Posts Tagged ‘values’

3 Questions Linking Strategy and Execution

Tuesday, August 6th, 2013

My friends think it’s a little sad, but I get excited when I find a book about business strategy that I haven’t read.The link between strategy and execution

I saw an article about one the other day, and was impressed by the author’s answers to 3 questions about the link between strategy and execution.

Judging by the article, the book focuses on larger corporations. But the lessons apply, I think, equally to owner-managed businesses.

Question 1:  Why do companies spend more energy on strategy development than execution?

Strategic planning off-sites usually take a few weeks to prepare and only last a few days.

But executing a strategy takes months or years during which time things go wrong – e.g. the economy changes, competitors react and the managers who developed the strategy leave the company.

Also there are more people involved in execution than in development. Some have different attitudes and levels of commitment to the strategy than the people who developed it. They may not really understand how what they do fits into the strategy or they become distracted by day-to-day problems.

So it’s easy to give up when things get in the way of execution.

Question 2:  What are the biggest mistakes, or most common pitfalls, when it comes to turning strategy into results?

A big one is failing to realize that there’s no silver bullet. Turning a strategy into results takes time.

Another classic is not putting a detailed implementation plan in place. Without one there can be no focus on key action plans and the responsibility and accountability for completing them. Nor will there be a process to manage the relationships and reactions between the constantly changing variables – e.g. resources, priorities, departmental rivalries – that are in play.

A third is that, in some bigger companies, management think that having created this beautiful strategy, their work is done. “Other people” have to buckle down and turn it into action.

Question 3:  What can you do to improve the odds of executing successfully?

Here’s where the saying “culture eats strategy for breakfast” comes into play.

Because the best way to execute successfully is to have a company that is “results oriented”. In those companies everything – the values, processes, individual rewards and, most of all, the behavior of the owner and management team – supports the achievement of the company’s goals.

Building this kind of culture isn’t easy and it can’t be done quickly.

It takes time build a workforce in which employees’ personal values match those of the company. And it takes time for employees to feel confident that they won’t be ridiculed if they suggest something new, or penalized if they take a risk and it goes wrong.

By the way, the book I found is called “Making Strategy Work: Leading Effective Execution and Change” and the author is Lawrence Hrebiniak. You can read more about it here.

 

If you enjoyed this post you’ll also enjoy So Tell Me, What Is Strategy?

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Why Conflict In A Family Business Is Bad For Strategy

Tuesday, July 23rd, 2013

We’ve worked in a lot of family businesses over the past 12 years.The negative impacts of confrontation and infighting on strategy

During that time we’ve had assignments disrupted, even brought to a premature end by family conflict.

I’ve seen family members say, and do, some terrible things to each other.

It’s not as if it’s a new experience. I saw some ugly political games in the 25 years I spent climbing the corporate ladder.

Confrontation and infighting are bad for any business. Their impact on the strategy, however brilliant and well executed, can be enormous.

There’s a difference though. In a family business, the damage isn’t just to the company.

The unpleasantness spills over into private lives, and relationships that should be close – parents and children, brothers and sisters – are shattered. And sometimes they remain unrepaired until it’s too late, because one of the parties dies.

I’d realized that the conflict in family firms seemed more intense than the ones I’d seen in my corporate days. But I hadn’t realized why until a blog post I read recently made it clear.

Corporations have barriers that prevent conflict becoming too ugly. Rules, processes and structures govern the behavior of every employee, from the lowest to the highest. For example, if a manager talks or behaves inappropriately, he will find himself on the wrong end of disciplinary action initiated by HR.

The same rules exist in many family businesses, but they apply to everyone except the owners.

Why? Family members apply the dynamics from their personal relationships to business situations – even though they know they shouldn’t. For example:

•  When a child becomes an adult and joins the family firm, the parent who raised her remembers her missteps and miscues from childhood and adolescence.

•  Parents try to resolve disputes by forcing everyone to toe the line.

