The aim of the Beyond Default Roundtable discussions is to give practitioners in strategy and change an opportunity to share their experiences, challenge conventional wisdom, brainstorm ideas and network with peers who share the same interests and challenges.
As the Roundtable followed Chatham House Rules, the summary below only attributes information that is in the public domain.
Moderator: Welcome everyone. It’s good to see so many familiar faces, and also some new ones. Today’s topic is an interesting one that I’m sure most people will have come across at various times, and that’s the notion of establishing the conditions for success when executing strategy. So, let’s start by asking David why he chose this topic.
Discussion: Thanks Chris. I chose it because I believe a different approach to executing strategy is required. When people talk about executing strategy they tend to talk about the things that need to be done, like setting up a steering group; establishing implementation projects; defining a set of KPIs; reporting on progress and holding people to account. While these are important and necessary, they are in themselves not sufficient.
Why do I think this? Simply because all the evidence indicates that the conventional approach to executing strategy isn’t delivering the success that everyone hopes for. Let me illustrate through a couple of examples. A 2013 study of more than 2,200 executives by the consulting firm Strategy& found that 44% of those who responded had found themselves in a situation where they didn’t understand the strategy they were asked to implement and 38% said they didn’t agree with it. In a 2017 Economist Intelligence Unit global multi-sector survey of 500 senior executives from companies with annual revenues of $1 billion or more, 90% of respondents failed to reach all their strategic goals; 59% admitted that their organisations often struggle to bridge the gap between strategy development and delivery; 20% failed to meet their strategic objectives because of poor implementation and for one in 10, failure in strategy delivery did not impede achievement of their strategic goals!
There have been many other studies over the years that indicate the success rate in strategy execution has not improved. That’s why I’d like to explore a different approach during this call, one that is based upon establishing the necessary conditions for success.
Moderator: Could you give us an example of what a ‘condition for success’ might be and how we can put them in place?
Discussion: Certainly. Let me start by saying there are some ‘always true’ conditions for success like sponsorship, funding, communication, commitment and resources. These conditions for success are well understood – but not universally or consistently applied. Others are less well understood and, as a consequence, not given the attention needed. These are the ones I’d like to focus on today.
Those familiar with the Beyond Default approach to strategy will know that the essential purpose of strategy is to change the trajectory of an organisation, from one that’s taking it to its default future – which is a place it will end up if it takes no action other than currently planned – to one that leads to an improved future. Strategy therefore is essentially about changing an organisation’s trajectory to one that achieves its strategic intent. Now, strategic intent is not the same as vision; it doesn’t define the end-state but the direction of travel. So, one condition for success, and probably the most important, is having absolute clarity of strategic intent. But that is not enough. Strategic intent is a choice, a choice with equally valid alternatives. It’s therefore equally important that the rationale behind the choice is also clearly articulated. To put it another way, what’s the architecture of the logical argument? What’s the premise on which the critical thinking that went into choosing the strategic intent was based? There are of course other conditions for success that we can discuss as we go through this conversation.
Moderator: Having an understanding of your strategic intent, and being able to show the workings of how you got there, seems so basic. In your experience is it simply that executives don’t want to share that stuff or is it that they don’t see it as relevant for everybody else and only relevant to them?
Discussion: What a lot of CEOs and senior executives do when they think about strategy is start by defining their vision of the organisation in three or five years’ time. It’s been the predominate approach for the last 30 years or more. The problem is that most visions end up being the same: they lack the definition of how the target future is different. What’s more they don’t define what’s been excluded. Furthermore, the logic of why a particular vision has been selected – and others excluded – is rarely articulated in ways that people can understand. What’s more most visions aren’t visions, they’re aspirational statements. The conclusion I’ve come to is that all too often executives are applying old thinking to the development and execution of strategy. An approach that’s no longer relevant in today’s increasing volatile, uncertain, complex and ambiguous world. Over recent years I’ve increasingly encouraged executives to think in terms of strategic intent, rather than visions, and the trajectory they want their organisation to take, rather than the end-state they want to achieve. I’ve found that this leads to greater understanding of why change is necessary and enables people to engage more effectively by thinking about what they can do to change the trajectory of their organisation.
