THIS IS A TRANSLATION OF AN ARTICLE THAT WAS ORIGINALLY PUBLISHED IN THE DANISH JOURNAL EFFEKTIVITET

Transcription

1 ARTICLE Just get it done! THIS IS A TRANSLATION OF AN ARTICLE THAT WAS ORIGINALLY PUBLISHED IN THE DANISH JOURNAL EFFEKTIVITET By Morten Benn, Partner,, mob@implement.dk Often, when strategies are announced, a magical link appears between the direction and goals and how to implement them. It is magical in the sense that the implementation process often does not contain the same level of clarity or tightness as the formulation of the strategy. The assumption is that once the right strategy is in place, it just gets done. However, getting things done can be very tricky. Just think of the difficulties of achieving personal goals. It is one thing to achieve personal goals when it is only up to you. It is quite another thing when many people are involved. This article emphasises five areas to work with in order to create real effect of the strategy. This article was first published in a magazine with the cover theme from strategy to reality 1. This theme is based on a common belief that we are dealing with two different things. That two processes are in play: A process in which the strategy is formulated and, subsequently, a process in which the strategy is realised. Many people talk about strategy formulation and strategy execution. Included in this very traditional distinction is the assumption that few, very clever people in a heroic top management come up with new and brilliant strategies. Subsequently, the other managers as well as the employees are responsible for realising these strategies. This is an absurd assumption. First of all, in complex 1 Effektivitet, the March issue

2 2 Roger Martin: The Execution Trap, July-August 2010, HBR. 3 Roger Martin: Playing to Win: How Strategy Really Works, knowledge companies, there is no such thing as people who just mechanically execute strategic orders. Every day, each employee is facing choices that on some levels have to be linked with the strategy, and where everyone needs to be involved. Secondly, in a time where markets are rapidly changing, it is unrealistic to think that a small, limited group of people are able to see so clearly that they make all the right choices. Nevertheless, we often find this mindset in companies when we hear words and sentences such as the strategy has to be rolled out to the rest of the organisation or that we must ensure buy-in from those who are implementing the strategy 2. In our opinion, this mindset is the primary reason why only about 1/3 of all strategic initiatives reach the intended goal. It is also the reason why we have worked with rethinking companies strategy processes for the past ten years. We believe that strategy is primarily about making choices. Strategy is not just reserved for the few, because explicit choices must be made at every organisational level 3. Explicit choices are characterised by the fact that it is completely clear what we agree to do and what not to do. If, at the same time, a choice is to be strategic, it is characterised by the fact that the company chooses to do something that requires a clear focus. Thus, it is hardly a strategic choice to focus on the customer who would not want to do that? However, it is a strategic choice to say that we exist for a very particular group of customers and no one else or to be very specific about what it actually means to focus on a specific customer. Choices, such as should we be on this market or not, are made at a higher organisational level, whilst others could be made at a more product-specific level whereby we see an increased interest in natural protein consumption or natural organic low-fat yoghurt products. Consumption increases by 40 % in a category which is rather stagnant. Should we change our offering to serve the group of people that buy these kinds of products? Why are they interested in organic products? (What is the need behind it?) Naturally, these kinds of choices should be made by those who are close to the problems that need solving no matter what level they are at in the organisation. Strategic choices should be linked at all organisational levels. All managers of a company need to work continuously with the strategic choices which they are facing. It is not something we do once every 5 years. Consequently, this means that the ideal strategic process involves senior employees making fundamental and important strategic choices on a more ongoing basis. When you as a leader have been part of identifying what is the right thing to do and you have been part of making the choices yourself, you are already halfway through the execution process. However, it is often the case that some companies already have a strategy that has not been executed or that is not as perfect and ideally formulated as just described. I was once in a meeting with the CEO of a subsidiary of a large global company. After discussing the strong effect it has when the management have been involved in making the choices they have to live by, she says: Yes, that is all very good. I understand and I agree that the choices I make myself are more important for me to implement than the choices others have made for me. But now I receive my new strategy from Helsinki. It has been created by three people and we are supposed to implement it. Can you help us? Naturally, I agreed to help! The world is imperfect, but a lot can be done about it. You basically need to consider approaching it from five different perspectives. Depending on how 2

