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Jul 15, 2010

By Jocelyn R. Davis, Edwin H. Boswell, and Henry M. Frechette, Jr.

Even as the business environment has become increasingly complex, many strategies have become increasingly simplistic. Some have become so abbreviated that they’re little more than catchy phrases.

These “strategies” aren’t strategies at all — they’re just statements of strategic intent, or at best, strategies that are incomplete. At worst, they’re sound bites that provide little guidance for execution.

Here are some examples:

  • “Our strategy is to be the low-cost provider in our industry.”
  • “Our strategy is to focus on the customer.”
  • “Our strategy is to grow through international expansion.”
  • “Our strategy is to help our clients grow.”

A consultant we know once made a presentation to a company’s leaders about their strategy. At the same time, he had been working with another company on its own strategic issues. Part way through his presentation, he realized that he was actually describing the other company’s strategy to his audience. No one listening to the presentation noticed the mix-up. Both firms’ strategy formulations were so vague that, to listeners, they were indistinguishable.

An affirmed strategy is nothing like the business bromides above. It’s complete, clear, and sensitive to context, communicated well, and fully supported by those who will execute it.

While this chapter focuses mostly on the senior leadership team or the team responsible for creating and executing an organization-wide strategy, the lessons are equally important for any team that’s accountable for executing a strategy or initiative, whether organization-wide or confined to a particular business unit.

Strategy affirmation consists of three imperatives:

  1. Leaders must understand the components of a complete strategy: The strategy needs to tell a compelling story in a way that clarifies what you’re doing, why you’re doing it, and how it will be executed. People must become clear on the organization’s direction and how their jobs contribute to success.
  2. The leadership team must be aligned and alert: By aligned, we mean in agreement on the strategy’s purpose and components. By alert, we mean sensitive to both the external business environment and the organization’s internal capabilities. The team needs to be aware of what’s going on outside the company and what’s possible inside the company in order to make progress on the strategy.
  3. Leaders must help others buy in to the strategy: We all know what lack of buy-in looks like: people say they are on board with an initiative or project, but then they fail to show up for meetings, follow through on tasks, or change their behavior in any way—or simply don’t give their best efforts. A strategy without real buy-in is one that will never truly get off the ground.

Formulating a strategy is really only a small part of the story. For a strategy to be affirmed, many people — often thousands — must be brought into the process and buy in to the strategy as a result. Strategy affirmation can take longer than many leaders might like, but if it doesn’t happen, the entire strategy runs the risk of staying far below the noise-value line forever.

Understanding the Components of a Strategy

A strategy should be like a great newspaper article. It should grab your attention with a compelling story that draws you in and makes you want to know more. Like a good article, a good strategy leaves you not just clear about its conclusions but also aware of how the writer reached those conclusions and what the implications are for you. It should be clear about what you can and cannot do — about the choices you can make. In addition, it should clarify how and where you will execute those choices. It should finish by providing you with a clear direction for moving forward.

A complete strategy will leave you clear on the who, what, when, where, and how of the story:

  • Who are your customers — and what market segments are they in? Whom do you wish to attract as your employees?
  • What is the compelling story that will inspire people to action? What are your differentiators in the marketplace? Will you win in these markets by being the low-cost producer or by being the most innovative? Will you win by providing the best customer service or by having the most reliable products?
  • Where will you compete — not just in terms of geography, but also in terms of market segments? Where and how will you create the most value for your markets?
  • When will you make strategic moves and in what order? What is the timeline for execution, and what are the milestones? How quickly do you intend to grow the business?
  • How will you actually get it done? What are the resources — the core technologies and competencies needed to execute this strategy? To what extent will you achieve your goals organically, though strategic alliances, or through acquisitions? What are the specific points in your strategic plan?

Donald Hambrick and James Fredrickson write about the economic logic of a strategy: how all the pieces fit together in a manner that will generate the economic returns you seek. Southwest Airlines is an example of an organization with great economic logic. Everything this company’s leaders have done — from defining who their customers are to selecting the types of planes and routes they will fly—is based on being the low-cost provider of service. Contrast Southwest with the many less-profitable imitators in the industry who have mimicked some but not all aspects of the low-cost model.

Examples have included Ted (United) and Song (Delta). These imitators had legacy systems and processes that were inconsistent with one another or with their strategic intent. While Southwest has been unified around being a low-cost airline, Ted and Song intended to be low-cost but in practice couldn’t disengage from all the features and processes that were intertwined with their identity as large service providers.

The who, what, when, where, and how of their strategies didn’t hang together and didn’t support their marketing tag lines; in short, their economic models lacked logic. Southwest has continued to flourish; its competitors have floundered.

Reprinted by permission of Harvard Business Press. Excerpted and adapted from Strategic Speed: Mobilize People, Accelerate Execution. Copyright 2010 The Forum Corporation  ( .