Moderator: Does anyone have any thoughts or experience on what David’s been saying?
Discussion: David and I have had lots of conversations about this, and I think we’re broadly in agreement. I think the challenge isn’t necessarily that the definition of vision is wrong per se, it’s just the way that people go about it is pretty poor. What you find is that you get vague vision statements of people saying, ‘our vision is to continue to grow and to be a bank’ and our vision is ‘to continue to make money’. And you think wow it’s not really a hugely compelling vision that they’re driving towards; it’s almost a statement of continuum. I read a lot of literature on vision creation and it tends to focus on people saying things like ‘Microsoft’s vision is to have a PC on every desk’, which is fine and the one they started out with, but it’s more about the state of the market once they’ve finished, as opposed to what you want for the company. I think it’s the creation of vision statements that is too woolly and too open to interpretation that doesn’t lead to good results.
Moderator: Interesting, and if the vision in the truest sense of the word is grand enough it might take multiple strategists to deliver it. And, to a previous point, the strategy might need to change as you move towards the vision. Anybody else got any thoughts about that first condition for success?
Discussion: J F Kennedy’s aspirational statement that ‘by the end of this decade we will have successfully put a man on the moon and successfully brought him back to earth again alive’ is a clear declaration of strategic intent. It’s severely lacking in detail in terms of the strategies to get there or the ones that will need to be developed along the way. I think there are three things needed. One is sufficient clarity of the end-state, for example the Microsoft and Kennedy visions, but with sufficient content to galvanise the organisation towards that trajectory of strategic intent. The second is clarity of the milestones along the way that will tell us whether we’re keeping true to that trajectory and making progress, and thirdly having clarity and consistency of communication across the entire organisation to ensure that they are engaged in the journey along a different trajectory.
Moderator: I have a couple of people who would like to comment.
Discussion: I’m in the fortunate position of having a set of conditions for success for our strategy that David helped us define. As a voluntary organisation it’s important that we adopt an entrepreneurial approach where people come to you with an idea saying ‘I think this will work’, and you say ‘yes, I’ll help you do that as long as it’s in line with our strategic intent’. And we’ve got one of those running at the moment. We also needed a kind of a fast-fail approach where you say, ‘we’ll try this, we don’t know whether it’s going to work but we’ll put it out there and if it doesn’t, we’ll think about doing something else’. That’s different to the way we’ve done things before where our default trajectory was to run a programme of events because we thought we should be running a programme of events. So, we’re now more nimble about how we approach it, which is good and more fun. I guess my question is that of the excellent list of conditions for success we have some are more aspirational as we don’t yet quite know how to put them in place. We know that they’re important and there to realise the strategy. Equally we know that the strategy will inevitably mutate over time as circumstances change. I wonder whether David or Peter could offer any guidance on how you reprioritise the conditions for success or establish new ones as your understanding changes?
Moderator: Would David or Peter like to respond?
Discussion: I think this is a very good point. One of the things you can do as you execute the strategy is to assess the degree to which the conditions for success are in place over time. Equally, you can assess their importance over time. For example, having strong executive sponsorship at the outset is critical, but once in place it becomes less important, but still needs to be maintained.
Moderator: When I reflect on the conditions for success they’re like the components of a satnav that help you understand whether you’re going in the right direction, what the speed limits are, where the motorways are or whether you’re on a toll road. All the things that help you judge whether you’re on track. What I find interesting about what the previous speaker said was the act of creating the conditions for success helped him reflect on the fact that in the past he hadn’t gone about it in quite the right way.
Discussion: I’d like to comment on a couple of points. Firstly, conditions for success may be aspirational and you don’t necessarily know at the outset how you’re going to put them in place. That’s fine because you define the conditions for success as if they are already in place; you don’t define them in terms of what you’ve got to do to put them in place. The analogy I often use to help people understand conditions for success is that of gardening. Your strategic intent could be to create a beautiful garden where you can relax with a glass of wine in the evening, where there’s vibrant colours in the spring and soothing colours in the autumn. Gardeners among you will know that this won’t happen – however much time and money you spend – if the conditions for success, like fertile soil, are not in place. Furthermore, by defining the conditions for success in this way you’re not being prescriptive on how to put them in place, which encourages people to apply their intellect, knowledge and experience to ask themselves what they can do to put them in place.
