James is a CEO for a $1bn equipment manufacturer supplying the New Nuclear sector and is charged with building new momentum into the product pipeline in the next 7 years. With the uncertainty surrounding investment and technologies, how can he increase the odds of success?
Caroline is a commercial director in a growth SME in the UK electronics sector and is seeking new growth options, new technologies and applications. Being able to clearly articulate the commercial gains with R&D programmes will help create buy-in from the board.
Roberto is Business Development Director at a SME tier 1 rail rolling stock supplier and wants to jump on the 10%pa growth opportunity. He’s juggling make / buy / acquire decisions which must be made in the next 4 months.
But, they have a problem…
Only 8% of Business Leaders are good at both strategy formation and its execution. At least according to Paul Leinwand, Cesare Mainardi and Art Kleiner’s article in a recent article for Harvard Business Review . And 63% were rated as neutral (or worse) on development or execution.
Makes you think, doesn’t it..?
This resonates with me, personally. I’ve been in my fair share of “business strategy” meetings in large companies that should have known better. Every year the invited would be subjected to an off-site “Strategy day” to develop or test plans. This apparent Innovator will remain nameless, but let’s call them BIGCO.
For a start, it wasn’t strategy: “A method or plan chosen to bring about a desired future, such as achievement of a goal or solution to a problem.”
The sessions were (mostly) failures – but why?
First, although there was lots of intelligent talk by and among clever people, there was little analysis and no real coordination of execution.
Second, no decisions were made about where resources would be spent (or not). High on bluster but low on details.
Third, the effect of people attending after three years of these was to demotivate and make it almost certain that strategies would fail. Like Sisyphus, sentenced to continue to roll his rock up hill to no apparent purpose for eternity…
“There is perhaps no process in organizations that is more demanding of human cognition that strategy formation.” (Mintzberg)
Effective strategy is like layers of an onion: Business strategy comprises product and technology strategy, manufacturing strategy, marketing strategy, sales and distribution strategy, pricing strategy HR strategy and so on.
Or, like the structure of a spider’s web it weaves and touches every part of the organization and helps the people understand what the need to do every day (and stop doing) for that matter.
The Strategic Failure Problem
It’s been quite a few years since those strategy meetings…
And it’s time to dive a bit deeper for the root-cause reasons strategic failings.
I was really interested to read more into the Paul Leinwand et al article.
You can see from the graphic below, that it appears (most) strategy fails to be fully realized. Either it’s the planning that is unsuccessful or it’s the execution, or some combination of both.
There appears to be a number of strategy failure“types” – those that can be characterized by their strategy development / execution abilities.
- Type A: “The Leaders” – 8% of Execs: Are very effective at both development and execution
- Type B: “The Middling” – 29% of execs: Are at least partially effective in development and execution
- Type C: “The Laggards” – 63% of execs: Are neutral or worse at development or execution.
But perhaps it’s not surprising: If Henry Minzberg is right – it’s challenging to create strategy and its challenging X3 to deliver as intended!
So, what’s behind the failure of strategy?
Failing No 1: “I do what my boss showed me; after all it worked for them.” But did it really work for them? OK, so you’re not starting from zero base and just about everyone has seen a SWOT or PESTLE analysis and maybe used Porter’s 5 Forces. But the full strategic toolkit is rather vast. One study done by Rob Phaal et al identified over 850 strategic “2×2” tools , which is overwhelming and clearly too many to be efficient. Yet by distilling and combining the essence of these we can get most of the outcome with far less effort. And effort there must be…
Failing No 2: “The Absence of Analysis.” We’re creating choices here and you need to know what the options are and have done the hours in the library to really get under the skin of the information. This was a failing of BIGCO’s strategy process: little, if any, real strategic analysis was done to underpin the planning.
Failing No 3: “Lack of Collective Sweat.” There are some consultancies, who parachute in with a small army of analysts that look over the books, remote from the organization, then conduct many interviews (to extract what you already know) and present it all back to you. Does that work?
Alternatively imagine an energizing process which effectively primes your people, gets them to do the homework (analysis) before hand and brings them together in highly engaging workshops where they go to work on challenging problems.
Participants come up with new ideas and they feel like they’ve been through something together. By going through a well-tested strategy process, that is facilitated, lean and effective, maybe strategy days can become something people actually look forward to rather than dread?!
And there’s some science behind this. IfM produced research which identified the ways in which strategy becomes “sticky” – the combination of social, cognitive and psychological factors makes for better outcomes .
Failing No 4: “Failing to Choose.” A good friend of mine, Paul Haslam, first told me about the origination of the word decide… De-Cide… Cide (latin) to cut off choices by choosing others. When decisions have been made, simplicity dramatically improves. The Complexity problem is a killer as recently discussed in the HBR Ideacast by Chris Zook .
In innovation management we use a portfolio and matrix to help reveal the most potent opportunities that are most likely to deliver. By making deliberate choices, we free the limited, precious resource in our organizations to do their thing which makes the strategy much more likely to succeed…
But it’s also fair to point out that strategy is a combination of deliberate a priorichoices resulting from analysis (Intended) as well as opportunities that seems to arise (Emergent). And that’s OK, because strategy is a dynamic process.
