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Saturday, July 02, 2011

There Is Lots More To Organizations Than Strategy

12:03 AM Posted by Deepak Nayal , , No comments
Sometimes the extent to which people are so enamored by strategy surprises me a lot. Professionals rush at the first chance of updating their Linkedin profiles with the word “strategy”. Journalists and analysts jump at the opportunity of writing strategy-related articles or analysis. Companies proudly announce major strategies in press conferences. People think of strategy guys as the ones with higher brain functionality, and a good strategy as the solution to most of organizations’ problems. Strategy consultancies are sought by many organizations as their saviors.

I think this fascination with strategy is the biggest misunderstanding in the professional world. Media, bschools and consultants have much to be blamed for this. To be honest I have been part of that crowd as well. That is one the reasons I went to a bschool, and the only reason I joined a “strategy” job after completing MBA. But then, after working there for sometime, a sense of dissatisfaction started to dawn on me. Analyzing markets, making presentations, discussing value chains all seemed fun in the beginning, but then I started to realize that it is all superficial. I started to feel like a bystander, watching a Rio carnival go by, dying to dance with the performers on street but contents himself by just tapping his feet and clapping his hands. Sitting on the sidelines; all words and no action. That’s when I first started to realize that we in the professional world give way too much credit to strategy. Don’t get me wrong. That strategy job of mine was a good learning experience, but then I guess you are either a thinker or a doer. I am more of a doer.

It’s Not Just About Strategy
Any organization has three main aspects: strategy, operations and culture (I combine operations and culture under the umbrella of execution). A successful initiative is the interplay of all three. Note that I mentioned initiative and not organization, because organizations consist of many initiatives, projects, divisions, and the culture may vary between divisions. Organizations have successful as well as unsuccessful initiatives. Now, unfortunately, the world is way more fascinated by strategy, than its other two counterparts. However, the reality is that it is the operations and culture that are the harder elements to deal with, and are actually the ones that really make the difference. These are harder to deal with because when it comes to execution you have to get into details; strategy is more of a high-level stuff. Details matter. Don’t believe anyone who says otherwise.

I have seen countless times, in organizations that I have worked with, that the senior management comes up with some strategy or a vision to increase market share, increase revenue or launch a new product. The strategy guys come up with this good-looking presentation. But then when it comes to executing that strategy, the outcome is not really what was expected. Now, obviously, that’s not always the case, but the chances of things not working out the way they were meant to are pretty high. There are many cases where even though the strategy is good and is important for an organization’s growth, it cannot be just outright executed because of either the way managers are incentivized or due to complexity of systems or because of the company culture.

In case, you are thinking, “well, I have never seen that”, then either you haven’t been involved or informed of both aspects of your organization/division (a rarity, I believe, as generally employees are aware of the strategic initiatives and involved in operational aspects of their companies) or the reality is not that apparent to you or you never looked deep enough (no need to go too deep though) or you are just plain stupid or your company is really awesome (and seriously, you should tell the world if its the last one!).

Examples From The Corporate World
Examples of world’s fascination with the strategic stuff, as compared to execution-related aspects, and its [bad] consequences, are abundant in corporate world. Mergers and acquisitions in particular are full of such cases. Many research studies have found out that most of the M&As fail due to post-merger integration issues. Examples, anyone? AOL-Time Warner. News Corporation-Myspace. Lloyds TSB-HBOS. The list just keeps going on. But thanks to media it’s the initial hype and the act of buying a company that gets most attention.

There are plenty more examples where execution excellence trumps strategy. Look at the tablet market. Tablets have been around way before Apple jumped into the market. And now there seems to have been an explosion of players in the tablet market. All of them have their own strategies. But none of them have been able to execute that strategy as well as Apple. Its execution excellence, the attention to details, has led Apple to market leading position in the tablet market. Anyone who uses Apple products will understand what I am talking about. This top-notch execution of strategy is not just apparent in its products but in its stores as well. Go to a Best Buy or PC World, look at the store and how Android tablets are placed there, and then go to an Apple store and look at how the iPads are placed there.

Look at Nokia in the smartphone market. It went from a world leader in mobile phone to an also-ran in smartphone market. Though they had a strategy to fight back Apple and Google, they just could not turn around their products that fast, and eventually had to settle for a side-partnership with Microsoft. They had their strategy but the execution team was not able to deliver it. This line from Nokia’s CEO Stephen Elop’s famous ‘Burning Platform’ memo sums it up really well -
At the lower-end price range, Chinese OEMs are cranking out a device much faster than, as one Nokia employee said only partially in jest, “the time that it takes us to polish a PowerPoint presentation.” They are fast, they are cheap, and they are challenging us.
The Right Mix
The world’s earliest fascination with strategy probably was SunTzu’s The Art of War. Since then strategy has been associated with various words, such as army, battles, leadership, competition, etc. Strategy has evolved to become this thing on a high pedestal that tells “foot soldiers” aka employees where to march and whom to fight. Unfortunately, many see strategy as a higher-level function as compared to execution. Truth however is that best leaders and managers see strategy and execution as interconnected aspects, one affecting the other and also feeding from it. Best organizations are not just top-down, but also bottom-up and side ways.

Thomas Elva Edison once famously said that genius is one percent inspiration and ninety-nine percent perspiration. I think a corollary of that statement is that an organization’s success is one percent strategy and ninety-nine percent execution. I am not against strategy, it obviously is important. But I am surely against world’s fascination with strategy, as clearly it is the execution that differentiates the leader from the follower. But then it is not really about picking either strategy or operations or culture as the winning element, but about understanding that all of these components are important and that an organization’s success depends on using the right mix of these three.

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