The other point I’d like to make is that exogeneous forces are continually changing the context within which organisations operate, so if you define a vision there’s a very real risk that it will become less relevant as you progress towards it. That’s why I put greater emphasis on strategic intent and the trajectory you need to travel. Then, as the context changes, you can change the trajectory rather than saying the vision is no longer relevant and we need to define a new one – or ignore that the context has changed and carry on!
Moderator: I think that’s interesting. I must confess that I’m one of those who like a good vision statement. I find them quite compelling and engaging. What I find interesting about what you just said is that the level of aspiration within the conditions for success should satisfy the need for something that stretches and pushes you.
Discussion: I’d like to build on a couple of things, firstly many organisations spend time defining what their strategic intent should be and then forget that it needs to be sensitively communicated to all the different stakeholders. When explaining strategic intent to your shareholders you probably need to do it differently than when explaining it to your employees. Strategic intent should be explained in ways that enable different groups of people to understand it and buy into it.
The other point I wanted to make is that being able to see an ‘audit trail’ that, for example, describes the forces that were considered, the scenarios that were looked at and, the strategic axes that are growing or shrinking, is important. If any of these then change you can go back and make adjustments. It allows you to keep everything in sync.
Moderator: I know that Peter will have picked up on the nuance around communicating the message in the right way and using the right language for the right audience. Peter, you talked about the need to have that constant pulse of communication throughout.
Discussion: I completely agree with what’s just been said. When I talk about consistent communication, the message and messaging need to be constantly set from the top of the organisation. As previously said the language used for shareholders to employees at every level needs to be different, but consistent. When I interviewed the leadership of a major Health Trust in the northwest of England the senior executive team ‘got it’ and were able to communicate it, not just verbally but in pictures. Describing what it means to put the patient at the centre of your thinking and describe the patient journey through visualisation is immensely powerful.
Moderator: I know from my own behavioural psychology background that the ability to articulate what you want to say in many different ways, rather than relying on the standard PowerPoint that came out from the leadership team’s strategy offsite, is very powerful.
Discussion: In my experience there’s been a disproportionate amount of time spent on thinking about what you’re going to do and not enough on what you’re not going to do. So, what you end up getting is both scope creep and lack of focus. I think some of it results from the psychology we talked about where people want to be seen to be doing something, to be positive and not be negative. But for me the reason an awful lot of strategies fail is because there isn’t enough of a narrow focus, they haven’t been clear about what they’re not going to do and, even if they have, not sticking to it. For me there’s something about getting the right balance between stating what you are going to do and what you’re explicitly not going to do.
Moderator: David, what are your thoughts on the notion of a condition for success being what we’re not going to do?
Discussion: I think this is a very important point, the question is how do you do it? I’ve found that one of the best ways is to clearly define a set of operating principles. An operating principle states that we’re going to operate this way, as opposed to that way. To put it another way, we’re going to do things this way, as opposed to doing things another way. The thinking is that if you operate in line with the operating principles then you’re more likely to change to the target trajectory. Equally, if you stop operating to the ‘opposed to’ operating principles you’re more likely to change away from your current trajectory. They are a way of articulating the strategic intent that’s meaningful to others. I stress that these are operating principles, not operating practices. They are not prescriptive in the sense that they tell people precisely what they should and should not do. As they are principles they are turned into practices when applied in a specific context. What’s more they enable people to use their intelligence and experience to turn the principles into practices in ways that are appropriate to their context. I find it’s an effective way of engaging people and not patronising them by saying they’ve got to do things a particular way. What you’re saying is if we operate to these principles it will help us change trajectory, now help us translate the principles into practices.
The reality is that all organisations already operate to a set of operating principles, it’s just that they’re not written down. They are the ‘unwritten rules’ of how an organisation operates. They’re what you seek out when you join a new organisation in order to fit in. By making operating principles explicit, and aligned with the strategic intent, I find it engages people and they feel that they can actually contribute. It also comes back to a previous point about having an audit trail that describes the architecture of structured thinking and rationale of why we should operate in a particular way. If the context, or strategic intent, changes you can change the operating principles.
