What enables companies to implement their strategies swiftly and successfully?
Tom Atkinson is Director of Customer Research and Steven Barry is Director of Strategic Marketing at Boston-based Forum Corporation, a workplace learning company which helps senior business leaders execute their company strategies through people.
Their work involves translating major research studies into new leadership development programmes. They write here about how companies can execute their strategies swiftly and effectively.
As the pace of global competition increases, most business leaders are concerned about their company’s ability to move fast enough to take advantage of opportunities or counter threats. To understand the impact and growing importance of speed, Forum set out to identify what enables companies to implement their business strategies swiftly and successfully—that is, to achieve strategic speed.
What, then, makes some companies faster than others? We found that several factors facilitated speed:
- People-oriented leadership: Adopting a leadership mind-set focused on managing people, creating a clear business direction, unifying teams with a central purpose, and responding rapidly to change
- A robust strategy affirmation process: Ensuring early on that the business strategy is well understood by all stakeholders
- Focused executive-level execution: Developing a disciplined process in which senior executives are involved in implementing strategic projects instead of just delegating them
- Dynamic organizational climate: Fostering a highly motivating work environment that taps people’s full talents
- Continual learning: Treating strategy execution as a series of experiments that help the company continuously learn from and adjust to a dynamic environment
In today’s hyper-competitive environment, how well a company executes its business strategy is only one part of the corporate success equation. Lately, a corollary has been added: Sustainable growth depends equally on how quickly a company can implement strategic initiatives. Whether launching a new product, integrating an acquired business, developing a sales territory or countering a competitive threat, the window of opportunity for the company can be relatively small and can close rapidly.
The purpose of our research project was to determine how companies could achieve what we call "strategic speed." Strategic speed has two elements: reducing time to value and increasing value over time.
Reducing time to value means enabling the organization to reach the breakeven point: the point at which the financial return begins to outweigh the costs (acquisition-related expenses, for example, in the case of a post-merger acquisition). Increasing value over time means sustaining the effectiveness of the strategic initiative (for example, continuously expanding the market for a newly launched product by modifying it to better-fit customer needs).
The survey asked respondents to rate their company’s overall speed of execution and its effectiveness in applying a set of leadership practices; describe how their company implemented a successful speed initiative; and provide advice on achieving strategic speed.
Several major themes emerged:
- Globally, there were significant gaps between executives’ perception of the importance of speed to their success, and their company’s ability to execute with speed.
- Companies that identified themselves as fast generally performed better than did their slower-moving counterparts.
- The biggest hurdles executives faced in implementing strategic speed appeared in the shift from planning initiatives to executing them.
Although the survey respondents’ ratings of speed were telling, they were also subjective, reflecting individual impressions of how companies executed strategic speed. To determine more objectively whether speed - or the perception of speed - correlated to financial improvements, the Economist Intelligence Unit (EIU) analyzed the actual business performance of respondents’ companies. For each publicly held company, the EIU tracked the 3-year growth rates for sales and operating income summarized in public reports.
As expected, the subjective speed ratings were strongly related to business-performance metrics. Based on 3-year averages, we found that sales growth was 40 per cent higher and operating income growth 52 per cent higher for companies rated relatively faster than for companies rated relatively slower. In other words, when executives viewed their company as achieving strategic speed, their perceptions were a good predictor of actual strong business performance.
Various factors facilitated strategic speed and helped close gaps in achieving it. Several of them directly related to leadership capabilities. Others related to team dynamics and company climate.
Executives representing faster companies rated five leadership factors in the survey higher than did their counterparts representing slower companies. Speed largely depended on how well company leaders were able to:
- Identify and respond to threats and opportunities as they emerge
- Create a shared understanding of the business strategy
- Maintain an organizational climate that drives employee engagement and high performance
- Learn and improve from experience continuously
- Execute strategic projects in a speedy and effective manner
Team and company factors
Team and company factors also influenced companies’ strategy-execution speed. They included the extent to which companies valued innovation and experimentation; whether people were comfortable raising issues and ideas; management’s overall cohesiveness and alignment; and the degree to which managers and teams emphasized learning from experience. We asked survey respondents first to think about a strategic initiative their company implemented successfully and speedily, and then to characterize their teams and companies in terms of a set of statements (such as "team members had a clear understanding of one another’s problems and needs").
The responses reflected distinct differences between faster and slower companies.
Based on the pattern of responses to this part of the survey, Forum created a profile of companies that execute with speed. Faster companies tended to have the following qualities:
- They value innovation. Faster companies are more likely to base their success on exploring new capabilities than on improving existing ones. They are also more likely to develop new products and services than to keep customers satisfied with current ones.
