All the CEOs I meet are clear that their top priority is to deliver their strategic vision and achieve their performance goals. And yet the evidence shows that successfully delivering a vision is the exception rather than the norm.
I have worked with dozens of organisations on strategy and have identified three critical factors that drive ultimate success. They are set out in the chart below. At one level, these three drivers appear obvious and superficial. But by really understanding what is required and ensuring that both the executive team and the wider organisation remain focused on these three factors, CEOs can transform their chances of achieving their strategic ambitions.
For the past five years, for instance, I have worked with the leadership team at Topps Tiles, the UK’s leader in the ceramic tile market. Over time, the strategic approach of the team has evolved to focus on these three factors. Thus enabling the company to grow its share from 25% to 33% and to more than double its profits.
The three drivers of success are these:
At Topps, for instance, Matt Williams, the CEO, coined the phrase ‘out-specialising the specialists’ to help colleagues and stakeholders understand what the strategy is all about. Underneath that heading, however, is real clarity on the key goals. A rigorous focus on the scope of the business (Topps came out of wooden flooring, for instance, when Matt and his team became focused on being the #1 tile retailer). And the creation of a focused agenda for action that builds on its advantages and delivers on the company’s ambitions.
A strategy cannot be delivered by the executive team. It can only be delivered if the entire organisation is committed to its success. Like random iron filings being aligned by waving a magnet over the top of them, the leadership group must work to point colleagues from across the organisation in the same direction. This involves shared goals. Developing an environment where cross-functional collaboration is encouraged and rewarded. Ensuring that teams are genuinely involved in determing what the strategy means for their own priorities. Critically, alignment and collaboration start at the top. I have yet to see effective organisational commitment to a strategy without true partnership and collaboration in the executive suite.
A strategy is not a plan. As Jeff Bezos once said of Amazon, ‘we’re fixed on the vision, but flexible on the journey’. That said, the organisation from the executive team down must be disciplined in reviewing progress and addressing performance issues head-on. Ensuring that their key initiatives and the wider results, remain on track. Some otherwise effective executives can become bored by the discipline of review and follow-up. But without monthly (or more frequent) reviews of strategic progress, it is unlikely that the necessary changes will be fully delivered or exploited.
The key take-out to understand is that each of these three factors are equally critical to strategic success. Remove any one of them and the chances of failure are rapidly increased. The chart identifies four potential positions:
In this situation, the company has a clear strategy and has built the engagement and commitment of the organisation. But it fails to follow up on its plans in a disciplined way. Many times, the CEO becomes bored with delivery and assumes that it will happen without close supervision of the leadership team. As a result, early successes and excitement is replaced by a lack of activity and broken promises. This creates an environment of cynicism where colleagues my literally own the strategic t-shirt, but where real change and results are thin on the ground.
Where you have strategic clarity and delivery discipline. But you have not created the shared commitment that encourages broad involvement and cross-functional collaboration. You will end up with a situation where the leadership team must continue to exert pressure on the organisation to deliver the desired changes. Without that pressure, little is achieved. I remember working at a UK retailer where a new top-down strategy was not supported by the vast majority of middle managers. I would use the term ‘passive resistance’ to describe the stand-off. But the lack of involvement and engagement of the wider organisation ensured that the new strategy – and the leadership team – was consigned to failure.
Incremental at Best.
Where you have commitment and discipline, but lack a clear, compelling or coherent strategic direction, you have created an environment that will deliver continuous improvement. You may not see major improvements in performance. But you will see marginal gains. This is fine in relatively stable market conditions. But in more rapidly changing markets, continuous improvement is insufficient to withstand structural shifts. Nokia’s share of the global smartphone market, for instance, fell from nearly 50% in 2007 to 3% in just five years. A lack of strategic direction meant that the company was impotent in the face of new competition from Apple, Samsung and a host of low-cost Chinese OEMs. Although low levels of shared commitment and delivery discipline also contributed to the company’s demise!
It is only when all three factors are present that you are able to build the moment and truly accelerate results. Any sustained success requires a clear and continuous executive focus on each of the three factors.
In simple terms, these three priorities – strategic clarity, shared commitment and delivery discipline – are the fundamental jobs of leadership. How well does your leadership team and organisation rate on these critical tasks?
© Stuart Cross 2017. All rights reserved.