3 4 The Financial Times, 29 October Rebecca Homkes, Donald Sull and Charles Sull: Why Strategy Execution Unravels and What to Do About It, HBR, March well you are performing within one perspective, you may choose to focus on one of the others: FIVE DIFFERENT PERSPECTIVES 1. CLARITY: Is the strategy clear and concrete? 2. LEADERSHIP POWER: Does the top management constitute a strong team? 3. IMPORTANCE: Is there a common understanding of what is important? 4. PRIORITISATION: Does allocation of resources work optimally? 5. RESPONSIBILITY: Do we have well-functioning processes that anchor and encourage people to take responsibility? Those five areas would strengthen the execution power of your organisation together with some infrastructure to follow up on the initiatives. Obviously, this is important to do. Recently at a press conference, the chairman of Sanofi, Serge Weinberg, stated that he was dismissing the existing CEO, Christopher A. Viehbacher, on the grounds that his execution focus was not sufficient 4. Clarity: Is the strategy clear and concrete? The first thing that comes to mind when reading this headline is yes, of course but define clarity! This is not an easy task, however, since all strategies are about how to increase a company s value creation, one of the requirements must be that people other than the management are able to identify where value is created. It would also be an advantage if the management and a large number of managers at the company are able to identify which key initiatives are important in order to implement the strategy. I have rarely met a board member who did not think that the company s strategy was clear. However, if you ask a wider circle of top 50 leaders to explain the link to value creation and mention the right key priorities, it is often quite a different matter. Therefore, I doubt whether the strategy is in fact clear? Thus, a clear strategy contains the following elements 5 : 1. It is clear to everyone what drives value creation at the company and how the strategy supports this. 2. It is clear to everyone what the critical challenges are in terms of value creation. 3. There are few overall priorities that, if they are realised, will overcome the challenges. 4. It is clear what brave choices and deselections have been made or must be made in order for the company to differentiate itself from the competitors. Leadership power: Does the top management constitute a strong team? In order to be able to work efficiently on realising the strategy, the top management must agree on priorities and direction. It goes without saying that if they do not agree on the direction of the company, it will be difficult to make things happen. The management need to share common ground as regards the strategic priorities. However, as with many other things in life, this is easier said than done. The majority of companies are divided into functional areas and they often have different internal priorities. These opposing interests result in silo creation unless action is taken to create coherence and a sense of community across the company. Thus, the first key question is: Do the management work as a team and do they have the necessary competences to step up to the next phase? 3

4 6 Moments of Impact: How to Design Strategic Conversations That Accelerate Change, Chris Ertel and Lisa Kay Solomon, Even when all are in agreement, one of the challenges for the CEO is whether he has the right team to make it happen. Bill Marriott once explained the process he went through to find a new CEO for the famous hotel chain, and how he discovered that his son was not the right person for the job, even though he had dedicated 30 years of his life to getting to know the business and, in many ways, was the right candidate. In spite of this, Bill Marriott ended up concluding that the business needed other competences. Regardless of whether you as a leader have been working at the same company for many years, or you have just started working there, it is a question that needs to be answered. Given the new market situation and the development we are facing as well as the critical challenges that arise in relation to value creation, do we have the right competences, the right mindset and the right level of dedication to handle it? If that is not the case, we need to make a difficult decision to change the team, given that the right team is the most important prerequisite for success. Importance: Common understanding The US military has a specific term for the world we live in. They call it the VUCA world, which is a world characterised by nonstop volatility, uncertainty, complexity and ambiguity 6. We can probably all agree that there is much truth in this! The consequence is that we all need to change our perspective on strategy and how we react to change in our surroundings. In the VUCA world, we need to quickly identify and understand the changes in our business environment and react fast. We need to seize the opportunities that arise and respond to the challenges in order for us to enable sustainable economic value creation. Here, the long-term strategy plans, which are conceived by only a limited number of people, as well as initiated with gradual coordination and alignment across the company, are inhibitive to getting a quick response. 4

