Better Execution: Stick to Your Strategy? [Part 2]
ronald.lamb posted in Challenges, Execution of Strategy, Guiding Principles, Improving S2E (Strategy to Execution), Life Lessons & Execution, Performance Improvement, Strategy, The Language of Strategy to Execution on September 21st, 2006
He’s curious about how companies can improve the link between the two.
Today I’m going to respond to Rob’s second question:
“[Do] companies that stick with a similar strategy for too long wind up with employees that are complacent about execution? Perhaps they have executed the same strategy for so many years they have mastered it.”
Here are my observations about firms that have a strategy that hasn’t been changed in a long time.
- We don’t have a strategy: Companies that don’t refresh their strategy for long periods have employees who typically say that they don’t have a strategy. Things change that affect any strategy. Strategies are based on internal goals, external opportunities and constraints. A change to any of these requires an adjustment or re-confirmation of the legitimacy of the strategy. What more often occurs is that change occurs and the famous strategy binder that originally was seen as the holy-grail for the firm is hence forth seen as obsolete.
- We go off-site once a year to develop our strategy: How wonderful it would be if we could organize all the internal and external changes that have a major impact on our firm to occur just before our annual off-site strategy exercise. We could deal with all of them at once at set our strategic course for the next year. We could then revise our strategy at some nice location each year about the same time.
“Wait a minute now, that’s what we do now! But we haven’t sorted out how to ensure the only significant change happens before our strategy session.” Employees don’t become complacent with a stale strategy, they ignore it as irrelevant based on accumulated change since it was created and communicated.
- You can’t master a strategy: As explained above, there is no such thing as “mastery of a strategy”. You can’t go on auto-pilot thinking that you’ve mastered your strategy. Think of how disruptive e-commerce was to the retail industry or personal financial services. Companies like Sears and Merrill Lynch who might have seemed to have ‘mastered’ their strategy had some very hard lessons to learn from Amazon and e-Trade.
- Complacency comes from believing in your own hype: Yes employees can become complacent in execution. As Jim Collins suggests, it comes from a failure to face the brutal facts. Some organizations breed and work on sustaining an incredible story about their capabilities and success. They loose any real ability to tell when they’re dead wrong. When the imagined reality varies from the real situation, it seems to be the time to hold on to the myth even harder than before. Believing in the myth of being successful in execution allows you to ignore change around you. It allows you to avoid figuring out what you need to change to remain successful.
The worst case of it I ever experienced was with DEC (Digital Equipment Corp). They were the most famous mini-computer vendor in the 1970’s and 80’s. In the early 1990’s as head of sales for a division of Westinghouse, I brought them in as a partner during a negotiation for a $100 million outsourcing deal. We were selected and were going through contract negotiation and a detailed examination of the deal. The client had a number of concerns that they wanted addressed by very senior DEC executives with DEC’s commitments put into the contract. The DEC executives were so insulted by the questioning of their capabilities, that they treated the client and their questions with unhidden contempt. To my shock, one senior DEC even resorted to calling one of the clients a @#@$&! idiot to their face for asking some questions about their ability to deliver their services. Needless to say the client ultimately broke off negotiations. The DEC executive point of view was that the clients were idiots for not taking the deal. Their own hype about their capabilities was much more real and important to them than examining the client’s sense of risk. Needless to say my experience wasn’t unique. DEC ended up breaking up their organization into parts and selling it off bit by bit until it was gone.
- What is success, if you continuously change your strategy?
- What is successful execution when you don’t get to complete projects and achieve targeted outcomes?
- What is success when you don’t update your strategy?
My short definition of execution is: Leveraging the assets that you have available, to achieve targeted outcomes.
Successful execution is: meeting expectations in the execution of targeted outcomes. In order to execute a strategy you translate it into targeted outcomes.
Summary of Suggested Rules:
- A strategy that changes too often puts initiatives and execution in disarray.
- A strategy that changes too infrequently becomes irrelevant. The targeted outcomes and their associated initiatives are relevant by chance rather than by design.
- Few organizations can change their strategy at the speed of change. Most strategies reside in binders and PowerPoint presentations. They are not easily altered, and rarely read.
- Organizations can translate their strategy into targeted outcomes. It allows the organization to modify these targeted outcomes and their associated initiatives at the speed of change. Execution stays relevant.
- Strategy as translated into targeted outcomes can exist at any level of an organization. Targeted outcomes are the object of successful execution. The above rules apply to execution at any level of an organization.