What are the seven key elements required for successful strategy realization?
Element 3: The Strategy
There are seven core elements, all of which are essential to achieve portfolio success – and we will discuss each in turn in this series of blog posts.
These seven core elements – pictured left as a hub and six surrounding spokes, are not only vital, but more importantly, must all work together to form a cohesive unit. There is a need for a constant feedback loop so that data, information, knowledge, and understanding can flow through and connect the whole process. It is only when all those ingredients are present that real competitive advantage can be achieved.
In our previous posts we explored the central hub, Portfolio Management, and the Innovation Process. In this post we will explore the all-important Strategy.
We are in an amazingly complex and surprising world. Strategy must be brought into the realm of doing. It seems so obvious, but the hard bit is accomplishing it.
You may think that success can be achieved by excelling at either strategy or execution individually—that great visionaries can change how we see the world, or that amazing operators can wind up outperforming competitors. But experience and research suggests that the days of keeping strategy and execution as separate topics are ending. We need leaders that can create big promises to customers, and help their organizations deliver on those promises. In fact, these two skillsets are intrinsically linked since a bold vision needs to include both a very ambitious destination and a well-conceived path for execution that will get you there.
There are so many simplified views that depict strategy as sequential. Worse still, corporate behaviour frequently follows the same pattern. Formulate strategy, summarise in a roadmap, develop the OGSM… and then cascade it into the organization. Evidence of the success rates of implementing strategy tells an awful story, and we all know it as well. Statistics vary but the message is always the same… “over 60% of strategies fail”…. “90% of strategies don’t turn out as expected”.. or my favourite most damning comment from a corporate veteran “I have never yet seen a strategy that worked”.
Why do we keep doing it? Einstein famously said that the definition of insanity is to keep doing the same thing over and over and to expect a different result.
Instead, you need to incorporate the classic view of strategy, defined in terms of two distinct layers. Firstly, a strategy map to help understand the logic of what themes are covered by the strategy and why. Second, a cascade of goals and objectives to provide a tangible focus for the rest of the framework to build upon.
These layers are connected intrinsically but very distinct in purpose. The first is your ‘strategy formulation’ process – the tools for this are many and have been written and researched exhaustively elsewhere, so we will not dwell on the detail here. The usage of these tools is essentially analytical – to come up with the desired direction for the overall enterprise, and for individual businesses. This is vitally important, intellectually challenging, and complex… but all that does is get you to the start line. When the competitive race is on, which is all the time, it’s what you do as reality unfolds that counts.
For this to happen, this analytical view then needs to be captured into a set of goals and objectives – which can then steer the ongoing strategy process. These goals provide the steering by acting as a set of values, the basis of prioritization for ongoing dynamic management of strategy execution.
The movie Le Mans 66 tells a great corporate lesson. Ford versus Ferrari in the Le Mans 24-hour race. Ford developed a new strategy, to challenge Ferrari. They built a race car, got themselves to the startline, and set their corporate objectives clearly upon the team. The movie shows a great scene, shortly after the race starts, Mr Ford leaves the racetrack in a helicopter, to go off for a nice lunch somewhere… Meanwhile, the great Enzo Ferrari stays trackside, involved, adapting, engaged and truly presidential. Ferrari win. Mr Ford returns and demands explanation of why the strategy failed.
The brave new offerings of Strategy Execution Management tools offer promise, though many of these prove to be quite simplistic in nature. Often not much more than communication tools to cascade the strategy ideas to a larger number of corporate people. You need to take a bolder approach. Craft the tools and processes you need so that real strategic insight and action can become an intrinsic part of the fabric of the enterprise.
And, last but not least…. be Enzo Ferrari not Mr Ford.
Strategy realization requires sophisticated yet easy to use financial modelling matched to the innovation process. This leads us onto our next post, Element 4: The Investment Model.
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