5 7 Rebecca Homkes and Donald Sull, That is why it is important that all managers of the company understand the link between the strategy and the company s value creation. Not to slavishly follow it but to continuously adjust, make choices and carry out initiatives that are required to ensure value creation. Especially when the unexpected occurs. Creating a common understanding among a wide circle of people requires constant and continuous dialogue. The important part is not what is being said, but rather what is being heard. Therefore, on an ongoing basis, we need to create situations and opportunities to discuss the strategic priorities and choices we are facing, regardless of whether we are managing a business unit, a region or a product. Prioritisation: Allocation of resources As previously mentioned, strategy is about making focussed choices. However, choices cannot be considered real choices until we move resources from what we choose not to have to what we choose to have. Hence, the company s resource allocation process is key to putting action behind the strategy 7. Still, we experience that many companies are incapable of telling us how many resources, capital, assets, talent and not least time are tied up in running the company and in developing it. They will often mention the development department, if the company has one. However, it is not very likely that all the important opportunities and challenges in need of a deliberate response have their natural, organisational focal point here. Once, I was invited to a company that had doubled in size year after year. When I visited the company, it had reached a turnover of a couple of billion. Additional growth would put significant demands on the organisation. The management went to the board with a plan and got the necessary finances for realising the plan. It was quite a daring plan and a bold move by the management team and the board, because the organisation was already under a lot of pressure to deliver. When the new plan was released, it consisted of no less than 21 strategic initiatives. The organisation was supposed to make them succeed without having an updated overview of the number of already existing initiatives or the number of people available to manage and carry out the old as well as the new initiatives. People are rarely just waiting for something to do; consequently, the obvious question that arises among all of the involved parties is: Which initiatives should we give up? Seldom have I seen anyone give up their own initiatives or projects. So a prerequisite for efficiently implementing the strategy is to have a clearly defined process in place for reallocation of resources, i.e. people with sufficient time and the right competences to implement the initiatives. Closing down other obsolete initiatives with a lesson learned. Often, the longer the projects are running, the higher the chances are for them to become irrelevant. Instead of implementing 21 parallel initiatives in a long, thinly process, most organisations could benefit from only handling a few at a time before the next wave of initiatives. Responsibility: Anchoring, commitment and engagement Allegedly, Dick Clark, former CEO of Merck, once told Peter Drucker that culture eats strategy for lunch. As an example, this means that in a culture in which it is commonly accepted not to keep an appointment or be on time, everyone starts to accept this and adopts the behaviour. It would probably be possible to find areas of the same company in which some rules or procedures actually work 100 %, and where it is simply not up for discussion. Without going into detail on the whole culture aspect, it is fair to say that it all starts from the top. At DuPont, safety is taken very seriously. 5

6 Everybody holds on to the banister when they walk up or down the stairs in the company. Naturally, this makes sense when climbing a steep flight of stairs of a tall silo, but it may not make that much sense when walking up the stairs of an office building. Yet, it is not up for discussion. Even the top managers always hold on to the banister, no matter what thus, they are part of establishing and supporting the company culture. Various processes exist in most companies, which are intended to make people more responsible, such as a process that measures the performance of certain indicators, or processes in which each employee takes on measurable and visible responsibility for the implementation. For instance, the strategic priorities may be advantageously incorporated in the regular performance reviews as development or performance goals. Thus, follow-up becomes more simple, and each employee will have the strategic priority translated into something very concrete. At one of the companies we deliver projects for, we designed a round trip over three continents in order for the top management to be able to have a personal dialogue with all employees concerning the need for everyone to take responsibility for the business-related situation and to adjust the strategic priorities. The initiative was followed up with similar dialogues together with the daily and personal leader. When an initiative of the highest strategic importance is to be realised and create effect, the processes related to it often need to be adjusted to fit the importance of the initiative. If a salesperson is assessed based on turnover as opposed to contribution margin, and the strategic priority is to increase the margin, an imbalance will arise between the relevant performance goal and what you say you want to happen in the company. Obviously, this creates a certain amount of uncertainty in terms of what is most important. Adding to the story about culture: Is it okay not to perform on the agreed initiatives? If rewards are still given, if the consequences of not coming through are missing, it means that someone has had a lunch they were not supposed to have had. A lack of clarity may be the cause of a lack of action The situation of each company is different, which is why standard advice is rarely directly applicable. However, we can get far by taking a closer look at the five perspectives briefly described in this article. Where and what are the biggest challenges? Are there examples of strategic initiatives at our company that have been executed quickly and efficiently? If so, what can we learn from that? What was in place? What can we learn from our experience with the things that really work. If you as a leader have the feeling that not much is happening or that not enough is happening, then it is worth trying to inquire about whether there is true clarity of the strategic priorities. Good luck creating strategic effect! 6