How to Move from Strategy to Execution

How to Move from Strategy to Execution · 1) Achieving Strategic Clarity · 2) Achieving Organizational Clarity · 3) Building A Management System. Youhave1freearticlesleftthismonth. Youarereadingyourlastfreearticleforthismonth. Subscribeforunlimitedaccess. Createanaccounttoread2more. Corporatestrategy HowtoMovefromStrategytoExecution Threestepstoputyourplanintoaction. by TomasChamorro-Premuzic and DarkoLovric by TomasChamorro-Premuzic and DarkoLovric June20,2022 kemalbas/GettyImages Tweet Post Share Save GetPDF BuyCopies Print Summary.    Threeoutofeveryfivecompaniesratetheirorganizationasweakonstrategyexecution.Whenyoudigintothepotentialbarrierstoimplementation,thereisagenerallackofunderstandingofthevariousfactorsatplay,resultingintheinevitablemanagerialjustifications—“poorleadership,”“inadequatetalent,”“lackofprocessexcellence,”etc.Thisarticlesuggeststhreekeystepstobuildtherightexecutionsystem:1)agoodstrategy,2)therightorganization,and3)effectivemanagement.Withthesethreeingredientsinplace,humaningenuitycanbeunleashed,andemployeescancollectivelydeliveronthecompany’sstrategicgoals. Tweet Post Share Save GetPDF BuyCopies Print Leerenespañol Leremportuguês StrategyinGreek(strategia)meansthe“artofthegeneral,”and,sinceancienttimes,impliedtheabilitytoachieveacomplexbattlegoal.Inthemodernbusinessworld,common“battles”mayincludeexecutingadigitaltransformationstrategy,winningthewarfortalent,ordisruptingyourselfbeforeothersdoso.Whicheveritmightbe,theonlyvalidstrategyisonethatcanbeexecuted.AsThomasEdisonfamouslynoted,“visionwithoutimplementationisjusthallucination”. Whileitisdifficulttoseparatefaultyambitionfromfaultyexecution,weknowthatmostcompaniesarenotgreatatthelatter,withonestudynotingthatemployeesatthreeoutofeveryfivecompaniesratetheirorganizationasweakonexecution.Manyleadersthinktheirstrategyis“right”butlamentthatimplementationistheproblem.Wehaveyettomeetasingleleaderwhoreportsthattheirstrategyiswrongbuttheyareexcellentatexecution.Likewise,whenyoudigintothepotentialbarrierstoimplementation,thereisagenerallackofunderstandingofthevariousfactorsatplay,resultingintheinevitablemanagerialjustifications—“poorleadership,”“inadequatetalent,”“lackofprocessexcellence,”orthestillpopular“cultureeatsstrategyforbreakfast.” InsightCenterCollection SettingYourCorporateStrategy Beyondareturnto“normal.” Asorganizationdesigners,wearefamiliarwiththedesireofmanyexecutivestotackleexecutionchallengeshead-on,andsuggestthreekeystepstobuildingtherightexecutionsystem: 1)AchievingStrategicClarity  Thefirstchallengeistohavethestrategythatbothcanandshouldbeexecuted.Whatcountsasgoodstrategyinacertainenvironmentishardtodetermineandisdependentonavastnumberoffactors,includingboththeindustryandthecompetitivelandscape.Whiletheadequacyofyourstrategyisbeyondthescopeofthisarticle,astrategythatcanbeexecutedwellwillmatchyouraspirationsandyourcapabilities.Therefore,twokeyquestionstoaskare: Isyourstrategysetattherightlevelofambition?  Wecanarguethattherearetwomajorerrorsrelatedtostrategyambition:atype1error,basicallyinaccurateoptimism,isanunrealisticoroverlyambitiousstrategy,whichprovokesaquestion“Howcanthispossiblywork?”andatype2error,irrationalpessimism,isanunambitiousoroverlypedestrianstrategythatprovokesa“meh”reaction.Type1errorsarecurrentlymorepopularintheworldofunicornsandactivisthedgefunds,butthatmaybejustamatterofcurrentfashionandriskappetite,nottomentionthefactthatsuchgrandioseaspirationsaremorelikelytoberewardedwithbiginvestment.Botherrorsaretobeavoided. Doyouknowwhatcapabilitiesareessentialforyourstrategy? Strategicclarityrequiresafurtherstep—understandingwhatitwilltaketoexecutethestrategy.Thefirststepistoclearlyidentifytheessentialorganizationalcapabilitiesthatthenewstrategywillrequire—oneneedstobuildcapabilitiesthatotherscan’teasilyemulate.Thesecondstepistoknowifthesecapabilitiesaresomethingyoucanbeexpectedtobuild.Establishedcompanieswillbemoreconservativeherethantheentrepreneurs(there’sareasonProf.HowardStevensondefinedentrepreneurshipas“thepursuitofopportunitybeyondresourcescontrolled”).Onewaytoachievethisclarityisthroughapre-mortemexercise,whichallowsexecutivestoidentifythesoftunderbellyoftheirstrategy,andthereforetheirkeyexecutionrisks. 