Successful CEOs operate in the future and look back to the present and past. They should go where there is no trail, and leave one.
Past, Present and Future
To help frame a strategy, the BEST system will help to take you from obstacles to action – Barriers, Enabling Strategies, and Targets. Identify all the barriers and obstacles to achieving your vision, include personal barriers. For each barrier identify an Enabling Strategy, at this stage don’t worry about how, focus on why.
Once Barriers and Enabling Strategies have been documented it is time to ask the key strategy question: how can I leverage my strengths to take advantage of the opportunities? If your business target doesn’t challenge you, it’s a waste of valuable time and effort to pursue it. “If it’s not hard, it’s not worth doing” (Sir Peter Blake).
The final aspect to strategy is execution of your business Targets. Targets should follow the SMART system, in other words they should be:
- Measurable – related to profit, turnover, number of clients etc
- Achievable – with a “stretch” (50/50 chance of failure)
- Reasons – need to provide your team with context
- Time bound – and linked back to your vision
According to a recent Booz & Company survey of more than 1,800 executives, the majority of managers in all industries believe that their companies lack a coherent strategy. They struggle to set a clear and differentiating strategy, they have difficulties ensuring that their day-to-day activities are in line with their strategy, and are unable to allocate resources in a way that supports the strategy. According to the survey:
- 52% of executives don’t feel their company’s strategy will lead to success.
- 49% say their company has no list of strategic priorities at all.
- 67% admit that their company’s capabilities don’t fully support their strategy.
- 43% say their strategy does not fundamentally differentiate the company in the market.
- 53% say that the way they create value, is not well understood by employees or customers.
- 64% say that their biggest frustration is “having too many conflicting priorities.”
- 57% say their company creates strategy by either, “pursuing a broad portfolio of strategic options and spreading the risks” or by “choosing an attractive market and figuring out how to be successful in it.” Only 43% say their strategy starts from the inside – looking at what they’re great at and finding markets that capitalise on those capabilities.
Companies who are performing in a coherent way, where strategy, capabilities and product offerings are in sync, typically perform better financially.
Another factor is the old adage, less is more. Companies who have very few (1 to 3) strategic priorities have higher profits and revenue growth, compared to those organisations who have a longer list of strategic priorities, or worse, no clear strategic priorities at all.
The Booz and Company survey would suggest that there is a problem with the way most companies set strategy. Most companies struggle to choose their key strategic priorities – and when they do, they lack the ability to focus on the execution of these priorities.
The root of the problem is that too many companies grab hastily for what seems like the next answer to growth. They don’t use a disciplined methodology to decide the critical few strategic priorities that will lead to sustainable success. They end up stretched to thinly, trying to do a little bit of everything and doing nothing well.
Seven strategy execution rules
- Rule 1: Simple beats Complex.
- Rule 2: Black and White – No Grey.
- Rule 3: Measurement Drives Behaviour.
- Rule 4: Hit the High Return Targets.
- Rule 5: Transparency Drives Accountability.
- Rule 6: Face the Moment of Truth.
- Rule 7: Tap Intelligence, don’t try to do it all yourself.
Winning companies choose a well-articulated path to success:
- They choose what they will be excellent at – rather than just trying to sell what they can make.
- They get very clear on what differentiates them from competitors, and how they will create value for their customers.
- They focus their investment on building the capabilities that matter.
Choose your path, keep it simple and above all ensure the execution is excellent. To discuss your strategic planning and business improvement needs, please contact your Hayes Knight advisor.