Moderator: What’s interesting in what you say is that it takes me back to what a previous speaker said that we may not know how we’re going to realise the strategic intent when we define it. It seems to me that the operating principles are one of the clues to how we might do it because it allows people to engage and come up with a solution.
Discussion: If we had all the answers at the outset it wouldn’t be a strategy, it would be a plan. There’s got to be unknowns in the strategy, there’s got to be uncertainties. As you go through both the development of a strategy and its execution you work these things out. To assume that you can have all the answers at the outset I think is misguided, and if you could it wouldn’t be a strategy it would be a plan. As we’ve discussed on previous Roundtables, a strategy is not a plan, and a plan is not strategy.
If I could just build upon what been said. If you use operating principles as one of the conditions for success from the outset it gives you a framework for holding executives to account. As the strategy is being executed you can challenge whether what’s being done is in line with the previously agreed operating principles, and if not, why not. I’ve found this to be a very powerful framework for holding people accountable for execution of a strategy.
Moderator: It’s that Magna Carta moment isn’t it when you’re able to point at something and say, ‘we agreed it was going be like this and it’s no longer like this and that’s your fault’?
Discussion: I just wanted to couple those two points together. Using operating principles as a framework for holding people accountable, plus the description of the logic of how you got there is really powerful. If something changes, for example the influence of an external forces, there could be a good reason to change the operating principles. You’re making a conscious change and not allowing things to drift.
For me communication plays the biggest part. More often than not a strategy is well written, often with the help of external consultants, but the messaging is where it drops. People within the business should be consulted on the strategy, even if they’re considered not senior enough to influence it. They should be given a chance to at least comment and thereby buy into it and make it a success. The question is what makes the communication poor? I think the main reason is the culture of the organisation, which is usually driven by the Board. If the Board doesn’t have the right culture then the communication is unlikely to be right however good the strategic might be. My other point has to do with people. You can have the best strategy and the right messaging, but if you don’t have capable people, starting with the right executive sponsor, it will fall apart. You need the right sort of individuals who not only buy into the strategy, but understand how it links back to the vision and strategic intent and are able to make sense of it.
Moderator: Thanks for those points. Certainly, having the right behaviours and cognitive skills to implement strategy is critically important.
Discussion: If I could make a slightly controversial comment that sometimes you have to change the behaviour of the executive team, not necessarily the Board but those responsible for executing the strategy. This can be difficult, particularly in organisations that are very command and control. Sometimes this may not be possible, and the strategy simply fails.
Moderator: This is often described as the culture of the organisation, but I try not to describe culture because I find it almost too nebulous to define and focus on things like how people behave as a group and what cognitive skills they show as a group. David, any thoughts from you?
Discussion: Yes, I’d like to pick up on couple of things. Firstly, what the previous speaker was talking about was a lack of collective leadership, which is such an important condition for success that we dedicated the last chapter of the book to it. In fact, we called the chapter ‘It all starts with collective leadership’. Simply put, without collective leadership there can be no collective strategy, and without a collective strategy an organisation is in danger of pulling itself in all sorts of different directions. What’s more people are not stupid. If they look up and see their executive team pulling in different directions they’re likely to think, ‘if they can’t get their act together, why should I?’. It’s often forgotten that behaviour breeds behaviour so if the executive team is lined up and act collectively then it’s more likely that people across the organisation will behave in a collective way.
The second point I’d like to make, picking up on what’s been said around communication, is that communication is definitely important, but for me the important question is ‘what’s the purpose of communication and how do we go about doing it?’ If a purpose of communication is to develop understanding of the strategy then the question is how do we do it? The reality is that highly intelligent experienced individuals rarely learn anything when they’re presented to or preached at. They only learn from their experiences. So, we must create experiences where they can learn about what the strategy really means to them. Call it experiential learning if you like. As Confucius said many years ago ‘I hear and I forget, I see and I remember, I do and I understand’. It’s also true that ‘if you live your life as if it were different, it actually becomes different’. The question then is how do we create these experiences, particularly when we’re dealing with organisations that comprise of people who think for a living? For example, one person on the call is Deputy President of a University, and like most universities it comprises many bright people. You can’t tell these people what to do, you have to create experiences where they learn about the strategy.
