Dr Rebecca Homkes is Teaching Fellow of Strategy and Entrepreneurship, London Business School and a Director at Ashridge Strategic Management Centre.
Dr Rebecca Homkes is Teaching Fellow of Strategy and Entrepreneurship, London Business School and a Director at Ashridge Strategic Management Centre.
It’s a bleak statistic, but a survey (Sull and Homkes) of more than 400 companies and 11,000 senior executives and leaders, run with groups including participants on London Business School’s Executing Strategy for Results programme, has uncovered some deep-seated reasons for our cloudy recollection of corporate priorities.
The main issue is that organisations fail to make tough decisions on clear priorities. This includes the space your business wants to play in and how it will win that space. For firms to execute strategy well, it’s important to articulate absolute must-wins for the mid-term (two to five years for most). Mid-term is the best horizon for focussing on priorities. Think short-term and you have a business plan; long-term and you have a vision. Neither is bad, but neither is strategy.
Dr Rebecca Homkes is Teaching Fellow of Strategy and Entrepreneurship, London Business School and a Director at Ashridge Strategic Management Centre.
It’s a bleak statistic, but a survey (Sull and Homkes) of more than 400 companies and 11,000 senior executives and leaders, run with groups including participants on London Business School’s Executing Strategy for Results programme, has uncovered some deep-seated reasons for our cloudy recollection of corporate priorities.
The main issue is that organisations fail to make tough decisions on clear priorities. This includes the space your business wants to play in and how it will win that space. For firms to execute strategy well, it’s important to articulate absolute must-wins for the mid-term (two to five years for most). Mid-term is the best horizon for focussing on priorities. Think short-term and you have a business plan; long-term and you have a vision. Neither is bad, but neither is strategy.
1. Communicate your strategy clearly
Next, communicate priorities clearly. Too often firms articulate strategy through financial goals, vague notions of competitiveness or laundry lists of targets. They over-complicate the message, confusing employees with multiple notions of initiatives, agendas and objectives. It is no wonder employees get lost! If you can’t remember a strategy, you can’t execute it. Confusion reigns and, in the absence of clear understanding, people prioritise as they see fit, often leading to unhelpful silos.
What’s needed is a simple message where everyone can see how their part fits. Instead of presenting endless PowerPoints and town halls, invite discussion across your organisation about what matters, why it matters and what is and is not, working. And get people involved; our data shows that less than 40% of key managers are actively involved in developing strategy.
2. Make collaboration part of your DNA
When it comes to executing your strategy, what sets winners apart from losers is not so much the hand they are dealt as the way they play it. Business history is replete with companies that had it all: the hard assets, the skills, the strong market positions – and yet still lost their way. In the 1990s Sony’s music players, phones and computers were iconic; its movie studios and publishing companies were leaders in their fields. And yet Apple – 20 years ago a struggling niche computer maker, non-existent in entertainment – took what many at Sony once regarded as their rightful place. It’s the collaborators that survive.
Working together can be costly. You need the right platforms, tools, training and governance to ensure people know how to collaborate, and it requires you to foster a cooperative environment in which managers know why they should collaborate. But it works, if you get the assurance right. If we provide help can we trust that our power will not be diminished? If we accept help, can we be confident it will not sap our bandwidth unfruitfully?
Collaboration is not needed across all parts of the organisation all of the time – far from it. And leaders should call time on unfruitful collaboration. When managers retreat into silos, they do so for a good reason – to protect their energies.
3. Reward failure
Our work shows that lack of understanding of corporate priorities and collaboration are not the only challenges. Famously, ‘integrity’ was top of Enron’s published corporate values. But Enron was not alone: there are many such disconnects.
The survey (Sull and Homkes, 2015) shows that while more than half of companies list innovation as a top value, almost 60% of senior managers fear negative career repercussions if innovations are not successful. But we should only fear failure we cannot learn from. Competitive advantage stands or falls by our ability to learn. The real leaders in innovation not only expose but reward failures. For entrepreneurs a failed start-up, rather than being a warning sign, is often seen as a badge of honour. Corporations like Tata have also instilled this into their recognition systems.
4. Bring 'values' to the fore
But companies don’t own values, people do. Imposing values doesn’t work. You have to appreciate the values your employees hold dear. This legitimises values that will help you achieve the corporate purpose.
Reckitt Benckiser and Zappos are good examples. Reckitt Benckiser’s online application asks candidates to say how they would respond to scenarios and seeks to understand their values before they even join the company. Zappos asks interview questions probing on each of its values, while administrative staff conduct interviews with most senior executives; if potential C-suiters balk, they won’t fit with one of its core values – ‘be humble’.
Unfortunately these companies are still the exception, not the rule. The barriers to strategic clarity and a collaborative culture that support strategy execution are many, but not insurmountable, and it’s certainly worth the climb.
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Authors
It’s a bleak statistic, but a survey (Sull and Homkes) of more than 400 companies and 11,000 senior executives and leaders, run with groups including participants on London Business School’s Executing Strategy for Results programme, has uncovered some deep-seated reasons for our cloudy recollection of corporate priorities.
The main issue is that organisations fail to make tough decisions on clear priorities. This includes the space your business wants to play in and how it will win that space. For firms to execute strategy well, it’s important to articulate absolute must-wins for the mid-term (two to five years for most). Mid-term is the best horizon for focussing on priorities. Think short-term and you have a business plan; long-term and you have a vision. Neither is bad, but neither is strategy.