Deciding and Doing: How to end the strategy struggle

22/10/2015

Deciding to “do” is not the same as doing. Herein lies the problem facing many corporate leaders. When it comes to strategy, the devil is in the doing. 

Most chief executives and their boards are excellent at strategy – deciding what to do. Their ideas are well-researched, innovative and practical.

 

When it comes to doing what’s decided, problems arise.

An often quoted article published in Fortune magazine, Why CEOs Fail, suggested execution, not strategy, caused most companies to flounder.

“In the majority of cases – we estimate 70% – the real problem isn’t [bad strategy]…. It’s bad execution.” authors Ram Charan and Geoffrey Colvin wrote.

In 2007, the then-CEO of BP, Tony Hayward, annouced thousands of redundancies. In doing so, he said: "Our problem is not about the strategy itself but our execution of it … At the root of all this is a need to change our behaviours."

Companies struggle to deliver against their strategy goals. In nine out of 10 cases, they fail to realise all their goals, according to the authors of the Fortune story. This has two implications. One is that leaders need to get better at implementation. The other is that they may need to be less ambitious in their goals.

What goes wrong?

How could so many companies and their leaders fail to get stuff done? The answer lies in communication, says John Trevillyan, Program Director of Implementing Strategy.

“The biggest issue is that there is not effective communication down to front line leaders about how to implement the strategy,” he says.

Too little time

Leaders don’t give enough time to strategy. Trevillyan says 85% of management teams spend less than one hour a month looking at strategy. “They are looking at what colour to paint the roof, or past sales performance,” he says. “They are looking at lag indicators rather than asking ‘What are we doing now to give us a result’?”

Instead, executives need to develop balanced scorecards, strategy maps and how-tos to guide front line staff, and to discuss progress about the goals at executive committee meetings.

Hard edges

Companies need a clear-but-fuzzy strategy, says Trevillyan. Staff need to be able to tinker at the edges of a strategy when circumstances change.

The plummeting Australian dollar is a case in point: it has dropped from $1.10 to 70c. “That has a big impact,” Trevillyan says. “With a clear-but-fuzzy strategy, Australian universities recruiting students might switch from a focus on locals to international recruitment.”

No negotiation

Changes of strategy need strong communication, not a single email from the CEO telling you what to do.

“If you want to make strategic decisions work, it’s crucial to make sure the people who are implementing the decision understand what it is, and the reasons behind it.”

Strategies go wrong when they contain too much detail. “ ‘We need a new accounting system,’ is the strategic decision. Deciding who should choose the system, what results we want, and the best one to integrate with our other systems needs to be jointly decided by those who will be using it.

The wrong measures

Companies measure “up and down” instead of measuring across functions. “We should measure the connection between operations, sales and finance. We should  measure teamwork, and cross functional-decision making.

“During my career, the more senior I got, the harder my job. If I want to make a change, I had to get people in finance and human resources to agree. Negotiation across functions is an essential leadership skill.”

Exemplify

Pope Francis drives a five-year-old Ford Focus and has exhorted all Catholic priests to drive humbler cars. “If you like the fancy one, just think about how many children are dying of hunger in the world,” he said.

It’s a far cry from the Mercedes-based Popemobile, but it’s consistent with his leadership. Corporate leaders need to follow suit.

“If I am in charge, my job is to make it happen, so I need to make it happen. If I believe in customer service, then I should be prepared to answer the phones.”

Distributed leadership

The people who make the decisions to make the strategy work need the power to be leaders. That’s the final link. It’s a change of attitude for many leaders who are used to making decisions on their own.

Pulling it together

Trevillyan teaches an integrated approach. Each of these six strategies links to another. More time spent on communicating strategies leads to better management of them, while the balanced scorecard enables distributed leadership. Negotiation also fosters distributed leadership. Leading by example communicates that change is important, and rewarding co-operation transforms behaviour.

It’s when all these elements work together that strategies become realities.