“We are all in the gutter,” wrote Oscar Wilde, “but some of us are looking at the stars.” That is the nature of strategy through execution. You operate deep in the weeds, managing countless day-to-day tasks and transactions. At the same time, you keep a steady gaze on your company’s long-term goals — and on ways you can stand out from your competitors.
“Having a close link between strategy and execution is critically important. Your strategy is your promise to deliver value: the things you do for customers, now and in the future, that no other company can do as well. Your execution occurs in the thousands of decisions made each day by people at every level of your company.”
Quality, innovation, profitability, and growth all depend on having strategy and execution fit together seamlessly. If they don’t fit — if you can’t deliberately align them in a coherent way — you risk operating at cross-purposes and losing your focus. This problem is all too common. In a recent Strategy& global survey, 700 business executives were asked to rate their company’s top leaders in terms of their skill at strategy creation and at execution. Only 8 percent were credited as being very effective at both.
Strategy&, the strategy consulting business of PwC, has been studying the relationship between strategy and execution for years. We have found that the most iconic enterprises — companies such as Apple, Amazon, Danaher, IKEA, Starbucks, and the Chinese appliance manufacturer Haier, all of which compete successfully time after time — are exceptionally coherent. They put forth a clear winning value proposition, backed up by distinctive capabilities, and apply this mix of strategy and execution to everything they do.
Any company can follow the same path as these successful firms, and an increasing number of companies are doing just that. If you join them, you will need to cultivate the ability to translate the strategic into the everyday. This means linking strategy and execution closely together by creating distinctive, complex capabilities that set your company apart, and applying them to every product and service in your portfolio. These capabilities combine all the elements of execution — technology, human skills, processes, and organizational structures — to deliver your company’s chosen value proposition.
How do you accomplish this on a day-to-day basis? How do you get the strategists and implementers in your company to work together effectively? These 10 principles, derived from our experience at Strategy&, can help you avoid common pitfalls and accelerate your progress. For companies that truly embrace strategy through execution, principles like these become a way of life.
1. Aim High
Don’t compromise your strategy or your execution. Set a lofty ambition for your strategy: not just financial success but sustained value creation, making a better world through your products, services, and presence. Apple’s early goal of making “a computer for the rest of us,” which effectively shaped the personal computer industry, is a classic example.
Next, aim just as high on the execution side, with a dedication to excellence that seems almost obsessive to outsiders. Apple, for instance, has long been known for its intensive interest in every aspect of product design and marketing, iterating endlessly until its notoriously demanding leaders are satisfied. The company’s leaders do not consider execution beneath them; it is part of what makes Apple special.
Together, a strong long-term strategy and a fierce commitment to excellent execution can transform not only a company, but a regional economy. After the 1992 Olympics in Barcelona, a group of local political and business leaders realized, with some disappointment, that the event hadn’t triggered the economic growth they had expected. So they resolved to change the region’s economy in other ways. Led by the mayor, the group created a common base of technologies and practices and set up training programs for local enterprises. By 2014, after two decades of persistent effort, the city had become a hub for research and technology companies. One legacy of the Olympics is a group of about 600 sports-related companies with a collective annual revenue of US$3 billion and 20,000 employees.
In carrying out this first principle, the top executives of your company must lead the way. They must learn to set lofty goals, establish a clear message about why those goals are relevant, and stick to them without compromise. This may take a while, because lofty goals require patience. You need to persevere without lowering your standards, and the confidence to believe you can reach the goals soon enough. Leaders must demonstrate that courage and commitment, or no one else will. At the same time, don’t be surprised if the rewards start to appear sooner than you expect — both financial rewards and the intrinsic pleasure of working with highly capable people on relevant projects. With high aspirations (for example, IKEA’s goal of “creating a better everyday life for the many people” or Amazon’s self-proclaimed role as the “everything store”), you recruit talented people who are deeply committed to being there. That’s one way you’ll know that you’re aiming high enough: The whole organization will start to feel like a better place to work.
2. Build on Your Strengths
Your company has capabilities that set it apart, things you do better than anyone else. You can use them as a starting point to create greater success. Yet more likely than not, your strongest capabilities have been obscured over the years. If, like most companies, you pursue opportunities that crop up without thinking much about whether you have the prowess needed to capture them, you can gradually lose sight of what you do best, or why customers respond to it.
