In parallel with my consulting/advisory practice, I just finished teaching business strategy – the traditional capstone unit – to 47 MBA students. What stuck across that 12-week period? One way of judging that is through the students’ learning journals. We ask them to reflect on the content each week, and explore how these ideas intersect with their experience or observations. Learning journals have good pedigree in education circles, and beyond[i].
What were some of the frameworks that resonated with the MBA students? Here are three frameworks that were popular.
The Strategy Execution Playbook. In the MBA we explore the dismal record of organisations on strategy execution. We seem to be stuck in the slow lane. It cannot defensibly be lack of knowledge: we know everything we need to know to be much better at it. In response to this my colleagues and I have developed a ‘strategy execution playbook’. It offers a list of 7 ‘process checks’ which we guarantee will deliver much better execution outcomes (see below).
Let me highlight just three of these. Firstly, it begins with a robust strategy. This seems self-evident. Yet I was speaking recently with an executive who lamented the lack of a robust strategy in their organisation. He is no orphan.
Second, broaden and deepen engagement. Most people ‘get this’: greater engagement improves execution. But it is more important than that alone. Broader engagement also expands the array of strategic options that surface; and it exposes fatal flaws early.
And finally, build an execution rhythm. Too often organisations look more like they are rushing between exercises at ‘circuit training’. It’s the organisational analogy of individual multi-tasking. You might feel like you’re the master of the universe rapidly switching between multiple tasks, but all the evidence proves this is incredibly inefficient. At a psychological level we know you are wasting energy. There are always ebbs and flows, but professional athletes know that the most efficient use of energy is to build a cadence; a rhythm.
Strategic Readiness Framework. My early research explored barriers to transformational leadership. When we explore the literature around organisational transformation the same patterns emerge. The research has led us to build a three dimensional strategic readiness framework: clarity; competence; and culture (see below). Weakness on any of these dimensions will derail your strategy.
Is there clarity around the strategy? If you think the broader leadership team are clear around strategy, there’s a fair chance you’re wrong. Do they understand the priorities? And do they understand their role[ii] in all this?
Do we have the competence at both an individual and organisational level to execute? Have we thought deeply about the specific capability and capacity required to execute? One senior executive watched his firm as they sought to internationalise a decade ago. His summary: they presumed it was pretty much just like their existing domestic business, but with a lot more international travel. It didn’t turn out well: they are still struggling to give effect to the strategy. We know that great strategies build cumulative capabilities. Are you?
The cultural framing matters, but it is often used as a ‘catch all’. It is often a barrier, but we should resist the automatic urge to go straight to this as the ‘issue’. In many cases it is an ‘out’ that allows us to gloss over shortcomings in these other areas.
The ‘fit’ test: strategic, capability and cultural. One of the frameworks for evaluating M&A’s is the ‘fit’ test: strategic fit; capability fit; and cultural fit. We applied this framework to the Renault-Nissan alliance (1999). It was variously described as ‘a marriage of desperation for both parties’, and a ‘marriage of the poor’. But it has exceeded beyond expectations.
According to Fortune (2014) magazine Gohn, the Chairman/CEO of both companies, has done a brilliant job:
“he has built the Renault-Nissan into the fourth largest car maker in the world … the stocks of both companies have done well, with Nissan rising 50% over the last three years, and Renault more than doubling”.
If you reflect upon your M&A experiences, ask yourself how whether these ventures would ‘pass muster’ against this ‘fit test’.
As one class finishes, so a new one begins. Every time I teach I make connections between theory and practice. The teaching enriches what I bring to the table with my clients; and my client experience adds value to the MBA cohort. A beautiful, virtuous circle. 😊
DDB … a strategist’s view
[i] Nobel prize winning psychologist Daniel Kahneman has argued the best way to improve your decision making is to use a decision journal. It captures your thinking at a point in time without the ‘cost’ of hindsight bias.
[ii] There’s been a lot written around decision rights. It goes to the heart of this issue.