Strategy and Operations
By : Shane Phillips, MENA Regional Practice Leader Financial Services
A Primer for discussion: the effectiveness of having the two concepts constantly interacting for overall effect.
According to Fortune Magazine, “Less than 10% of strategies are effectively implemented.” The best strategies are really ineffective if they are not effectively implemented. What prevents a strategy from being effectively implemented? Better still, who makes a strategy effective? There is only one answer to that question-People.
We all know that answer, which sounds quite simplistic. Why then do less than 10% strategies get effectively implemented? People need to be engaged in the implementation of a strategy. Jan Bladen COO of the Dubai Financial Services Authority (DFSA) believes the best strategies are simple, “if you can’t fit your strategy on one page, then you probably are doing something wrong” he says. “Often I see people show up with a Ferrari when all the job requires is a Tractor. Over sophisticated approaches which are difficult to implement are not a fit for most Middle Eastern organizations. I prefer strategies which are clear, effective and implementable. While a Ferrari is a beautiful automobile, if you need to plow a field it just won’t do. On the other hand a Tractor is cheaper, more effective and will get the job done”.
The following statistic will shock as much as it is sobering: Gallup conducted extensive research on the subject and found that in the USA, more than 50% of employees are not engaged at work-and nearly 20% are actively disengaged! The cost of all this disengagement: about $ 300 billion a year in lost productivity in theUSA.
How many of us have taken a rented vehicle to a car wash or done home improvements on a place we are renting? I suspect not too many. Why is this so? Because we do not own a rented vehicle or rented house. People do not implement a strategy effectively because they do not own the strategy. They have only rented the concept to get by in their jobs. They will do what is necessary to survive in their jobs-dispassionately!
How then do we get them to own the strategy and passionately implement it? The answer is so simple that it seems unbelievable that companies do not do just that. People must participate in the definition of the strategy from day one. Unfortunately, most companies tend to signal that the definition of the strategy is mainly the prerogative of the Management; the rest of the organization is often charged with the implementation of the strategy. Herein lies the disconnect.
Involving people on the floor in the definition of the strategy makes common sense. If you want to define what your strategy should be, ask the people who work on the implementation of the strategy on a day to day basis. There is a direct and powerful connection between strategy and implementation. In fact it is a two way street: as strategy is implemented, there should be constant feedback of the implementation experience to the crafting of the strategy. Just as much as there should be a constant feedback to the implementation process of the constant reorientation of the strategy based on all the feedback garnered from the markets, the products, the suppliers, the customers and the business environment in general. If there is a clear cut transparency between the evolving strategy and the implementing process on an ongoing basis, this will lay the groundwork for people to be engaged in their work and greatly improve productivity.
Most companies launch a strategy by stating a financial target and then work backwards from there. The strategy is then retrofitted into the financial goal. More importantly, the practice of establishing a fictitious figure across the board, say increase sales by 10% by all departments to meet a company’s financial targets, inhibits rather than enhances outside the box thinking that could actually result in sales growth percentages that boggles the imagination.
This fact is manifested again and again in the High Tech market, witness the cases of (RIM) Research in Motion and Face book as prime examples. In both examples, people were engaged passionately in creating value to serve a market need. The resultant explosion in sales defies any projected growth that the company leaders could have stipulated or even envisaged in their wildest dreams.
In this context, it should be evident that any person involved in strategy formulation must be pragmatically tuned in to the execution of that strategy and vice versa. It behoves all leaders, therefore, to groom every person involved in strategy implementation to be sensitive to, and capable of, working backwards from strategy implementation to strategy formulation. Hence, it follows that providing a transparent communication system and a constant mutual feedback process from the floor to the leaders to pragmatically make a strategy happen,
is a necessity and not a window dressing.
Jan Bladen COO of the DFSA believes today’s leaders must be able to make a deep and meaningful connection with their team. “Charisma and good communication skills are the weapons of choice if you are going to get the troops to follow you over the tops of the trenches” he says. He is right, the days of top down leadership are over, employees now need to feel empowered, included and most of all they must take ownership of the strategy before they will become fully engaged.
Strategy and operations have often been two separate concepts that are seen to require very different skill sets in leaders. However that gap is quickly closing as E-Commerce, Risk, and Human Resources become ever more complicated departments, Chief Operating Officers are now center stage during strategy sessions.
Previously the largest number of CEO positions were filled by people who are involved in Sales and Marketing and not from Operations. And to some extent this makes sense, because people in Operations were not encouraged in the past to actively develop their strategic thinking skills; they had to stick to their knitting and make operations work. To compete globally and execute locally it is no longer possible to let your Operations teams sit on the side lines. It is now critical to ensure your team is firing on all cylinders and this means engaging the middle and back offices and integrating them with the front office. Getting people engaged in their work to the point that failure to achieve their realistic goals is not an option, requires several simultaneous actions, not the least among which are:
- A simple, understandable vision statement created by the company that makes each employee feel inspired.
- A transparent two way communication process that encourages input at all levels without prejudice.
- The true understanding and experience of a culture that rewards and promotes mutually supportive teamwork.
- A genuine respect for the power of cooperative efforts to incorporate operations into strategy and vice versa.
- A disciplined and results oriented environment that faces reality head on.
As globalization increases competitive organizations must now demonstrate excellence in execution. Our research shows that the 10% of
organizations that effectively achieve their strategic goals use the above guidelines to effect on a day to day basis.
