinced it was lack of accountability on the part of the executive team and management. Upon further investigation, however, we discovered that the business was positioning itself as the price/value competitor in the market without having sufficient scale to support a cost leadership strategy. Their strategy, while logical, was never going to work. Flogging the team to implement the strategy was not going to achieve that strategy.
- Your business is subject to significant disruption – Businesses that have been lucky enough to enjoy long periods of prosperity without any significant disruption can almost be forgiven for not understanding why their “usual” strategy is not working when the disruption finally comes. Sometimes this happens quite slowly (e.g., Kodak) and other times it happens almost overnight (e.g., Blockbuster). While disruption is primarily a strategy design issue, leaders in incumbent organisations will often blame management for poor strategy execution – “why isn’t it working, c’mon why can’t you sell more film? The real problem is, of course, that the assumptions underpinning the former strategy are no longer valid when disruption finally comes, but the people responsible for execution are not able to challenge, or are unaware of, these assumptions. Alternatively, the strategy to cope with disruption is clear and compelling, but the mechanism for execution is just too slow to adapt the new strategy to the new market realities.
- You lack execution discipline – Much of what has been written about strategy execution falls in this bucket. We are told that good strategy execution amounts to setting a compelling vision, SMART objectives, clear measures and targets and the right set of initiatives. We know that we need the organisation to understand and align to the strategy and that everyone needs to, at least, understand their contribution to the strategy. It is also well understood that the strategy must be managed and governed and accountability established for the execution of strategic initiatives. Just about everyone would agree that communication is important and that change management is a key part of the equation. Unfortunately, most leaders find this difficult (and boring). Insurgents do these things dynamically, deploying and redeploying resources in ever faster cycles. Incumbents create top down bureaucracies that “cascade” strategies from the top to the bottom. Sometimes key elements are missing (e.g., lack of measurement), other times the system is too slow and the execution fails because the world has already moved on by the time the strategy gets to the troops.
- You are the problem – in my experience, if your strategy isn’t working and it’s not 1-4 then it’s probably you. You are not leading effectively. You are not able to rally and inspire the organisation to execute. You are not consistent in matching your rhetoric with your action. Your culture is not aligned. It can be difficult to look in the mirror and discover that you are the problem. However, this is one of the most controllable factors. You can change.
When it comes to execution, the bad news is that it isn’t easy. The good news is that reasons for failure are, for the most part, both predictable and controllable.
To learn more about Strategy Execution in the Age of Disruption, please contact us and we will be happy to share our perspectives with you.