2)AchievingOrganizationalClarity Onceyouselecttherightlevelofambitionandunderstandthekeycapabilitiesrequiredtoachieveit,youcanorientyourorganizationtowardsthekeychallengesforexecutingit.Anoperatingmodelcanprovideyouwithahigh-levelmodelofhowpursuitofyourstrategywillbedelegatedtotheexecutiveteam.Threequestionsarehelpfulinbuildingyouroperatingmodel: Haveyouspecifiedwhichunitownswhichpartofyourstrategy? Whileoperationalchoicesarespecifictoeachstrategy,wecanclusterthekeychoicesfacingeachorganizationaroundtwoaxesthattogethercreateahighlevelsetoforganizationalunits: Whatisthekeysubsetofstrategicgoals,basedonyourambition,thatyourorganizationneedstoachieve?Howcantheybestbegrouped?Often,complexorganizationswillconsistofanumberofdifferentbusinessunits,groupedbygeography,producttypeorcustomertype—howcanyoumakethislogicworkforyourstrategy? Whatstrategiccapabilitiesdoyouneedthatcutacrossthesegroups?Howwillthesesharedresourcesbegroupedandmanaged? Whendonecorrectly,allofthekeystrategicgoalsandcapabilitieswillhaveclearowners,reachingthe“mutuallyexclusive,collectivelyexhaustive”levelofclarity. Haveyoubuilttherightinteractionsbetweenthesekeyunits?  Oncekeyorganizationalchoicesaremade,keyinterdependenciesneedtoberecognizedandactivelymanaged.Differentbusinesssub-goalswillcreatedifferenttrade-offsthatwillneedtobemanaged.Cleargovernanceofhowscarceresourceswillbedividedandhowsharedsupportandcapabilitieswillbeallocatedarecrucialinordertoalignthewholeorganization. Thereisgreatimportanceinhavingthesetrade-offsproactivelyandexplicitlymanaged—thewholeartofthestrategywillbetobalancedifferentsubgoalswelltoachieveafarawaygoal. Haveyouassignedtherighttalenttotherightroles? Yourexecutiveteamwilldriveyouroperatingmodel—yourkeyleadersownthekeysub-goalsofyourstrategy,andtheyhavetobeuptothetask. Thefirsttaskistobuildtherightroles.Rolesarejustbiggroupingsofgoals,decisionrights,andincentives.Thesecondtaskistomaptheexecutivetalentontothekeyroles.Itisbettertobuildtheoperatingmodelyouneed,andthencheckwhetheryourcurrenttalentfitsyourneeds.Youcanlikelymakeafewriskybets,andmanagewithafewgaps,butifthegapistoobig,youeitherneednewtalentoranewstrategy. 3)BuildingAManagementSystem Oncethestrategyandoperatingmodelareset,theyhavetobeimplementedincountlessdaytodaydecisions.Forthat,oneneedsamanagementsystem.Inthisprocess,thekeycustodiansoftheexecutionbecomethemanagers—hierarchybeingonekeytoolforanexecutionofcomplexstrategyacrossalargenumberofindividuals.Hierarchyisnotterriblyfashionablethesedays,partlybecausestoriesoftop-downstrategiesgonewrongandleadersbehavingbadlyhavebecamewell-known,leadingtodiminishedtrustininstitutionsofalltypes. Webelievethatnewapproachestomanagement(e.g.agile,focusedoncustomerfeedback,withempoweredemployees)areanunderstandablereactiontoatop-downcommand-and-controlstyleofmanagement.Thelogicalexpressionofsuchanold-fashionedsystemisbureaucracy,whichcanbestbedescribedasproudobsessionwithformoverfunctionandprocessovereffectiveness.Inthisrespect,BritishhistorianRobertConquest’sThirdLawofPoliticsisstillcorrect:“Thesimplestwaytoexplainthebehaviorofanybureaucraticorganizationistoassumethatitiscontrolledbyacabalofitsenemies.” However,wealsobelievethattheideaofthedemiseofhierarchyandmanagementgoestoofar—anycomplexstrategywillneedorganizationandstructuretoachievecollectivecoordination.Theconceptsofself-organizingcommunitiesandmarkets,andtheresultingcollectiveintelligencetheycreate,aretherightmodelsformanyoftheoutcomeswecareaboutintheworld,butthey’rejustnotgoodforexecutingcomplexstrategies.Inotherwords,asageneralyoudon’tgettoaNormandylandingwithabottom-upprocess. Ourapproachcombinesmanagementhierarchywithtwokeyconditionsthatallowforsuccessfuladaptationofstrategytothelocalconditionsandavoidanceofbureaucracy: