Viewing the Portfolio Through A New Strategic Lens
Good strategy isn’t easy. Yet we know vastly more today than we did even a year ago about how corporate strategies should be crafted and implemented.
May 2013 | by Daniel Burk
Left unchecked, market forces continually conspire to deplete profits. Powerful business strategies can counteract those tendencies, but good strategy is difficult to formulate. How do they do it? One is the need to gain agreement—before creating strategy—on the essential decisions and the criteria for making them. Another is to ensure that the company is prepared and willing to act on a strategy once it is adopted. Too much of what passes for strategy development, we find, consists of hurried efforts that skip one or more of the essentials. The resulting strategies are often flawed from the start.
It’s also easy, though, to go too far in the other direction and make the creation of strategy a rigid, box-checking exercise. Appealing as a formula-driven approach might be, it ignores the truth that strategy creation is a journey—and an inherently messy one at that. Proprietary insights are hard to come by. Shaping keen insights into good strategies requires deep interpersonal engagement and debate from senior executives, as well as the ability to deal with ambiguity in charged and often stressful circumstances. When would-be strategists overlook these dynamics, they cover the essentials in name only. Consequently, they miss opportunities and threats, or create great paper strategies that remain unfinished in practice.
Don’t Leave the Strategy Unfinished
In conversations with senior executives, we occasionally hear some version of this saying: “I’d rather have a good strategy and great execution than vice versa.” We believe that this attitude reflects confusion about what great strategy is. Such a strategy creates a path for action and is inherently incomplete without it. Yet many companies fail to get the conditions for successful implementation right, and fully two-thirds of the executives in our survey admit that their companies struggle with the issue.
It’s a crucial struggle. No strategy, however brilliant, can be implemented successfully unless the people who have the most important jobs know what they need to do differently, understand how and why they should do it, and have the necessary resources. An added challenge, of course, is that strategic choices often involve big changes over long, three- to five-year time frames.
Finishing a strategy, therefore, requires creating tangible, proximate goals that connect to the longer-term strategy. It’s easy to create a high-level list of next steps and things to do differently on Monday morning. It’s much harder to roll back the future and connect it to the present so that people understand what they need to do differently and actually do it. When companies fail to set proximate goals, the results can be disappointing.
Creating strategy in today’s environment of complexity, ever-changing priorities, and conflicting agendas is a daunting task. Yet when senior executives invest the time and effort to develop a more thorough, thoughtful approach to strategy, they not only increase the odds of building a winning business but also often enjoy a positive spin-off: the gifts of simplicity and focus, as well as the conviction to get things done.