•  Siblings deal with difficult circumstances by withdrawing, avoiding, or undermining each other.

Even if the child has left the family home, the plant or office can become a replacement.

As the owners of the business, the family can ignore the rules or processes. So there is nothing to stop conflict, caused by the ineffective behavior of both generations, blowing the lid off the family’s assumed harmony and threatening the success of the business.

Does this mean that every family business is fated to erupt into a bitter fight? No, of course not.

Some families use their values, long-term orientation to their investment and loyalty to employees and customers to maintain a “professional management” approach to challenges, problems and conflict.   In the other cases, family members can be helped to understand that conflicts can result if there are no formal boundaries on their behavior.

And, in fact, we have been able to help families like these, put greater structure in place. Which enables focus to go back on the execution of the strategy and getting results.

If you want to read the full blog post you can find it here.

 

If you enjoyed this post you’ll also enjoy Little Things Can Have a Big Impact

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Where Do The People Fit?

Wednesday, February 15th, 2012

A friend asked me a really great question last week.

I was talking to him about the strategy development and execution processes. And he asked……………

“What about the people, where are the people in all of this?”

So I told him about the 5P’s. Of course – being the wit that he is – he immediately thought I was talking about my weak bladder. But I put him straight.

All of the companies that I’ve worked with, which are consistently Profitable, seem to have a focus on the same 4 things. Several years ago we began referring to them as People, Planning, Process and Performance. In the diagram they overlap because they are all in  action at the same time – and they intersect because they interact with each other and form a continuous loop.

Performance

I always start with Performance which provides both clear direction for the company and the benchmark against which success is measured.

It spans having Vision, Values and Mission statements, through setting and communicating clear goals, to making sure every employee understands his/her role in achieving them. And it includes comparing actual results against the goals regularly, giving feedback and adapting where necessary.

Planning

Then I usually talk about the huge difference between Planning – which is a process – and a Plan or Plans– which are outputs.

There are very few occasions when it’s necessary to write a Business Plan, the most common one being when a company is looking for funding.

But Planning is ingrained in the culture in high performing companies. An effective Strategic Planning process will produce a strategy that will work. The Annual Business Planning process is the key to executing that strategy and turning it into results.

Process

I told my friend that we focus on 3 types of Process.

Functional processes keep each area of the company – e.g. Sales, Marketing, HR and Operations areas –operating efficiently. Control processes monitor the key performance indicators – e.g. sales pipeline, product quality and lead times – and give the owner early warning of potential problems.Financial processes produce accurate and timely reports on the financial health of the company.

People

I always save People for last.

After spending 20 some years in corporations and over 12 years working with business owners there is no doubt in my mind that People is the single most important element in success.

The essence of leadership is finding, motivating and engaging the right People and creating an environment (culture) in which they can contribute fully.

A weak strategy in the hands of the right People will trump the right strategy in the hands of weak People – every time.

And that, I told my friend, is where people fit in………….

If you enjoyed this post you’ll like 6 Ways A Business Owner Can Influence Culture

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2 Things That Cause Bad Strategy

Wednesday, September 7th, 2011

Its business planning or budgeting time for many business owners and so in last week’s post I talked about the 4 hallmarks of bad strategy.

They’re featured in an article which was adapted by Richard Rumelt from his new book “Good Strategy/Bad Strategy: The Difference and Why It Matters”. The article appeared in the McKinsey Quarterly

I promised that, for those pressed for time I’d continue summarizing the article in this post and talk about why there is so much bad strategy.

1. Unwillingness or inability to choose

Rumelt argues that a good strategy requires focus. And focus means that business owners have to choose amongst business goals.

Do you remember Digital Equipment Corporation (DEC)? They led the mini-computer industry in the 60’s and 70’s but by the end of the 80’s they were losing ground quickly. There were doubts if the company could survive without making far-reaching changes to their strategy.

