How to build a business – Strategy Execution

We started our company partly out of frustration. Doing C-level jobs we were all very busy trying to score 100% against our targets, and most of the time we did. Each in our own discipline: Finance, Technology, HR, Risk Management. Meanwhile we more often than not did not see our personal success reflected in the company’s sustainable success, or worse: the companies we worked for might be on a fast track down the drain, while we completed all our projects and collected our bonuses.

Problem one: people tend to focus on the short-term and their own interests. Robert Kaplan: “The normal course of events is for companies to focus on day-to-day operations and short-term problem solving. Management meetings focus on fighting fires and fixing problems. Often little time and few resources get committed to strategic issues.” He quotes Sun Tzu in The Art of War: “Strategy without tactics is the long road to victory; tactics without strategy is the noise before defeat.”

Problem two: companies think in projects, with a scope, a budget, a beginning and an end. And problem three: many of this projects cover only one discipline: A system implementation, a reorganization, a refinancing. Without sharing information. “Execution is the result of thousands of decisions made every day by people acting according to the information they have – and their own self-interest.”

What happened to working together to implement a sound strategy? Working together is dangerous. Who will get the blame or who will pick up the medals? Identify an owner, a sponsor, some stakeholders. That is safe. But not very sound.

So what we did was bring together a team of competent professionals from different disciplines who together could be world champions in Strategy Execution, convinced that the key to success lies in bringing the disciplines together.

 

The beauty of starting a company that wants to make other companies successful is that you can practice on yourself. Without a history, without staff, without legacy processes and systems, you can try anything without the risk of disruption, destruction or demolition.

And what do you do when you have a plan, an ambition, a drive and a couple of people who you really like, respect and trust? You buy a bottle of wine, sit at a table, roll up your sleeves and discuss Why you want to do What you want to do, How you are going to do it, and with Whom. And then you decide who is best at what, and then you just do it. Together. Goals are set, successes are celebrated, failures are discussed, and everyone’s personal targets are: am I still enthusiastic, do I want to grab the phone and call someone to discuss what I did today? and is it still fun? Not: will I get my bonus, did I cover my ass.

All of us have seen many companies, strategies, read the books, attended the courses, and got the certificates to prove it. The world is full of Frameworks, Models, Approaches. Many of them deal with Management, Execution and a lot have nice lists:

The Six Disciplines of Strategy Execution, the Seven Habits of Highly Effective People, the 7S, 8S.

Nothing wrong with those, especially not with 7S, but what is the secret to success, who has a consistent track record of successful strategy execution?

Sometime in the ‘70s McKinsey Managing Director Ron Daniel wanted to find an answer to the assault of ideas from Bruce Henderson’s upstart Boston Consulting Group. Daniel was frustrated by the frequency with which clever strategies failed to be implemented effectively. Daniel brought Tom Peters, Bob Waterman – both from McKinsey – and Tony Athos, a professor at the Harvard Business School— together, to look into “effectiveness”, whereas before McKinsey’s most important tool was “organizational design”.

They published their framework in the 1980: “At its most powerful and complex, the framework forces us to concentrate on interactions and fit. The real energy required to re-direct an institution comes when all the variables in the model are aligned.”

Good point, you have to look at all angles and disciplines. Thirty years later the people who came up with the model had to admit:

  1. The success of the model was for a good part the result of the alliteration (and just in time the exchanged “subordinate Goals” for “Shared Values”)
  2. Where they started with “Hard Ss” (Strategy, Structure, Systems) in the framework, then added the “Soft Ss” (Style, Staff, Skills, Shared values—or Superordinate goal), they now insist: “Hard is soft. Soft is hard.” That is, it is the plans and the numbers that are often “soft”, and the people (“staff”) and shared values (nowadays: “corporate culture”) and skills (“core competencies” these days) which are truly “hard”—that is, the foundation for an adaptive and enduring business.

 

Original 7S Model

 

The conclusion: Deal with all aspects or accept the consequences—likely less than effective implementation of any project or program or increase in overall organization performance.

And then there is Leadership. Interesting word; nobody knows what it means. Even Wikipedia is struggling.

Robert Kaplan said: “Of the key issues [of Strategy Execution], first is leadership. Without strong visionary leadership, no strategy will be executed effectively. It’s not enough just to have a strategy. The strategy also needs to be widely shared, understood, and used as a basis for individual and team decisions.

Many managers — at all levels — assume that their people understand the firm’s overall strategy and how their work contributes to it, especially if high level presentations, town meetings, and videos about the strategy have been disseminated. Organisations do not need better “tell me”; they need more “let me” so they co-create it. If we’re there to shape the decision and learn WHY something was made the way it was made, then we own it ourselves.”

Now who knows how to solve all these problems (short-term, own interest, single discipline)?

Kees Engel is such a leader. Four years ago he joined Quion as a CEO.  Quion is a mortgage services. It services multiple labels, and can introduce new ones at very short notice. New concepts can be introduced with a short time to market, which is really interesting for parties that want to become active in the Dutch mortgage market. It connects Funders with Distributors, and has its own labels too.

Kees understood that to implement Quion’s strategy, and to grow their portfolio in a difficult market he had to involve everyone, integrate everything: shareholders, management, staff, clients, processes, partners, departments. He reorganized the company in market teams, that would service end-to-end processes. All departments were housed in a new attractive building, where teams and their managers would sit in the same open office space.

Although the process of servicing a mortgage is not that complex, in the past every step in the process was done by a separate, files where (sometimes physically) transferred from one department (and that meant one buidling) to the next, and each department had it’s own systems, staff, targets and management. The teams where more focused at counterparts (Funders, Borrowers, Agencies, etc), than on executing a strategy or a process-chain.

By introducing a culture of doing things together, based on a sound strategy, enabled by a shared IT platform, and by being visible as an interested and committed leader, hand picking key resources, and where necessary running projects himself, personally attracting new clients and knowing all the ins and outs of what might go wrong, he managed to bring about a change that made it possible to cut the the workforce in half, while increasing the portfolio to somewhere around thirty billion euro. And he never new anything about mortgages when he started. He had one, but that was about it.

How did he do it? He probably would not be able to tell you, except that he used a lot of common sense (that the times of Fords’ conveyor belt processes are over), a lot of expertise (on integration processes and IT systems), a lot of experience (on how to plan, how to select and motivate people) and a lot of genuine interest.

 

– But we need a framework.

– Sorry. No framework.

– A model?

– Sorry.

– But success deserves a name.

– Okay, we will call it Leadership.

 

What is Leadership? I do like Acronyms. So my Acronym for Leadership, and for Strategy Execution is VICTIM.

  • Vision
  • Inspiration
  • Connection
  • Traction
  • Interest
  • Momentum

 

That should sort it all out. I will write a book about it. Or maybe a blog. Sometime.


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