by teamrec“Leadership is a potent combination of strategy and character. But if you must be without one, be without the strategy.”
Ask any corporate executive; they will tell you strategy is core to business. What should the CEO do? Think about strategy. What’s wrong with an unsuccessful business and the one which is failing? Bad strategy… most sought after response! This wisdom is very much uncontroversial. Yet strangely, as we will see, this “wisdom” is wrong and stands in the way of success. What business really needs is not better strategy but an “alternative to strategy”.
It is difficult to talk intelligently about strategy because people use the word to describe just about any thoughtful action. Saying, “Hey buddy, what’s our launch strategy?” is common—but launch strategy is not the issue. The issue is ultimate strategy. The process wherein top management, aided by the world’s most expensive/famous consultants, dream up fabulous strategic ideas. The ideas are then formalized in some elaborate plan and sent off to operating/line managers to implement.
In today’s time when the world is experiencing turbulent times and to hold on to the sinking ship…. Something which is required is just not strategy but an alternative to strategy…which is crafted execution.
In practice, this kind of ultimate strategy almost never works. Managers will agree that “yes, it never works in my organization” but they remain convinced that it should work, and that it does work someplace else, over the rainbow. Business magazines enjoy treating us with stories of grand strategy. Many managers are familiar with the case of Honda. The story outlines Honda’s brilliant and successful strategy of entering the North American market by starting with low end motorcycles then working up to luxury cars. The trouble with this story is that it is just a story. It never happened that way. Honda came to North America with little sense of strategy, just a hope that they could sell big motorcycles. When this failed, the managers, almost in despair, began to sell the smaller cycles, and stumbled to success. Honda was successful not because of a great strategy but because of great managers, actually on the ground in America, who overcame a string of failures, changed their plans, and eventually succeeded. Yet surely Honda was just lucky. Surely it is best to have a great idea and a great plan. Henry Mintzberg, the great organization theorist, says no. When you study successful businesses you rarely find that great ideas were behind their success. Instead successful organizations simply work hard at being good. Over time, what works well emerges from our experience. Over time we learn how to succeed. Later on we look back and call it a strategy.
Take Southwest Airlines. They came up with the brilliant strategy of flying point-to-point rather than following the customer unfriendly hub-and-spoke system. Yet the great idea only looks like strategy after the fact. When Southwest started up their strategy was to use a hub-and-spoke system just like everyone else. They only went point-to-point because they could not secure enough landing slots at an appropriate hub. Southwest is successful; there is no doubt about that. What we need to understand is that they are not successful because of strategy. They are successful because of great people management and operational excellence.
To understand just what is wrong with strategy we need to re-consider our everyday ideas about business. There is an underlying sense that what lies at the heart of business is problem solving. A CEO considers the competition, customers and environment and figures out “an answer”, a strategy. It is like those Grade 7 math problems, only harder. But it’s not harder—it’s impossible. The business world is too complex and dynamic to be ‘solved’ on a weekend retreat. And in any case business is not about an idea, it is about execution. There are many instances in which CEOs and Executive management are faced with this issue of a question mark ”?” over strategy. However good a strategy one may develop, if it is not executed, it will be of no use. Research shows there are increasing business failures. Generally the fault is identified with wrong strategy. Organizations are still fighting to find the right strategy. On the other hand Strategic planners always complain about lackluster execution / implementation and resistance to change. They think they have done the hard work in coming up with a vision and now if the dough head managers can just follow it through everything will be fine. But the hard part is never the planning; there is never a shortage of “great” ideas. The hard part is the doing and if you are focusing on strategy then you are not focusing on getting things done.
Strategy is a strange word. It is treated like a gospel. Once it is put on a paper it needs to be revered, etched in stone. Strategy may be all that but it does not make it sustainable in itself. Most strategists usually jump headlong into full throttle execution, assuming that the gospel will lead to the holy trail. They do not feel the need to pilot it. Extensive rollout is planned without actually seeing the results of the pilot study. And lessons in execution are learnt in ‘hindsight’ rather than during the process of execution. Strategy is never ‘sustainable strategy’ unless it is backed by successful execution.
