Strategy is not new to this world. Every organisation and business needs a strategy for it to grow and provide value to its shareholders. While a lot of companies define their strategy, many falter in implementation. In the words of Jack Welch, "Strategy is a general direction that a business should determine - after that decision, one should implement like hell." One cannot agree more with this statement. But the question remains - how? How does one go about executing the strategy that will lead to the final objective?
Paul Leinwand, Cesare Mainardi and Art Kleiner - authors of Strategy That Works: How Winning Companies Close the Strategy-to-Execution Gap - have provided a great framework to overcome this conundrum of successful implementation. According to the authors, the key is to link strategy to capabilities to implementation - easier said than done.
All good companies have capabilities, but how many of them manage to define a few differentiating capabilities and integrate those capabilities to strategy? In the authors' simple words, the following need complete alignment: a value proposition that distinguishes a company from other companies; a system of distinctive capabilities that reinforce each other which enables them to deliver on the value proposition; and a chosen portfolio of products and services that make use of the capabilities.
The authors have correctly pointed out that the coherence among the above three elements shapes a company's identity, its culture, its practices, its approach to managing resources and its ability to close the gap between strategy and execution. This coherence is imperative for success and, in all likelihood, will translate the value proposition to results. The authors have provided great insights based on excellent research on successful enterprises like Apple, Danaher, IKEA, Haier and Natura. Many tend to blame the execution or the team executing the strategy; however, reality indicates that it is seldom the truth.
The authors provide a quick, five-point, fairly simple and practical guide for effective implementation, compared to conventional wisdom (see table).
While these seem logical, it is important to understand the nuances of each of the five points above. The issue of growth bothers everybody and there is a mad rush to do whatever competition does - only better. The authors are right in saying that such an attitude by itself will put organisations on a treadmill, where the only option is to run faster - an unsustainable model.
So the solution, like those adopted by Starbucks, IKEA, Lego, Zara - all recognisable brands - is to create a strong identity. It's not an easy task as it requires the whole organisation - in the case of Starbucks, right down to the person preparing your coffee - to adopt the same and live the identity. This requires cross-functional combination of processes, tools and systems to translate the strategic intent and the differentiated identity to live through on a daily basis. What this means is that in the daily activities of an organisation, one needs to embed the strategy, and people need to understand the implications of their actions or inactions. This requires commitment of leaders and employees throughout the organisation. This calls for a sustained effort at making the processes and practices work in a manner that people feel they own it.
Organisations like Apple, Starbucks, Frito-Lay (post the merger with Pepsi) and Haier followed a ruthless implementation model and, thus, got it right.
In addition, most companies that have managed to build a cohesive organisation have done so by shaping the future in that industry - by investing in their capabilities - not just by reacting. They have played a critical role in predicting the market requirement, playing to their strengths and sticking to their value proposition or identity. Apple (almost bankrupt in 1997), Lego (2002) and Cemex (2008) are clear examples.
Of the five points mentioned above, the most important one is culture - the way people think and behave. It is the backbone to get the strategy execution right. One can have the best of all - people, product and process - but if the ethos of the organisation is not right, it is not possible to build cohesion required between value proposition, capabilities, and the products and services.
A critical quality required in the leadership today is the ability to execute the chosen strategy. Great strategy and execution are not mutually exclusive. Failure to bridge the gap between strategy and execution is the leadership's fault - the buck stops here. It is the leadership's responsibility to define (a) the value proposition, (b) the capabilities - what is it that one can do best that no one else can, and what further capabilities to develop (invest, acquire) and (c) how to get there.
Top books by sales for Jan 31 - Feb 13, 2016; Includes only books released after Jan 1, 2015
In discussing the five unconventional strategies through real-life examples, the authors have provided tools/ thoughts that can be adapted by organisations to ensure effective mitigation of the gap between strategy and execution. The characteristics of an unconventional leadership, as explained by the authors, have given a nudge to traditional thinkers. While reading the book, one stops and ponders as to what one can do better - a sign that it serves the purpose intended by the authors.
The reviewer is Partner, Sales and Markets, KPMG in India.
Views expressed are personal