Two-thirds of executives say that their organizations don’t have the capabilities to support their strategies, with 80% admitting that their overall strategy is not well understood, even within their own organization.
The first question, of course, is why is this is happening? The second obvious question is: How to fix it?
That’s at the heart of a new book, “Strategy: How Winning Companies Close the Strategy-to-Execution Gap” by Paul Leinwand, Cesare Mainardi and Art Kleiner.
They say that the key is focusing on “unconventional leadership,” which includes what they call “committing to an identity.”
But at a time when markets are moving so fast and new competition seems to pop up every day, does that mean a company has to decide what it does best and stick to it?
“Leaders are told: ‘Be agile. Be responsive. Go where the opportunities are.’ But unless those opportunities fit with the capabilities and value proposition you already have, they lead to incoherence. Incoherent companies fall behind,” the authors say.
Being agile sounds appealing, but the truth is that most organizations “can’t turn on a dime,” and instantly move their business model to new opportunities, they say.
“The companies that manage change best recognize that they have a responsibility to create their own demand, creating the change that will benefit them, rather than defensively adjusting to market disruption,” they say, citing companies such as Apple, Frito-Lay, Starbucks and Inditex (Zara).
“They have all overcome disruption in spectacular ways, but not by becoming more agile. They do it by taking advantage of the prowess, perspective and creativity inherent in their own distinctive capabilities,” the authors say.
At the same time, they caution organizations that committing to an identity “does not mean stagnation” and organizations can’t just ignore what’s happening in the marketplace. Instead, companies must be deliberate about what they do and make changes that will build on existing strengths.
For example, Amazon got into cloud computing in a way that builds on its existing capabilities, and they know when to pull back on something that doesn’t fit its strengths, like the FirePhone, they explain.
In the book, Amazon’s CEO and founder, Jeff Bezos, is quoted as saying that he’s often asked about what will change for the company in the next 10 years.
“I almost never get the question, ‘What’s not going to change in the next ten years?’ And I submit to you that that second question is actually the more important of the two. Because you can build a business strategy around the things that are stable in time,” Bezos says.
Bezos goes on to explain that Amazon knows its retail customers want low prices, fast delivery and a big selection, which isn’t going to change in the next decade. “[When] you have something that you know is true even in the long term, you can afford to put a lot of energy in it,” he says.
Another act of unconventional leadership promoted by the authors is what they call “translating the strategic into everyday.”
They advocate that company leadership needs to answer one important question: How are we creating value in a way that others do not, and what are the few capabilities that enable us to deliver on this way to play more effectively than anyone else?
Once an organization figures this out, then they need to create a blueprint to show how everything fits together and what it will look like to live it. To ensure that these capabilities deliver the promised outcomes, companies should ask themselves:
- What is each capability that we need?
- Why is it valuable? What does it do for the company’s value proposition and for the business in general?
- How is it different from what we have today?
- What does the capability look like in action? Which functional groups are involved? What kinds of things do they do?
- What is required to make it work? What processes, systems, tools will be used in making it happen?
Don’t focus on what others in the industry are doing, but instead bet on your company’s “distinctive capabilities” that can be created in your own way and “that no one else can copy,” they say.
Some other insights from the authors include:
- Building a strong identity takes time, but it will be worth it. “The big challenge in a disruptive economy is to differentiate your company: to do things that no one else can do as well. A leader who understands this will attract many others to work with the company: not just employees, but suppliers, distributors, other companies in the sector, and even regulators and investors,” they say.
- Technology should support the strategy. Companies can get antsy to try new technology when there are so many options and “and you can often see your competitors jumping on the bandwagon of new fads that will put them ahead of you,” they say. But those organizations with strong identities have the clearest view of how to adapt and what will and will not add value. In other words, their “technological sophistication operates in service of their strategic sophistication,” the authors say.
- Focus on the positive cultural aspects that align with the strategy. “If you are at cross-purposes with your culture, there’s a natural temptation to think of full-scale culture change. Giant roll-outs of new missions and values statements, with reshuffling of the organizational chart and wholesale shifting of activity. This tends to be counterproductive. The culture pushes back,” they write.
Posted in Agility, Business Innovation, Strategy | Tagged amazon, culture, execution, identity, technology