When faced with steering their firms in a new direction, CEOs can take months to craft a corporate strategy yet still fail to reach their destination. What’s missing to successfully translate strategy into action?
Beyond blockbuster ideas and the best-laid plans, successful strategic leadership is built from the ground up, from thousands of concrete actions interweaved into the firm’s day-to-day.
“Formulation and implementation shouldn’t be considered as separate processes,” says IESE Prof. Fabrizio Ferraro. “More importantly, they are not the outcome of a specific set of decisions, but rather the cumulative result of all of the decisions made by the executive team.”
When deliberating decisions, senior leaders should consider the strategic, operational and political implications, says Prof. Ferraro. Decisions that appear purely operational might actually have important strategic and political consequences. For each potential decision, executives should ask:
- Does it promote the long-term implementation of our strategy?
- Does it address operational priorities and demands?
- Does it align with the demands of critical stakeholders and strengthen their political position?
Working within this framework, Prof. Ferraro highlights seven areas that CEOs should zero in on when charting new paths for their firms:
- Resource development and allocation
Strategic planning and budgeting are moments of truth when the firm decides where to allocate its finite resources, defined in the broadest sense of the word: financial resources, physical resources, human resources and intangible resources such as time and attention.
- Organizational structure
To effectively address future challenges, some firms will need to reorganize their activities, redraw reporting lines and recalibrate as the strategy progresses. Structural decisions are key for companies focused on critical strategic challenges, but new structures should be considered as prototypes to revise as priorities shift.
- Talent pool
People are the linchpin for any change initiative. The first order of business for GMs is ensuring a solid executive team that’s aligned with the corporate strategy. They should also stay in the loop on other staffing decisions, particularly those that directly impact the new corporate direction.
- Management systems and processes
Although less noticeable than people and structures, management systems can be more crucial to winning strategies since they influence how things get actually done in organizations. Corporate, people and operational systems need to work in tandem to drive effective strategy implementation.
- Stakeholder engagement
Internal and external stakeholders play a pivotal role in the success or failure of corporate strategy in function with their alignment and level of understanding of the strategy. CEOs need to identify key stakeholder groups and map out their expectations to make sure they will help, not hinder, the process.
- Informal power structures
Since organizations are ultimately political coalitions, a CEO’s success will depend largely on their ability to cultivate relationships with people that support and advance their decisions. A keen understanding of the political landscape and sources of power within the organization is paramount.
To be successful, CEOs should spend an inordinate amount of time communicating to both internal and external stakeholders – employees, the corporate board, clients, business partners, the media – and the list goes on. They need to be adept at distilling the core of a strategy down to its essence in easy-to-understand language customized for each stakeholder.
Getting Things Done (GTD) is an intensive four-day program that helps senior decision-makers build influence and drive corporate strategies within their organizations. The next editions will be held October 9-11, 2019, on IESE’s New York campus and May 19-22, 2020, in Barcelona.
Written by business communicator and editor Suzanne Hogseth