Three alternatives were considered – business as usual, become a solutions provider or focus on designing better technology. The CEO wanted consensus on the new strategy but the executive team was divided and unable to reach one.

The result was a compromise, “DEC is committed to providing high-quality products and services and being a leader in data processing.” Like most compromises, it contained a little bit of everything and focused on nothing.

DEC continued losing ground and the CEO was replaced in the early 90’s. His successor focused on technology, but by then it was too late. The losses could only be stopped for a while and the company was acquired by Compaq in the late 90’s.

Failure to choose results in weak strategy and weak strategy results in failure.

2. Confusing “positive thinking” and strategy

Motivational speakers – and their books and web sites – have given rise to the notion that charismatic leaders and positive thinking can achieve the impossible. In concept it’s done by developing a vision and inspiring people to follow it, while empowering them to accomplish it.

The concept was reduced to something of a formula and distilled into a template for strategic planning. But not everyone can be a charismatic leader. Nor can success be achieved simply by applying a formula and completing templates.

A vision has to be more than a statement that the company will be the best, or the leading, or the best known.

The mission has to be filled with more than high-sounding, politically correct statements about the purpose of the business.

And a company’s values can’t be noncontroversial platitudes about integrity, respect and excellence.

Rumelt’s point is that, if the vision, mission and values turn out that way then the strategy is going to be nothing more than aspirations, goals or statements of the obvious presented as decisive insights.

Lack of substance makes a very weak foundation on which to build a future.

3. So what does work?

I’ll save Rumelt’s views on the underlying structure of good strategy for my next post.

6 Ways A Business Owner Can Influence Culture

Tuesday, March 22nd, 2011

The 6 Ways a Business Owner Can Shape Culture.

Communicate and publish the company’s values, vision and mission as widely as possible. This first assumes that they were identified during the strategic planning process. Repeat and discuss them at every opportunity; put them on mugs, t-shirts, mouse pads and baseball caps; reward everyone who can not only remember them – but who also know what they mean.

Be a role model for the values. Employees watch the owner and other leaders’ behaviour all the time. Inconsistencies between the written values and day-to-day action send loud messages about the real culture. For example, having “investing in employees” as a value and then not providing funding for training is inconsistent. So is saying that “being innovative” is a value while punishing employees who attempt to innovate but fail.

Tell stories and help create legends about people. Stories are a great way to reinforce the desired behaviour and culture. If, for example, an employee goes out of their way to help a customer, the owner and management team must repeat the story – and encourage others to do so – at every opportunity. That’s how legends are born. Richard Branson shows how here.

Ensure the organization chart supports the culture. A company’s organization chart is a major way in which they embed and send signals about the culture. It’s easy to be inconsistent. For example if the stated aim is to foster collaboration and teamwork, a flatter organizational structure will be much more effective than a very hierarchical one.

Design the work space appropriately. Much like the org. chart, the physical layout of an office, plant or warehouse can affect company culture. For example, an open environment with no walls creates a very different atmosphere than one in which everyone has their own office with floor to ceiling walls. Neither approach is wrong, but both can be really inappropriate and unsupportive of values and culture.

And number 6 is – The use of rewards and status symbols. Salespeople are usually compensated using reward based systems e.g. commissions, bonuses for being over quota for a quarter or year; trips to exotic destination. But the people on whom the company relies to make and deliver the products or services the sales force sell frequently aren’t rewarded in this way. This difference in approach to pay can damage the culture by creating divisiveness or, if left unaddressed, even bitterness. On the other hand, used effectively rewards and status symbols can build an achievement oriented culture.

In Summary

If a business owner isn’t pro-actively shaping the culture in the company, one will develop spontaneously. And while the culture can support the development and execution of great strategies, which get great results, if it is inconsistent with the strategy, it will dramatically reduce the odds of the strategy being successful.

Taking the initiative and developing a culture which will help increase operating profits and build shareholder value is simply another aspect – or even by-product – of good leadership.

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