Putting aside the debate about the cumbersome and mind-boggling nature of strategy, we at the Effectiveness lab strongly opine that you need a strategy to run a business effectively.
The belief by some people that you don’t need a strategy is premised on the apparent evidence that strategy is mostly absent at organisations, but they have survived. That strategy is too longterm to be useful in a fast-changing environment. Orthodox strategy making is considered a useless ritual.
Now, you can debate how long strategy should last – day by day, week by week, a year, many years; it’s up to you and what works best for your firm/industry. But we know that you require some kind of north-star to create sustainable value-add of any magnitude.
Indeed, even firms without formal strategy documents have some kind of north-star alignment tool – only that it’s not written anywhere. It’s imprinted on individual heads. Indeed, for the very savvy business mind, the imprint is deep in the subconscious part of the brain. Yes, strategy for the latter type works via serendipity, but it’s there.
Therefore, it’s our opinion that organisations (or even nation-states) need a strategy of some sort to make sense of what they choose to do, plus remain relevant. What differentiates you on the strategy continuum, and it’s all of you, is the extent of strategy formalisation. A strategy, ever prevalent, is either formal or informal. It’s never far from you.
So, what makes you think that we don’t need a strategy? It’s the failure to do strategy right, and the abysmal failure rate at execution.
Frustrated by the failure to attain intended strategic plan outcomes – mainly due to bad execution, you revert to what is human – rationalise failure. That strategy is not impactful at companies and you can avoid it and still do well. And the latter is somehow true because, for the above 70% failure at strategy effort, we haven’t seen a corresponding company failure rate.
Somehow these strategy-inept companies survive. The only observation is that they are cheating owners out of value creation and for charities, signature impact on those they serve.
According to McKinsey, 70% of change efforts [strategic effort] fall short of the expected results. Put another way, for all the strategy work you leadership gurus do and boast about, only 30% gets you a good measure of efficacy. Even giants, as we shall see on this blog, have failed to achieve the expected standard of strategy-execution excellence.
And If you think that it’s only the small firms that are strategy-execution inept, and therefore contribute to the uncalled-for disdain for matters strategy at companies, well think twice. The giants can be as bad.
Below we look at classic cases of strategy execution failure. We have gone flipped learning, i.e. learn from the negative. We believe that from the struggles of other companies, we can learn a thing or two about successful strategy-execution excellence. We show, that without the right combination of: the ‘right’ strategy people to deliver the strategy, as well as a structure flexible enough to address known and emergent issues in the strategy’s lifecycle execution excellence remains elusive. When the latter is true, the haters of strategy win.
The Trump administration:
Apolitical as it may be, the Effectiveness lab has always been fascinated by the administration of D. Trump – an OD. rebel, the outsider that has shaken the classic JF Kennedy School of Government protocols but still secured the full lifecycle of the presidency – well, still have a few days to the end. It’s a given he will finish the race.
It’s a typical case of ‘you don’t need a strategy to survive or even do well’ – and if the latter were true, why bother doing strategy anyway?
In January 2017, the Foreign Policy warned that: ‘Trump’s approach to foreign policy was dangerously nearsighted and posed unacceptable risks to national security.’ The Foreign Policy went on to assert that in the absence of course correction, a train wreck was all but assured.
The Foreign Policy summarises the endpoint of the above execution shortcomings so very well:
‘…….the administration’s method of policymaking is explicitly anti-strategic. This deficiency results from three operational and philosophical principles that orient the president’s decision-making: a focus on short-term wins rather than longer-term strategic foresight; a “zero-sum” worldview where all gains are relative, and reciprocity is absent; and a rejection of values-based policymaking. The shortcomings of this approach — which we dubbed “tactical transnationalism” — are already apparent in the Trump administration’s foreign-policy record to date.’
Yet – the administration has survived to the end of the presidency; indeed it has a ‘strategy’ even if not written and constantly shifting.
This case recognises the importance of strategy, crafting and implementation; failure was in execution. And when firms fail to execute, they get tempted to disdain strategy. Both cases have opposite perceptions of the value of formal strategy, but similar trip points – poor execution
It’s shocking to learn that a giant like Microsoft and its super leaders can also fail at strategy execution. And even more shocking, that amongst all the execution excellence drivers, it’s people management that Microsoft tripped on.
According to INSEAD, managers forget that strategy execution excellence is attained when there is a balanced and consistent emotional-allegiance of the teams they lead. Managers commit cardinal OD. sin by focusing on the ‘intellectual’ left-side of the brain when dealing with strategic matters, and forget the ‘right side’ of the brain that addresses emotional intelligence. The latter approach treats human beings like old IBM mainframe computers – machines that are switched on and off, as and when managers want a certain task accomplished. Well, sorry, if you don’t address the emotional side of humans, strategy execution will fail from the word go.
Apparently, CEO’s: ‘….who are receptive to the subtle, non-verbal signs of collective emotion are more likely to have the credibility required to lead strategic change. Sadly, such leaders are still few and far between.’
Microsoft caught wind of the impending technology revolution by Apple – read: run-up to the first iPhone release. Microsoft Owner Bill Gates ordered his CEO, Steve Ballmer, to mobilise his ‘team of teams’ to counter the impending technology leap by Apple. CEO Ballmer got to work and ordered his team leads to start work to match Apple’s forthcoming technology advantage. Sadly, like we have seen in many as endowed companies, Microsoft efforts failed, and Apple got ahead of the company.
The long and short is that Microsoft’s departments failed to work together to curtail Apple’s impending technology leap and dominance. Microsoft had everything needed to neutralise Apple, yet failed. Experts blame Microsoft’s cut-throat ’stuck ranking system’. Microsoft staff were ranked and graded either as ‘good’ or ‘bad.’ This regressive culture, where staff ranked bad felt belittled, undermined team culture at Microsoft. Political interests drove collaboration at work—Microsoft staff associated with peers that had been or were likely to be ranked good. Work at Microsoft was no longer about the collective effort to achieve an absolute whole, but who to associate with to get the best performance ranking come to the end of the year.
Microsoft seniors failed to relate what they observed at work to the people that worked for them. The question has to be – how did seniors at Microsoft miss noticing that a regressive culture was eating into its OD. fabric and killing the company? Well, seniors like Steve Ballmer’s helicopter-view positioning left a lot to be desired. No wonder in 2013, Microsoft abandoned its archaic people management paradigm (stack-ranking), and Steve Ballmer left his job
Strategy formal or information requires the right execution skills and toolbox. The interplay between Strategy and organisational vitals (OV) like people and structure should happen in a symbiotic manner. The later segues into execution-excellence and sustainable, signature-value creating strategy.
You need it!