A new book published by Harvard Business Review Press, Strategy that Works, documents research on successful strategy execution.
In an ongoing global survey of senior executives, more than half of the respondents said they didn’t think their company had a winning strategy, and to make matters worse, two-thirds said they didn’t think their organization had the right capabilities to execute the current strategy they were following.
Having capabilities is all well and good, but just because you are capable of doing something, does not mean you are going to be successful.
The researchers found that winning companies don’t follow the prevailing trends and practices of their industries, rather they follow 5 practices that contradict conventional wisdom to out-execute and out-compete their opponents.
Here is my personal take on the 5 strategy execution practices used by winning companies:
1. Commit to an identity
Winning companies focus on a clear target market and focus on what makes them unique with that audience. They avoid chasing growth by pursuing multiple markets in areas where they have no clear point of differentiation. They get very clear about their strategic position and build capabilities that will help to support that position over the long term.
2. Don’t get carried away with benchmarking
Winning companies keep an eye on what competitors are doing, of course, but they do not blindly follow the herd. In fact, they know that using the same technologies, following the same methodologies, and benchmarking the same Key Performance Indicators as your competitors is just a recipe for mediocrity. Winning companies develop a winning strategy that will set them apart in their industry, and translate their long-term strategic moves into their current projects and performance metrics.
3. Prune what doesn’t matter to invest more in what does
I have a saying I often share with clients; “You have to keep pruning the rosebush if you want to create beautiful blooms”. It’s easy to keep adding new features to your product / service, and adding new projects for your company to work on. What’s more powerful is to trim away the bloat and excess, and only focus your resources on the small number of things that really matter in pursuit of your strategy.
The key to effective strategic leadership is to figure out what is truly "core", vs what is "context" and "non-core" in terms of your activities and product/service offerings. To paraphrase Peter Drucker, leaders must continually ask themselves, “What do we need to get into, and what do we need to get out of?”
4. Stop constantly reorganizing
I’ve seen many firms try to re-strategize by constantly reworking their organization chart and rethinking incentives. HBR’s study confirms that this doesn’t work.
Winning companies resist disruptive reorganizations and instead put their core values and culture to work. They use culture, not structure, to drive change.
5. It’s not about agility
Winning companies are not “agile” in the sense that they respond to external change as rapidly as possible. Rather, they are “smart agile”.
I have written before that you need to be agile enough to address threats, or pursue promising opportunities that support your plan - but remain disciplined and focused enough so that you do not end up “chasing squirrels”, lurching from one idea to the next while you lose sight of your original strategic intentions.
Winning companies shape their future by creating the change they want to see.