From Mintzberg and Waters
Failing No 5: “Failing to Execute”… and having made those decisions about what to do, and what to stop doing, the hard and dirty work of getting things done is, well… hard and dirty. Execution projects can be complicated and easily get off track. But as we were reminded in those interminable strategy sessions, “You gotta execute!”
If you’re not yet convinced, there are other ways of looking at this. Maybe it’s because Leaders do not embody or “operationalise the strategy” and it remains “pie in the sky.” Strategy must “translate into daily actions that guide people every day” as Starbucks CEO Howard Schultz puts it in his book Pour Your Heart into It. And sufficient resources must be devoted to the most critical capabilities and the value proposition they support .
What’s the alternative?
What if… you could engage your business teams in a lean and effective business strategy process that is rigorous and rapid? And it’s likely much more likely to stick, embed and succeed.
I now work with companies through IfM at Cambridge University on technology, innovation and strategy.
But if I could go back in time and wish for one thing… it would be a lean and efficient business strategy tool kit… (Well, for business at least!)
There is Another Way…Go LEAN
…we also need to recognise that businesses are in different places when it comes to strategy.
Some may have no strategy at all. Or they might have a strategy but it’s not effective for them and lets down the potential of the company. Some companies may have a decent strategy, but time moves on and business conditions and technologies change.
We need something for each of these situations.
In the first case, the business without strategy, we advise starting with a business diagnostic to prioritise the strategic options. This can reveal significant holes of their business which need to be attended to at once, even before any strategy is developed.
In the case where strategy exists, but is not firing on all cylinders, we need to take a fresh look at the options and possibilities for the business.
A series of strategy workshops run over only a few weeks can generate renewed focus and energy for the strategy.
And one point, before I forget, is on this word LEAN.
It absolutely does not mean short cuts – the analysis must be done and we have a significant number of areas to cover in the analysis. It does mean the toolkit is academically underpinned and rigorous with no waste of time, effort and energy. And it results in the whole foundation of the strategy as so much more rigorous.
And in the case of the company where no strategy exists, after the prioritization diagnostic is done, we facilitate a number of highly designed workshops to engage the strategic players in the company. This creates a tight and well-underpinned rationale of investment in highly defined strategic projects.
The outcome is that the strategy is “stickier” and more likely to succeed in the long term.
Situations where the Strategic Toolkit has been used…
1. Organization types: For manufacturing SMEs and SBUs of large organizations
2. Drivers: Manufacturing companies seeking to create growth or respond to new technologies and build capability as part of a critical supply chain.
3. Situations: Where new management requires a rigorous plan for maximizing investment returns, where large important supply chain customers demand some improvement, where companies are looking to sell and want to maximize their premium.
What are the Results?
A result is enhanced engagement and better strategy with greater longevity. And better strategy links directly to better business results right at the bottom line. Twice as many companies in the best performing categories use strategy tools.
By the design of the strategy process, we get more and better options for using new technologies. The process is not an easy ride – it is very much designed to challenge and ultimately get better results. But also it focuses idea generation on real and tangible opportunities.
- With correct preparation a rigorous strategy can be produced in a few weeks.
- It makes visible what you know and what you need don’t, but need to.
- The strategy becomes “sticky” – more likely to create buy in and last over the long term.
- Makes complex issues easier to understand and communicate.
- Ensures effective use of your precious resources: Know Why, Know What, Know How, Know When.
Back to our strategy heroes…
For our nuclear sector business leader, James, we could help him design an effective strategic process that brings together scientists and engineers with commercial representative from his company members. With solid preparation, we scope out the objective and set the exam question and homework for workshop attendees in the weeks in the run up to the one day workshops. At the workshop a skilled facilitator leads the activities for the day by inviting delegates to share their knowledge and experience. Since the IfM strategy toolkit is a highly visual and dynamic process, the delegates are able to get hands-on, co-creating the options that show where new products and technologies come from and what projects and resources are needed to develop them.
Do you need to review your Strategy?
The following questions could be helpful if you are considering a strategic review,
1. Is your strategy causing problems, or focusing precious resources?
2. Do you struggle to get buy-in and alignment in the company to new business opportunities?
3. Is the pace of innovation and technology development increasing, creating a danger of being left behind?
4. Do you know where and when the new products will flow out into the market and are they backed up by technology acquisition?
5. Is the R&D well-aligned to your commercial objectives, or does it need better coordination?
In the last 20 years, IfM ECS had carried out more than hundreds of strategy workshops for a wide range of companies, industry sectors and government agencies.
Rob Munro is an IfM ECS Industrial Fellow delivering strategy services to companies and government. Please contact me and let’s discuss how we can help you develop a roadmap for you company, function or agency. firstname.lastname@example.org
Take action, today. Email me and let’s make your strategy happen.
1. Only 8% of Leaders and Good at Both Strategy and Execution, Paul Leinwand, Cesare Mainardi, Art Kleiner, HBR Blog 2015
2. Cogitate, articulate, communicate: the psychosocial reality of technology roadmapping and roadmaps, Clive Kerr, Robert Phaal, David Probert, R&D Management 2012
3. Lean Strategy: Start-ups need both agility and direction, David Collis, HBR 2016
4. https://hbr.org/ideacast/2016/06/getting-growth-back-at-your-company, HBR 2016, Chris Zook
5. Technology management tools: concept, development and application, R. Phaal, C.J.P. Farrukh, D.R. Probert, Technovation 26 (3) (2006) 336–344