David’s point about communication is spot on, but how do you get inertia out of the way? I think when you have scenarios where you’re making a bank digital and closing branches that’s very explicit execution on strategy and it’s hard to ignore. Equally is closing a factory, but in other cases you could have organisations that are trying to digitally transform while wanting to keep the current headcount. While some might understand what you’re saying, others might not be onboard and fight against it like white blood cells do against a foreign body. So, you can agree at the executive level that you have the right way forward, but depending on the shape and the size of the organisation you’re trying to change it’s how do you execute the strategy? It’s how you keep everybody on board and establish the momentum that leads to success. How do you build a critical mass that overpowers some of those negative views and gets people on board?
Moderator: I think there’s something in David’s point about experiential learning, allowing them to engage with what’s happening. David what are your thoughts?
Discussion: My simple response is that all the conditions for success we’re talking about today are aimed at achieving what the previous speaker was talking about. I don’t think it’s one thing that you can do, you have to put a set of conditions in place. We’ve talked about the need for clarity of strategic intent and the rationale behind it, we’ve talked about the need for clearly articulated operating principles, but we’ve not talked about the organisational capabilities that need to be in place in order to ‘pull’ an organisation onto its target trajectory. Equally, the endogenous forces that are anchoring an organisation to its current trajectory need to be weakened or removed. So, it’s a combination of things, it’s a multi-faceted approach that you have to take and what I often see is executives assuming that it’s just one thing they have to do, often assuming it’s all about communication. To the question asked by the last speaker, if you build up digital transformation capability then people will feel it, they’ll know the organisation is serious, and if you decommission legacy applications, they’ll know it’s for real.
I think that’s exactly the point I was trying to make. You can talk about it and you can be as intellectually sound as possible, but if people don’t see any action that’s when the strategy is at risk. I once said to a group, when asked about introducing digital capability, just do it and don’t talk about it. I think action is a very powerful form of communication.
Moderator: I can see a hand up.
Discussion: I’ve often seen that the thing that’s missing is enough time for continuous reinforcement of the why. Everyone gets hung up in the ‘what’ and the ‘how’. I forget which philosopher [Friedrich Nietzsche] who said ‘people can endure any what and how as long as they understand the why’. I think all too often organisations don’t give a compelling reason why we’re doing something, whether it’s to move away from something or to move towards something, or to do both. For me this is a really critical condition for success, spending enough time continuously explaining the why and using that powerful word in English language, ‘because’. Then I think once people understand it, and if we subscribe to the philosophy that most people don’t set out to be obstructive or destructive, then they’re more likely to put time in to making it happen. Whether we call that communication or something else, I think that all too often disproportionate effort is put into the what and how, rather that the why.
Moderator: Some great points, thanks. I’m conscious of time and, as always, we’ve only just scratched the surface of the topic. Maybe it’s something we can come back to in a future session. Before we close, David would you like to sum up?
Discussion: Thanks Chris. Before we bring things to a close is worthwhile reminding ourselves that what we’ve been talking about today are the conditions for success for strategy execution, not strategy development. If you’re talking about developing strategy, there’s a separate set of conditions for success. If anyone is interested they’re described in an article on our website called DIY Strategy Health Check. There’s also a link in the article to an online tool where you can assess the degree to which they are in place.
Our next Roundtable on 5 May 2022 is entitled Confronting Your Default Future. The reason we’ve chosen this is that we believe it’s a key role of leaders to confront the default future of their organisation and we thought it would be good to have a conversation on what that actually means and how you go about doing it.
Before I hand it back to Chris I’d like to thank everybody for joining us today. I find these discussions very stimulating, and I learn a lot. Special thanks to those who have joined for the first time, we hope to see you again at future sessions.
Moderator: I prompted David to go with this topic because as we move through these conversations it feels like the topic is the genesis of it all. The notion that leaders often fail to confront where they’re going and just carry on managing in the way they were managing.
Thanks everyone. Sounds like our next session will be a good one.
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