“However beautiful the strategy, you should occasionally look at the results.”
— Winston Churchill (1874 – 1965)
Does Winston Churchill challenge the common practices of many organizations today ? I would argue that he might challenge a common practice and maybe even indicate a new one. I would like to demonstrate the two approaches to strategy practice in the organization through three stories:
I recently met a colleague who works as a strategy manager in one of the world’s leading internet firms. We haven’t met for a couple of year so I asked him about the exciting projects he had been working on in the last few years. New pricing strategy, new product introduction and mobile segment opportunities overview were just some of the exciting projects he mentioned. We discussed his last project around the mobile industry, a segment that I’m very familiar with, and then I ask “What was the impact of the proposals implemented? Were your forecasts relatively accurate?”. “We stopped tracking these projects after a while and moved on” he answered. It reminded me of a similar conversation that I had while helping an MBA student work on his resume. He worked for a consulting firm and mentioned some of the projects he worked on in his resume. “Well you need to focus on results rather than actions. What was the impact of your recommendations? Did revenues grow? Did cost go down?” I asked. “I can try and find out” was his answer.
Not surprisingly these two conversations share a similar pattern. Most strategy departments in mid to large size corporate act as a management consulting firm to the executive team. A Majority of the employees in these departments come from consulting background. They work and consult the management team on strategic projects. The capacity to look at long term opportunities, explore segments that are not in the company’s current focus and provide an unbiased view on investments that the company considers, is crucial.
The only part that is missing, in my opinion, is accountability.
Let me demonstrate that through my second story, which is based on my own personal experience: a couple of years ago, while I was a strategy director, I explored a certain initiative to help the company grow. The opportunity was really appealing and I presented that to the management team. As there were no resources to pursue the initiative, I found myself responsible for realizing the opportunity and leading the initiative. The effects:
1. I was extremely motivated as I had to stand by the 1st year’s forecast that I had estimated.
2. I learned what it takes to pursue the opportunity for the company and what is the “non-financial” cost. Cataloging the new parts, new product introduction and buy-in within the organization in general and the sales teams in particular are just some of the items you would rarely see in strategy presentation.
3. I handed off the business at a growing but mature phase. Had I left the initial implementation task for another department, I assume the hand off process would have taken more time and the process might have taken a different route, impacting results.
Speaking of results, the results of this continuous process were amazing. The business made 3 times what I projected by the end of the first year and had a profound impact on the company’s performance that year.
By the next project, I was much more experienced, I had a successful track record and I could look at some of the opportunities from a real insider perspective rather than an outside consultant perspective.
I realize the tradeoffs of such a model: The capacity to explore and evaluate opportunities and analyze potential initiatives is limited. However, linking strategy and implementation leads to practical results’ driven projects.
My third story has to do with Silvio Napoli. Silvio is the current general manager of Schindler Asia/Pacific region. In 1994, following his graduation from the Harvard business school, Silvio joined Schindler as the head of corporate planning. A year later Silvio took on project Swatch, which was aimed at improving Schindler’s margins for it new products. Silvio’s recommendation, as head of corporate planning, was to develop a standard elevator while outsourcing many of the parts from outside suppliers. Around that same time, Silvio was also developing a plan for Schindler to expand into India. But then something changed – Silvio was asked to establish Schindler in India and integrate his “common elevator” plan there. He discovered how different it is to plan and implement: the culture in India was very different than the Swiss culture in terms of alignment to a strategy, finding good people in India was very difficult, getting the engineers in the headquarters to communicate with the local suppliers in India was difficult and many other challenges rose. It took Schindler India and the Swatch project 4 years to ramp up – far behind the initial plans. The story has a good ending though: By 2000 Schindler India sold 500 units with 85% of the parts sourced locally, as planned.
Silvio learned how challenging and different the reality is from the initial plans, and how many factors, usually neglected or considered irrelevant, are the ones that most impact the implementation. He also learned that he was the best fit for the implementation, as he said: “I realized that the future manager of the new company would be key to success of the business plan I had been working on. I was conscious that my early involvement in the project made me the best candidate”.
To conclude, even though the article questions the common practices of strategy in many organizations today, the objective is rather to offer a new perspective than to make a call on a particular approach. A CEO should clearly define the role of the strategy department: Is it a special task force for analyzing long term opportunities or should it be results driven and have direct impact on the company’s performance.
So what is the role of strategy in your organization ?