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The gap between strategy and execution is commonly talked about. But our data suggests that the reality is more complicated than that. It is time to look at ‘the gap' in a new way.
The Strategy-Execution Gap
People have been talking about a gap between strategy and execution for a long time. While intuitive, it can result in an over-simplification of the problem. As any leader who has faced this challenge knows, the issue is complex and difficult to resolve.
Yes, there is a gap, indeed several gaps:
- The gap between confidence in execution and the ambition of strategy.
- The gap between the vision and the reality, or between the target set and the results delivered.
- The gap between those who created the strategy (typically one or a few at the top of the organization) and those who must implement it (the rest of the organization, especially those at the front line).
However, the old thinking about the gap between strategy and execution hasn’t helped solve the challenge of bringing ambitious strategies to life. That is because the issue is more complicated than good or bad execution or even good or bad strategy. It is time to apply some new thinking to this old problem.
The Strategy-Execution Gap Re-Imagined
Why do so many ambitious strategies struggle with respect to execution? Well, look more closely, and you will see that the gap between strategy and execution is, in reality, the gap between performance and transformation.
Different types of strategies place different demands on execution. In particular, the gap between strategy and execution is greatest in respect of those strategies that entail transformation. They are what we call ‘Big Gap Strategies'.
As every leader knows, strategy has two parts – performance and transformation.
Those strategies or aspects of strategy that focus on Performance concern themselves with meeting the number this quarter and the next. These are what we call ‘Low Gap Strategies'. That is because this is ‘business as usual' – the usual products, channels, markets, processes, etc. When in ‘performance mode':
- The organization has to keep doing – tweaking and optimizing it along the way – but otherwise not diverting from a well-worn path.
- The role of management in this environment is to ensure visibility, predictability and control, with a heavy reliance on structures, systems, procedures and so on.
- The demand for change and innovation is minimal, so it is the usual way of working. All this means that executing the strategy is relatively straightforward.
Here is a summary of the characteristics of a ‘performance-focused’ strategy. Where these apply, a high level of confidence regarding execution is likely.
While maximizing today’s performance, organization’s must also adapt and innovate to ensure long-term success in an increasingly unpredictable and fast-changing world. This is the ‘transform’ aspect of strategy, where the gap between strategy and execution is greatest.
Such change and transformation may involve new products, channels, business models, modes of delivery and so on. Also, new organizational structures, systems and even cultures. In other words this is ‘business unusual'.
Executing on a business unusual strategy is typically where the greatest challenges arise – the biggest gaps too. This is because business unusual demands innovation and entails greater risk and uncertainty. Thus, the gap between strategy and execution can be seen as the gap between business as usual (BAU) and business unusual.
Typically, the transformative aspect of strategy requires greater speed, agility, and cross-functional collaboration. All this adds up to new ways of working that present challenges for ‘business as usual’ companies organized in a top-down hierarchy with functional reporting lines.
Business Unusual brings with it the twin dangers of hidden complexity and misplaced certainty. Traditionally linear approaches to planning struggle when the requirement is to be able to ‘see around corners‘. Curiosity, humility, experimentation and fast learning are essential. So too multiple perspectives.
SOLUTIONS & SERVICES: Here are some of the ways that our research & insights are put to work by our clients: