Business Reporter · October 2012
4
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Mind the gap
No matter how well planned, CEOs need more than just
strategy to drive change – they need to be able to execute it
INDUSTRY VIEW
I
n today’s demanding business
environment, the need to execute
strategic change is an essential
factor in improving a company’s
performance. As a result, substantial
sums of money are spent each year
on hiring external consultants to
formulate comprehensive business
strategies that promise to deliver
tangible results.
Once this exercise is complete,
CEOs and their executive teams are
normally presented with a
comprehensive, beautifully laid-out
report, all tied up in a bow – which is
exactly where most change
strategies grind to a halt.
“There is a quote that I really like,
from Sir Winston Churchill, where
he says: ‘However beautiful the
strategy, you should occasionally
look at the results’. I don’t think I can
make the argument for effective
strategy execution any clearer than
that,” says Matthew Gunbie, CEO at
pmX – ProgramExecution. “It’s very
nice to receive a package wrapped
up in a bow, but the contents will
always be useless unless you know
how to unwrap it.”
Even if change plans are
strategically sound, CEOs often
struggle to execute them for one
simple reason: fear. Most CEOs
worry that they don’t have the
resources or experience within their
organisation to execute change
effectively. Plus, unless they are able
to measure and monitor constantly,
it can be very difficult for them to
gauge progress, and to
define the
desired outcomes
– the real end
value – with any
real clarity. The
paralysis that
results is a
phenomenon
known as the
‘Execution Gap’
– and many
CEOs fall into it.
“No matter how
well thought out
and well-presented
it is, CEOs need more than just
strategy to drive change – they also
need to have the ability to execute
change on a day-to-day basis
throughout the organisation,”
Gunbie explains.
“The ‘Execution Gap’ occurs
when CEOs know what they
want to achieve – and
have a sound strategy
– yet are unsure
whether they have the
resources and
capabilities to get there.”
Research shows that companies
typically realise only
about 60% of a
strategy’s potential
value, and so perhaps
it’s no surprise that
executives are
worried. As a result,
many CEOs find
themselves reaching
for the chequebook
to buy an expensive
‘insurance policy’
from a big
consulting firm,
but this does not
transfer the know-how that is
desperately needed to sustain
change.
Companies like pmX –
ProgramExecution are addressing
this issue. The company combines
the capabilities needed to
supplement the CEO’s own
resources in order to execute an
effective change strategy, thereby
transferring knowledge. This
combined approach relies on three
important strands. First the people
involved in the project need to be
highly skilled and experienced; ‘the
kids’ just won’t cut it when it comes
to projects like these. Effective and
timely measurement will also be
vital in order to provide an up-todate analysis of the project at any
given moment.
The third essential component
of this approach is what Matthew
Gunbie describes as a ‘value focus’,
which puts a strong emphasis on
the business benefits to be gained
from the change
process the
whole way
through.
“Most
traditional
consultants
focus
purely on inputs and outputs when
executing a change strategy, but
these don’t tell the whole story,”
Gunbie explains. “We help
businesses translate their business
strategy into measurable results
through a combination of expert
support, cloud-based technology
and proven methodologies that
deliver tangible benefits. At every
step of the way, we’re asking: ‘what
will the customer get out of this
change?’ We have lived through
organisational change many times,
over many years, so we know how
to untie the bow, open up the
strategy, and deliver the results that
CEOs want and need to achieve.”
www.programexecution.com
When less is more
There are times when words speak louder than actions.
Focusing on what really matters instead of what doesn’t
can be the secret of success
strategy, challenging project teams to manage from where the two cable companies had only
to outcomes instead of simply managing
just emerged.
budgets or timelines, and taking difficult
Tough decisions about what to stop, or exit,
decisions to stop projects that no longer fit
dominated management time. Berkett and his
the strategy, or that fail to deliver the
team knew that freeing up resources from
expected outcomes.
activities that were just distractions
Aligning projects against a
would enable them to integrate the
strategy requires the strategy itself to
networks, fix the billing and
Rise in
be sufficiently well articulated to
installation issues, and start to
customer
enable us to understand how a
develop products that would really
advocacy
project will contribute to successful
show their customers the value of
execution.
superfast broadband.
We often see tools such as the Balanced
The team persisted despite market
Scorecard, and strategy maps in particular,
skepticism, and their conviction has
being used to guide successful prioritisation.
rewarded shareholders and customers
As the creator of the Balanced Scorecard,
handsomely, with the share price rising from
Professor Robert Kaplan has said:“
a low of less than $5 (£3) in mid-2009 to
Strategy maps and scorecards teach people
around $30 (£18) today, and customer
where to fish.”
advocacy increasing over 30 per cent.
Once priorities are set, and the
So, on Monday, don’t just initiate a new
management team has the confidence to be
strategy execution process, but instead stop a
able to stick to them, the results are dramatic.
project that you know you should not be doing.
Virgin Media, formed by the merger of NTL,
Telewest and Virgin Mobile, and led by CEO
Jonathan Chocqueel-Mangan is
Neil Berkett, had a to-do list that was, at best,
managing director at leadership
daunting and, at worst, enough to risk sending
consultancy Tyler Mangan
the new organisation back into bankruptcy,
www.tylermangan.com
30%
Waste of breath: actions can often speak louder than words
INDUSTRY VIEW
“
Strategy is about deciding what not to do.”
These are the words of Harvard professor
Michael Porter and they ring out across
business schools and boardrooms all over the
world.
Yet most organisations set about executing
strategy by drawing up a list of actions that
everyone agrees will create value, and then
they fail to deliver them. The list is too long and
there are not enough resources to do
everything properly. It seems that in reality we
just can’t prioritise.
Most executives find prioritising difficult.
When we review the list of “key” investments,
we think that everything is critical. We know
that we don’t have enough resources to get
everything done, be that capital, capabilities or
management time.
So we try and spread what resources we
have across too many projects, we make do
with what we know is not ideal, and then we
wonder why progress is slow and behind plan.
Many organisations set out on the path of
strategy execution. The success stories all
feature ruthless prioritisation and robust
management dialogue about what does - and
more crucially what does not - need to be done.
Managing outcomes
In successful companies, management teams
spend valuable time together making sure
that investments are aligned to a clear