Howhaveyouempoweredyourstaff? Yourstrategyandoperatingmodelaremeanttoprovidesufficientclaritythroughouttheorganizationonwhatisexpectedfromeachemployeeandhowtheycanbesupportedtoachievewhattheyneed.Beyondthat,employeeswillrequiresignificantlatitudetoadaptthesegoalsandtheapproachneededtoadjusttothelocalspecifics.Goodmanagementsystemsexplicitlyensurethatthereissufficientaccountabilityandflexibilityintheirdesigntoavoidthe“bureaucracytrap”andenablesufficientlevelsofempowerment.OneexampleisRitz-Carlton’sfamous$2,000rule,whichspecifiesthatemployeescanspenduptothatamounttomakeaclienthappywithoutaskingformanagerialapproval. Howhaveyoubuiltself-correctivefeedbackintoyoursystem? Theimportanceoflocalcontextandthevalueofcollectiveintelligence,customerfeedback,andemployeefeedbackimplytheneedtobuildafeedbackloopthatallowsexecutivestoquicklyunderstandandreacttolocaldevelopments.Simplyput,executivesshouldunderstandwhatisworkingwellandwhatisnot,inthefastestandclearestwayimaginable,andbeinapositiontoquicklysharebestpractices.TaketheexampleofFord,whereanewCEOfacedaculturewhereissuesweretypicallynotreportedattheexecutivetable,andwerecertainlynotexploredopenlyandaddressedindepth.Byinstitutingabusinessreviewprocess,theleadershipteamwasabletofocuscollectivelyonaspectsofthestrategythatwerenotworkingandaddressthemquicklyandeffectively,therebycreatingakeylinktowardssuccessfulexecution. Insum,collectiveaction,i.e.,large-scalecooperation,isamajorcompetitiveadvantageofhumanity—tocraftafictionandmakeitbecomeareality.Forthat,threethingshavetocometogether:1)agoodstrategy,2)therightorganization,and3)effectivemanagement.Withthesethreeingredientsinplace,humaningenuitycanbeunleashed,andwecancollectivelyachievewhatwedoatourbest—realizeourdreams. HBRLearning SharpeningYourBusinessAcumenCourse AccelerateyourcareerwithHarvardManageMentor®.HBRLearning’sonlineleadershiptraininghelpsyouhoneyourskillswithcourseslikeSharpeningYourBusinessAcumen.EarnbadgestoshareonLinkedInandyourresume.Accessmorethan40coursestrustedbyFortune500companies.Freeforalimitedtime! Takeyourcareertothenextlevelbylearningbusinessandfinancebasics,anddevelopinganenterprisemindset. StartCourse LearnMore&SeeAllCourses ReadmoreonCorporatestrategy orrelatedtopic Strategyexecution TomasChamorro-PremuzicistheChiefInnovationOfficeratManpowerGroup,aprofessorofbusinesspsychologyatUniversityCollegeLondonandatColumbiaUniversity,co-founderofdeepersignals.com,andanassociateatHarvard’sEntrepreneurialFinanceLab.HeistheauthorofWhyDoSoManyIncompetentMenBecomeLeaders?(andHowtoFixIt),uponwhichhisTEDxtalkwasbased.Findhimatwww.drtomas.com. drtcp DarkoLovricisanorganizationalpsychologistandfounderatStudioMetis,anorganizationdesignfirmforinnovatorsandfounders.Headvisesgovernments,corporations,NGOsandventuresonhowtoexecutetheirstrategies,andcoachesentrepreneursonhowtobestmanageuncertaintyandchange.Heteachesbehaviorchangeandcollectiveintelligenceandblogsat@thelastmanager. Tweet Post Share Save GetPDF BuyCopies Print new HBRLearning SharpeningYourBusinessAcumenCourse AccelerateyourcareerwithHarvardManageMentor®.HBRLearning’sonlineleadershiptraininghelpsyouhoneyourskillswithcourseslikeSharpeningYourBusinessAcumen.EarnbadgestoshareonLinkedInandyourresume.Accessmorethan40coursestrustedbyFortune500companies.Freeforalimitedtime! Takeyourcareertothenextlevelbylearningbusinessandfinancebasics,anddevelopinganenterprisemindset. StartCourse LearnMore&SeeAllCourses PartnerCenter Diversity Latest Magazine Ascend Topics Podcasts Video Store TheBigIdea Data&Visuals CaseSelections HBRLearning