- Their leaders are aligned and committed. Company leaders are closely aligned with the purpose of strategic initiatives and committed to carrying them out. Their management systems support people working together coherently as opposed to working in cross-purpose engagements. They make decisions based on creative and innovative ideas instead of sticking with the tried and true.
- Their teams are more effective. Team members feel comfortable raising problems and disagreeing. They are more willing to cast off conventional roles and switch responsibilities to make the work more efficient.
- They promote learning. Teams at faster companies were more likely to take time to reflect on how the process worked and make necessary corrections than to concentrate only on completing the task. Faster companies, generally, were more likely to invest time in training and educational activities - even for experienced people - when new initiatives launched.
How to drive strategic speed
There are definite practices that distinguish faster companies from slower ones. Companies willing to adopt these practices and implement appropriate action plans are likely to drive higher speed and reap the short- and long-term financial rewards and competitive advantages that result.
We found that:
- Strategic speed demands strong leadership. The leaders we studied who had achieved strategic speed did not focus on "doing everything faster." In fact, paradoxically, many of their actions had the effect of slowing things down, at least initially. For example, rather than investing energy in making processes move at a faster pace, they focused their attention on people-related issues that facilitated or hindered speed.
- Additionally, leaders from faster companies adopted a mind-set that leveraged three elements: clarity, unity, and agility:
- Clarity: These leaders made sure everyone involved in carrying out a strategic initiative is clear on the purpose, value, and objectives of the initiative and their role in making it successful.
- Unity: These leaders established a singularity of purpose, so that team members supported one another’s efforts instead of working at cross-purposes.
- Agility: These leaders made adjustments fluidly as circumstances changed, without losing sight of the overall mission.
- Working with focused speed requires first affirming the strategy. As already noted, leaders who achieved strategic speed tended to "slow down to speed up." One important step they took involved spending more time in affirming their strategies than leaders of slower companies did.
- Strategy affirmation is necessary for creating the clarity, unity, and agility discussed above. Leaders in faster companies took every opportunity to communicate with their people about the strategy and translate it into everyday actions. One executive told us that business leaders often make the mistake of leaving too many decisions to line managers. That is, they develop a high-level strategy, communicate it down the ranks, and simply expect speedy execution to follow. In such situations, line managers typically become frustrated at the lack of direction and support, and they begin questioning the logic of the strategy. At this point, execution falters.
- Efficient speed depends on focused execution. In the companies we visited, we were impressed by the attention given to the project management of strategic initiatives, particularly at the executive level. Walls were covered with charts displaying the overall plan for the initiative and defining responsibilities and expected outcomes for each stream of work.
Achieving strategic speed
Executives in many companies may be tempted to delegate such project management to the middle-management professionals who do it best. However, we found that in the speedier companies top executives were unafraid to get "into the weeds" of the execution plan. They did not meddle, but neither did they completely abdicate strategy execution responsibility to others. Staying actively involved, they created a clear "command structure" that defined how decisions would be made, while still maintaining an open-door policy and encouraging ideas and debate.
- The fuel for speed is an engaging climate. When we walked the hallways of companies that executed with speed, there was a certain "feel." People seemed energized and focused. They enjoyed talking about the business, they offered ideas for doing things differently, and they were clearly committed to success. They also relished challenges, held themselves to a high standard, and appeared to take responsibility for playing their role in making their initiative successful. They’d likely go the extra mile to do their part. There was no mistaking how the organizational climate affected these people - and ultimately the company’s approach to speed.
- Sustaining speed involves continuous learning. Companies that not only reduced time to value but also increased value over time and thus established a strategic speed track record also supported the idea of continual learning. In other words, faster companies were intent on learning from experience. They were open to trying out new ideas, but they also made a point of debriefing fully after new ideas were tested. Slower companies, by contrast, tended to move on to the next project immediately once the present one was completed, without stopping to analyze shortcomings or pitfalls.
Faster companies also took the time to identify what was learned and transfer it to others via both formal processes (such as training programs and systematic debriefs) and informal processes (such as discussions among team members). They typically kept project teams intact over the course of several initiatives, instead of disbanding teams after each one. This promoted learning from experience and helped establish stronger teams, since members could get to know one another well and so enjoy working together more.
Full speed ahead
Speed is increasingly important to success in today’s business environment: Leaders in most companies are concerned that their organization may not able to move quickly enough to pursue strategic opportunities and avert threats. Our research consistently showed that speed was a critical element in driving sustainable growth: Companies that embraced speed initiatives typically performed better than companies that didn’t.
We also found that companies of all sizes, in all industries, all around the world, encountered speed gaps. Many of these obstacles tended to surface during the transition from strategy planning to strategy execution. While survey participants generally said their companies did well with planning, they cited executing the business plan, assessing results, and taking corrective action as the biggest challenges to their achieving strategic speed.