#543  Innovative Leader  Volume 10, Number 12          December 2001

Is Your Investment in Strategy Being Wasted in Execution?
by Catalyst Consulting Team

Catalyst Consulting Team is a strategic planning, leadership development, and experiential learning firm.  www.catalystonline.com

Over the past decade, we have watched many different companies attempt to implement new strategies designed to help them better fulfill their purpose. We have been struck by the fact that many create great plans for their future, but fail to implement them. When this happens managers and employees stuck in the following dilemma: “We tried to implement our strategy, but are getting results we didn’t intend and don’t want, and now we lack confidence that we can get the results we had hoped for.”

Below we present six short cases illustrating common dilemmas faced by executives and managers who are attempting to change strategic direction. In these cases, we tell the story and our diagnosis of the situation. See if any of these cases are familiar to your experience.

A new strategy is not being implemented by senior managers.

A large banking company has recently sharpened its focus from 30 major strategic initiatives to five. The reasons for the change are clearly understood by a handful of executives, but not understood at all by the rest of the company. The executives who do understand have been giving speeches, writing newsletters, and conducting strategy meetings to inform people of the new focus, but this has made no discernible difference in the behavior of most of the managers. From the managers’ points of view, they can still be successful by hitting target revenue numbers even if much of their business is in markets no longer strategic to the company.

Diagnosis: There is no common understanding of what the desired future state is, so there is no compelling reason for the managers to change their behavior. This is particularly true given that the managers can still be successful in the short term by doing things the old way. A method must be developed to help all of the managers see what the desired future state goals are and why it is important for the bank to reach those goals.

Managers several layers down do not understand a new strategy.

The senior management team of a very large division in an electronics firm commits itself to a new direction. The management team writes a plan and creates a compelling vision and the strategic initiatives needed to get there. The whole plan is consistent with the company’s reputation for excellent planning. The executive team agrees on how they are to spread the word throughout the rest of the organization. As the general manager talks to people three or four levels down, however, he realizes that these people do not fully understand the plan nor are they at all committed to it. Furthermore, they see many faults with it. Yet, when he talks to his executive team, he finds that they have been holding meetings and broadcasting the new direction as planned. After all of the work the senior management team has done to get the word out, they end up being frustrated by the lack of progress towards the new goals.

Diagnosis: Although there is a plan for moving the message of the new direction throughout the firm, there is no mechanism for getting feedback to the executive team. When inevitable problems arise with the new direction, managers are faced with a choice: they can behave as they would have before the new strategy was announced or they can attempt to problem-solve and move forward. Unfortunately, if they choose to problem-solve, they inevitably create further problems because they are working from a too- narrow perspective.

After going through several cycles of attempting to solve problems, which only create further problems, these managers soon figure out that they can resolve their dilemma by reverting to the old way of doing things and waiting to see what happens. In order for strategic change to move forward, the executive team must create a forum where such problems can be worked out.

Behavior of managers not congruent with new strategic initiatives they have helped create.

A large financial services organization goes through a strategic visioning process where 200 key managers are presented with a complete vision and the strategic initiatives needed to get them to the new, desired future state. Over the course of nine months, the managers are exposed over and over to the new goals and initiatives; they discuss them and argue about them, and they work on figuring out how the strategic initiatives will affect them, how divisional clashes could occur and how the organizational structure could get in the way.

Based on the managers’ responses, the executive team decides to reorganize and works on the new structure with the 200 key managers. At the end of this process, the managers realize that they and their people are still not implementing the new initiatives even though they understand what they are and why they are important. People find it hard to give up the old ways of doing business that were successful and to try new business practices that, while making sense, have outcomes that are still unknown and could negatively impact their performance.

Although everyone agrees on the new direction, they also find their plates overloaded because their old responsibilities have not been changed.

Diagnosis: Even in the best change introductions, people go through a period of “looping back” behavior where some of the time they try new things and some of the time they fall back on old habits and behaviors. This is accentuated when there has been no analysis of what duties the managers no longer have to perform: the managers feel they have to do everything they used to do as well as take on new responsibilities. This company needs to work with all layers of management to identify those actions that have been made obsolete by the new direction and make it clear that managers are no longer responsible for them. They also need to continue to reinforce the strategic vision and initiatives at all levels of management.

Unclear implementation plans for new business opportunity.

The general manager of an electronics firm’s world-wide customer support organization decides to expand his support services to include equipment made by other vendors. They have written a business plan that looks at the markets and the investment involved; they have determined it is a business they can be a major player in. The customer support management team—global in scope—hears the decision, but has no clear idea how to proceed with the myriad details necessary to implement the new strategy. Field operations become more and more complex and difficult; customer complaints increase. Employees blame the problems on the other vendors: from their perspective, none of these problems would be happening if other vendors’ equipment and documentation were as good as their own. Vendors claim it is a competency issue.

Diagnosis: The implications of the change have not been thought out at any level of management; there is an incomplete understanding of the gap between how the company does business now and how they want to do it in the future. This gap will have to be explored and understood; plans for closing the gap will have to be made. The planning process will have to move from senior manager levels out to field management where local problems can be worked out.

Divisions working at cross purposes.

A large, integrated computer hardware manufacturer has divisions which sometimes end up bidding against each other for large contracts. This has continued to happen ever since the firm broke itself into autonomous business units each responsible for its own profit and loss. From each division’s point-of-view, this competitiveness is rational behavior in light of the measures used to evaluate the divisions.

From the corporate management perspective, this strategy doesn’t make much sense because there is almost always a greater benefit to the company from one bid proposal than from the other. They are rightly concerned that current policy is confusing to the company’s customers and is preventing them from seeing the company as a unified whole. Corporate executives fail to see why the divisions cannot resolve these problems themselves and dislike having to frequently intervene with the divisions to resolve disputes.

Diagnosis: This company has set up a structure that encourages competition between divisions. While this could be an important mechanism to sharpen divisions’ sales and marketing efforts, there needs to be an overarching vision of how divisions can cooperate. This corporate-wide vision must include a plan that addresses how customers will view the entire company so that people in the divisions can see beyond their own parochial interests.

People in a department unable to create strategic goals for themselves.

A product support manager and his 20 people attempt to create a vision for their group to help the members keep focused so that he can spend less time directly managing his people in day-to-day operations. The product support manager found that he and his group cannot come up with a clear vision of their desired future state because they do not know what actions they need to take to support the division’s plans. The manager approaches his VP to see if there is a clear statement of where they were headed. The VP realizes that her division needs to be clear on its strategy so that all the departments are able to take action to support it instead of having to find their own methods.

However, she also realizes that her goals have been shifting with the market and the whole company. She is not certain if she should attempt to set strategic goals with her own people or if she should first attempt to engage the entire senior management team to set new goals for the company.

Diagnosis: This company has let its strategic goals go stale. The market is shifting quickly and the company has been slowly changing its strategy to move with it. There has, however, been no move by the executive management team to formalize the shift or to change the desired future state of the organization. Before teams within the organization can set their own strategic goals, the company needs to determine where it wants to be several years from now and what important initiatives are needed to get there. That vision can then be spread throughout the organization so operating teams can set goals for themselves that support the larger effort.

There is one overall theme common to how well-run corporations stimulate and manage change: they have a well-defined purpose for existing that is understood by most employees.

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©2006 Winston J. Brill & Associates. All rights reserved.