Strategy to Execution The Key in a Rapidly Changing World

Strategy to Execution The Key in a Rapidly Changing World

June 7th, 2016 // 5:07 pm @

ChessThe core of what a CEO is paid to achieve is too often lost in day-to-day management, and the need to react to today’s problem. Often even CEO’s themselves find it difficult to enunciate clearly exactly what their core role is.

CEO’s core role is to develop a strategy for the business that adds maximum value, and to implement that strategy effectively.

What a Business Strategy is, let alone what to do with it, is often little understood. A strategy is firstly how the business is going to add shareholder value, and this can mean different things for different business’s at different points in their development. It can mean delivering regular dividends through business profitability, or it can mean growing the company to make it more valuable. I ran a Job Board in North America for five years, and at no point did we make a profit, we built a dominate market leader in our segment and then sold it. We delivered 28 times the initial investment for shareholders without ever making a profit.

The key is to understand where your business is in it’s development and where the market is in its development. It is interesting to note however that in our present world where the speed of change in business is faster than it has ever been, that the valuations put on companies seen to be leaders in a developing new market are at historical highs. A present example is “Uber” a transport company that is seven years old, has a yet to prove it’s business model, has never made a profit but has a market value of over $60 billion.

A strategy is more than just having a clear understanding of how best to add to shareholder value, it must be a roadmap of how you are going to achieve that added value, not merely a set of goals. When it is that it becomes the reference point for every decision made in the business and a live part of the business every day. Sadly I have seen a division of a major business I worked with, very carefully develop a strategy, get in outside consultants to help with it, bind it into a beautiful document, then put it in a drawer, not to be looked at again. Strategy must be a live part of the business every day or it is useless.

Implementing strategy successfully hits a number of issues, some of them closely linked to human nature. Firstly human nature tends not to want change, particularly when things appear to be going well. For anyone in a business, which today is doing well, to accept that without radical change the business may not exist in five years, is simply difficult for many people to accept. However that is the reality in our rapidly changing world. For example Walmart, which is the biggest company on earth by revenue, makes good profits, has had a clear well-executed and successful strategy that has worked for 50 years. Yet the cold hard reality is unless it radically changes it could go the way of other major retailers who no longer exist, buried by the Internet. Getting such a company to accept the need for radical change let alone implementing that change is difficult.

The second issue of human nature that impedes successful strategy implementation is that many people struggle to comprehend strategy and today’s problems at the same time. The old saying “It is hard to remember the plan was to drain the swamp when you are up to your neck in alligators” is too true. Good leader whether they are CEO’s or Generals have the ability to understand today’s detail, but also never loose sight of the strategic goals, and can make decisions today based on the strategic plan.

Communication is often one of the key weakness’s of strategy implimentation, put simply people are not told what the strategy is. As a consultant going into companies it is interesting to ask people at different levels in the company what the business strategy is. Rarely is it clearly understood by those within the company, and is often articulated as vague goals, such as make more profit. It is unfair to expect employees to work towards a strategy when you have not told them what it is.

Good strategy to implementation has clear steps, which starts with board agreement on what the strategy is both in terms of goals and actions. When this is agreed it allows a process in which the board can as a group review progress against the strategy, and make decisions based on the strategy.

The strategy needs communicated as widely and as thoroughly as possible. The reality is most employees want the company to be successful and if they know the strategy they can work towards it. The reality is most decisions made in a company the CEO is not even aware off, so if everyone is aligned behind the strategy they understand it is more likely that decisions will be made to aid the delivery of the strategy. Aligning all parts of the company behind the strategy is one of the key roles of a CEO, but one that in many companies little time is spent on.

The motivational effects of a well-communicated strategy are significant. Staff are more comfortable working in an environment where they know where the company is going, and their part in it. People want clear direction, and to be part of a team with clear goals and expectations.

Taking a strategy and implementing it from a CEO’s desk, involves turning the strategy into reality on the ground, this starts with clear communication, but moves beyond that to the key tools a CEO has to redirect a business. The power of business structure is often underutilized, but how you build the company structure has critical impact on what people do. From structure comes teams goals, and targets fiscal and other, and from that the companies budget.

Targets and budgets are critical to effecting what people do, it is much more effective to manage people by outcome than input, put simply if you give people the right targets and give them freedom in how they get their you are more likely to have success. As an example I took over a business which had a significant telesales operation, and the staff had sales targets, but also targets for “Phone Time” being how many hours a day they were on the phone. However all people had to do was call the speaking clock and leave their phone connected to hit the “Phone time” targets. This is a good example of how if you manage by input rather than outcome you often get odd activity that was not what you intended. We moved to pure sales targets with good earning potential for over achievement, and the company’s sales grew consistently at over 45% a year.

As a CEO one needs the mental ability to build with your team a strategy, the knowledge of how to communicate that strategy, the willingness and skill to structure the business correctly, and to set fiscal targets that align the business behind the strategy.

When one goes into a business, which has, a clear well understood strategy, where everyone understands their part in that strategy, you will sense the higher level of energy and focused commitment that is so critical for success.

 

 

 

 

 

 

 


Category : Blog &Business Strategy

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