Five practical rules on strategy and execution

I am often asked about strategy, execution and the relationship between them, and I ended up explaining the issue in an e-mail today. After reading the e-mail again, I figured it was generic enough to be widely shared, so here goes…

Rule # 1- No need for “VP of Strategy”: strategy is so well embedded in the organization operating system that outsourcing it to a VP of strategy is hardly ever a good idea. The rationale is clear: when you are not making/selling/marketing anything, your strategic ideas will dwindle or become disconnected from the company reality. Say you promoted your bright director of product marketing to be the VP of strategy—sooner or later she will lose the source of inspiration she had, which was the constant work with customers and partners and the actual creation of the product and will not be able to impact strategy as she did before.

Rule # 2- Strategy is the business of the CEO:just as a division commander in the army doesn’t employ a “strategy officer” and is responsible for the division strategy, a CEO needs to be the one creating and executing the company strategy. He or she can include other executives to contribute to the process but should never outsource it all together to anyone in the company.

Rule # 3- Strategy is not for everyone: While devising a strategy is not a talent that one gets with the VP title, strategy should not become a companywide process. The VP of marketing can and should come up with the company marketing strategy, derived from the company overall strategy, but please don’t ask a manager in the support department to come up with the first level support strategy. The best he should do is to create support tactics based on the company strategy. For example, if your company strategy is to win customers by offering the best customer experience in the market, your first level support manager can insist in answering any call within 15 seconds and making sure that every support call translates into a positive experience. 

Rule # 4- Add strategy to each process: with one simple question you can turn every important process in the company into a strategic process. The question is: “how does it support our strategy?”. Here is an example: your CFO submitted the first draft of the budget for H2/2008. The draft calls for a 15% budget cut across all departments. Ask the question and you will discover that the CFO simply reduced costs by 15% to align costs with the plunging dollar and the plummeted housing market but forgot that your strategy was to win customers with the best customer experience. The new budget based on this strategy may cut 30% in marketing, in hopes that word of mouth will do the trick, and increase service and support budget by 20% and R&D in 10%. While it sounds trivial, start asking the question often and you will discover that (1) not everyone understands the strategy and (2) even fewer are taking it into account in planning.

Rule # 5- The strategy process never stops: this may be the most important one. I know that there are some people who say “now is the time for execution, not for strategy”. I claim that there is always a mix between the two; sometimes you invest more in the strategy process and sometimes more on execution. Say you just spent a week offsite, building a rock solid strategy. You still need to (a) keep validating it every time you have a chance to meet with a customer, analysts or anybody with a brain… (b) tweak it if needed. If your strategy is good, you usually only need to change tactics, and not the strategy itself, and (c) the most complicated task: make sure that execution is aligned with strategy.

Definitions:

Strategy is a long-term plan of action designed to achieve a particular goal, most often “winning.” Strategies are more stable in nature and don’t change often.

Tactics are the detailed maneuvers to achieve objectives set by strategy, which means they can often change as long as the underlying strategy stays the same.

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Five practical rules on strategy and execution

5 thoughts on “Five practical rules on strategy and execution

  1. Mike Ni says:

    You are right that all strategy needs to cascade from the top where the tactics of a higher level need a strategy to tackle it for the next level down. That strategy needs tactics to execute … and so on down the chain. I would disagree with VP of strategy comment. Your comments maybe true over the long term, the reality is strategic perspective, critical questioning, and the ability to step outside the daily challenges creates the opportunity for breakthrough insight. That lead strategy role needs to keep changing – possibly even contracted (hence an industry of consultants). At the same time, ideally, organizations should provide both the challenge and latitude for folks in the org to be strategic.

  2. Thanks for the comment, Mike. My issue with “VP of Strategy” is not lack of need to dedicate cycles to startegy but rather the fact that asking someone to distance herself from the organization for a long time will create disconnect at the end. This is why I much prefer a short term engagement of an expert that you suggested to shake things and allow the executive team of the company to own it going forward.

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