Take an inventory of your most distinctive capabilities. Look for examples where you have excelled as a company, achieving greatly desired outcomes without heroic efforts. Articulate all the different things that had to happen to make these capabilities work, and figure out what it will take to build on your strengths, so that you can succeed the same way more consistently in the future.
Sometimes a particular episode will bring to light new ways of building on your strengths. That’s what happened at Bombardier Transportation, a division of a Canadian firm and one of the world’s largest manufacturers of railroad equipment. To win a highly competitive bid for supplying 66 passenger train cars to a British rail operator, Bombardier shifted its manufacturing and commercial models to a platform-based approach, which allowed it to use and reuse the same designs for several different types of railway cars. “Platforming,” which was a new operational strategy for the industry, required adjustments to Bombardier’s supplier relationships and product engineering practices. But the benefits were immediate: lower costs, less technology risk, faster time-to-market, and better reliability.
Bombardier won the bid — and, more importantly, learned from the experience, making the episode a model for other bids and contracts. When some Bombardier engineers complained about the platform approach on the grounds that it curtailed their creativity, the leadership had an immediate answer: The platform demonstrated capabilities that competitors couldn’t match and the company’s creativity could be focused on innovation. Additional contracts soon followed.
The more knowledge you have about your own capabilities, the more opportunities you’ll have to build on your strengths. So you should always be analyzing what you do best, gathering data about your practices, and conducting postmortems. In every case, there is something to learn — about your operations, and also about the choices you make and the value you’re able to deliver.
3. Be Ambidextrous
In the physical world, ambidexterity is the ability to use both hands with equal skill and versatility. In business, it’s the ability to manage strategy and execution with equal competence. In some companies, this is known as being “bilingual”: able to speak the language of the boardroom and the shop floor or software center with equal facility. Ambidextrous managers can think about the technical and operational details of a project in depth and then, without missing a beat, can consider its broader ramifications for the industry. If strategy through execution is to become a reality, people across the enterprise need to master ambidexterity.
Lack of ambidexterity can be a key factor in chronic problems. For instance, if IT professionals focus only on execution when they manage ERP upgrades or the adoption of new applications, they may be drawn to vendors for their low rates or expertise on specific platforms instead of their ability to design solutions that support the company’s business strategy. When the installation fails to deliver the capabilities that the company needs, there will be an unplanned revision; the costs will balloon accordingly, and the purchase won’t fulfill its promise.
We recognize, of course, that not everyone needs to be equally conversant in the company’s strategy. A typical paper goods manufacturer, for example, employs chemists who research hydrogen bonds to discover ways to make paper towels more absorbent. They may not need to spend much time debating strategy in the abstract, but they do need to be aware of how their role fits in. Like the apocryphal bricklayer who sees himself as building a cathedral, the highly skilled technologists on your team must recognize that they are not merely fulfilling a spec but rather developing a technology unlike anyone else’s, for the sake of building highly distinctive capabilities. They might even help figure out what those capabilities should be.
Similarly, your top leaders don’t have to be experts on hydrogen bonds or cloud-based SQL server hosting, but they do have to be conversant enough with technological and operational details to make the right high-level decisions. No longer can a senior executive credibly say, “I don’t use computers. My staff is my computer.” If your leaders aren’t ambidextrous, they risk being eclipsed or outperformed by someone who is.
In The Self-Made Billionaire Effect: How Extreme Producers Create Massive Value (Portfolio, 2014), John Sviokla and Mitch Cohen suggest using the word producers to describe ambidextrous individuals. Self-made billionaires, such as Spanx founder Sara Blakely, POM Wonderful cofounder Lynda Resnick, Uniqlo founder Tadashi Yanai, and Morningstar founder Joe Manseuto have this quality. They can both envision a blockbuster strategy and figure out in detail how to develop and sell it to customers. There are similarly ambidextrous people in every company, but they often go unappreciated. Find them, recognize and reward them, and give them opportunities to influence others.
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Foster ambidexterity in practices and processes as well as in people. For example, in your annual budgeting exercises, ask people to explain the relationship of each line item to the company’s strategy, and specifically to the capability it is enabling. Over time, this approach will channel investments toward projects with a more strategic rationale.
…to be continued
The Strategy consulting arm of PwC