Wednesday, February 13, 2008

Executing your strategy is a good idea

The new book “Executing Your Strategy: How To Break It Down And Get It Done,” by Mark Morgan, William Malek and Raymond Levitt, is an invaluable resource for leaders seeking to plot a course for the future.

The authors accurately accuse most leaders of vision by default—setting management priorities based solely on the issues confronting them rather than looking ahead, and deciding what to do next. At the same time, Morgan, Malek and Levitt put forth a systematic approach for companies to decide “who they are, where they want to go and how to get there” and illustrate the means to implement those ideas. They also cover the key elements linking vision, strategy and operations--and how to connect them together into a coherent operating model for a company.

“Executing Your Strategy” is not a breezy read, and probably works best digested a bit at a time, and thereafter as a reference. Yet its density is welcome when the issue at hand—as the authors state, “The global business landscape is littered with expensive, well-intentioned strategies that failed in the execution phase”—is so important.

By contrast, “The New Leader’s Guide to Diagnosing the Business” (link - $$) in the February Harvard Business Review sets out a complete menu of activities for the new CEO in ten pages. While the tools to diagnose the current state of the business are fine and useful, “The New Leader’s Guide” goes awry when it tries to convert those findings to a working strategy (perhaps suffering from the consultant’s detachment from the complexities of actual business management). Here is a sample strategy they propose for a new CEO:

  • Reduce costs by $200 million to move relative cost position from 110% of best competitor to 90%.
  • Increase relative market share from 0.9 to 1.2 [i.e., from second in market share to first]….
  • Increase share of profit pool from 40% of $2 billion to 70% of $2.8 billion
  • Cut SKUs from 100,000 to 2,000; reduce organizational layers in SG&A from five to three; outsource 20% of all SG&A costs.

These consultants will remain nameless (their firm’s name rhymes with main), but they are in effect proposing a strategy to become a cost leader, a market share leader, and a profitability leader--all at the same time.

The authors of “Executing Your Strategy” say this:

We have worked with many companies whose strategies seem to ask them to do it all…. This type of multifront strategy is almost always a nonstarter…. What differentiates one organization from another in terms of strategic execution is the discipline of engaging the strategy with the tailored portfolio of projects and programs that will bring it to life. In a world of limited resources, it is as much about choosing what not to do as about deciding which strategic projects and programs to invest in. (p. 141)

Makes sense to me. If I needed strategy consulting help, I think I’d bypass the …ain guys and talk to Morgan, Levitt and Malek.

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