An interesting example is the bitter lesson learnt by organized Indian retail in the last few years. Indian Organized Retail story took off with a bang with the launch of Reliance Retail, followed by a slew of other big retail players like Aditya Birla, Bharti, Walmart, Tata’s etc. Indian retail strategists opined that retail was getting organized, and the poor “corner store” was threatened with crippling loss of business. Organized retail would unleash deals driven by economics of scale and a whole new customer experience. This would cripple the neighbourhood store, which would not be able to compete on these attributes. Consumers did throng the stores, especially when there unique promotions were launches like Big Bazaar during days of ‘’Maha Bachat ‘’, but they continued to patronize their neighbourhood shops. Unorganized retailers in the vicinity of organized retailers did experience a decline in their volume of business and profit in the initial years after the entry of large organized retailers. But the adverse impact on sales and profit weakened over time. Big Indian retailers failed to take notice of this. Customers kept flocking to organized retail but repeat buying was not robust. Any business which does not generate robust repeat sales is a leaking pot. But oblivious they did not gave heed to the situation and worked on their planned strategy and continued scaling up, implementing their strategic plan of adding outlets to reach their staggering targets of reaching an x number of outlets. Strategist thought that size & scale will bring volumes. It did not….The neighbourhood unorganized retailer would suffer badly as customers will plumb for great shopping experiences. This did not happen… Besides, the proximity, which is a major comparative advantage, the unorganized retailer displayed significant competitive strengths that included consumer goodwill, credit sales, and access to bargaining, ability to sell loose items, convenient timings, and home delivery. By the times big retailers started realizing that numbers were not coming in and the strategy was not sustainable, a lot of money had already gone down the drain. Reliance was around 700 outlets old, Subhiksha was refuting selloff rumours in media.
I believe the day you start executing strategy, you should immediately be open to learning lessons and incorporating them back in. Day 1 of execution, should be the day that the strategists need to start learning whether the strategy is really sustainable. And unless the execution lessons are incorporated, a closed loop between strategy & execution is fully in place. So initial strategy is more like a direction. It is the inputs provided by rigorous execution that gives it legs and makes it potent and long lasting.
We can learn something from legendary football coach Vince Lombardi. Lombardi always boasted that he would share his playbook with any of his competitors. To Lombardi, football wasn’t about great strategy, it was about great execution.
Stanford professor Jeffrey Pfeffer also casts doubt on the idea that business success is about strategy. He cites stacks of research showing that it is good human resource policies that separates the winners from the losers. Business does not need great strategic planners it needs people management.
The alternative to strategy is a focus on implementation, people management and on-going learning. This is all rather dull compared to spending time in mountain retreats with glamorous consultants. Yet the academic evidence is conclusive. Grand strategy is obsolete.
ABOUT THE AUTHOR
Ms. Damini Agarwal is working as Head – HR for Pyramid IT Consulting Pvt. Ltd. a fully owned subsidiary of Pyramid Consulting Inc. She has over 11 years of experience in leading HR Initiatives, HR Consulting, Training and Corporate HR Functions for IT / ITES organizations.
She holds a Masters of Psychology in Human Resource Development and Management (M.Psy HRDM), from Allahabad University with a proven track record in establishing HR practices in growing entrepreneurial setups.
She specializes in designing and implementing Performance Management System which focuses on enabling employees to perform to the best of their abilities. She is a Visiting faculty to various Management and Engineering Institutes. She has organized a National HRD Meet on “Building Proactive Organizations”. In addition, she has been associated with various studies conducted on diverse HR subjects for various organisations.
Behavioral Training is a passion to her and she strongly believes that individual behavioral traits can be harnessed, which facilitates the learning process and leads to great success stories.
