Too many businesses fail to make the connection between strategy and implementation.
Having great ideas is terrific, but they won’t do you much good if you can’t execute them. Years ago, Sam Walton may have suspected that high volume and low prices would lead to extraordinary retail success, but he understood that he would need a dependable system to deliver the goods. This practical manual supplements clear explanations with sidebars that call attention to common stumbling blocks and offer useful tips, lists, charts, sample plans and forms, and with chapter summaries. The book also includes an appendix that provides worksheets, the address of a companion Web site, a glossary and useful suggestions for further reading. getAbstract believes that any executive or manager will be able to relate to the book’s underlying message: If you’re going to do something, do it right.
Making Strategy Work
Military commanders understand that even the best battle plan is useless unless their
soldiers can carry it out. The same principle applies to business strategy. But proper
implementation is not enough to ensure success. Businesses must create a “competitive
advantage” that separates them from their rivals. Survival depends on offering the
customer a better product or service. For example, Southwest Airlines established its
competitive niche and distinguished itself from other air carriers by offering low fares
and superior customer service. eBay created a unique way for people to buy and sell
merchandise, and established the standard for online auctions.
Sound business strategy takes into account an organization’s strengths, limitations, and
long- and short-term objectives. Unlike a “business model,” which defines how a company operates, strategy describes the methods it will use to gain the competitive upper hand.
The “SWOT” Team
The first step in formulating a business strategy is analyzing four key aspects of your
business environment. Remember them with the acronym SWOT:
• “Strengths” – Abilities you can “leverage.”
• “Weaknesses” – What’s getting in your way?
• “Opportunities” – “Trends, forces, events and ideas” that will help you advance.
• “Threats” – These may be outside your control, but you must respond to them.
Look at the external factors, opportunities and threats, first. Social and cultural changes
can alter the business landscape. For example, fast-food restaurants must respond to
consumers’ new concerns about healthy eating or risk losing market share. Computer
companies that react slowly to changes in technology and customer preferences will also
lose ground. Corporations that are not sensitive to economic conditions and their effects
on consumers are bound to falter.
Next, look inward at your business’s “core competencies.” Select a trusted, impartial
individual to lead a SWOT team with representatives from various departments that will
analyze your company’s internal strengths and weaknesses.
The team should examine these kinds of questions: Are customers satisfied with the
quality of the company’s products and distribution channels? Do new products get to
the market quickly? Do customers identify with the brand? Is the company financially
stable? Can it access capital when it needs to? Do managers and employees work well
together? Can they adapt to change?
The best way to measure your core competencies is to compare them to those of the
companies that set the standards in your industry. When Xerox started to experience
customer service problems, it sent a team to Freeport, Maine, to learn how mail-order
expert L.L. Bean processed requests so efficiently.
Once the team has collected the data it needs, it should get together for a brainstorming
session, with the facilitator listing everyone’s ideas on a flip chart. The first objective
of the meeting is to arrive at a consensus about the company’s top three strengths. Next,
determine weaknesses. Include the SWOT team’s findings in a report for top management and others involved in creating the strategic plan.
Basic Strategic Approaches
Four primary strategies create and sustain market presence and increase profitability:
1. “Low-cost leadership” – Companies such as Wal-Mart offer their products or
services at lower prices than the competition. This strategy requires highly efficient
production and distribution.
2. “Product/service differentiation” – Ford, Chrysler and Toyota all sell cars, but
Toyota’s customers believe Japanese automobiles are the most dependable. Maytag
stresses reliability to differentiate its washing machines from others.
3. “Customer relationship” – This strategy focuses on customer service. It explains
why small operations can remain viable despite the looming presence of giant chain
stores. Customers are willing to pay premium prices for quality and service.
4. “Network effect” – Growth begets growth. For example, as more people accepted
eBay, which was very novel at first, its user network grew and exponentially attracted
even more customers.
Putting Strategy into Action
Implementation is arguably more important than strategy. Unless properly executed, a
strategic plan is worth little more than the paper on which it’s printed. All employees
should become involved with implementation – and to do so, they must have the right
skills and experience. Thus, implementation may require you to offer additional training,
provide incentives or bring in new workers who are more attuned to the organizational
mission. Establish performance goals and reward good performance.
How you organize your business also affects implementation. Align the business
hierarchy, and the relationships and functions of the various divisions and departments,
according to the requirements of your strategic plan.
Company leadership and culture are crucial. Initiatives that lack management support are
doomed, as are those that conflict with company values and culture – which may be difficult
to change. For example, a strategy that encourages employee creativity probably will not work
in an organization with little tolerance for mistakes. Always match strategy and culture.
Your Game Plan
Just as a football team develops a game plan before running onto the field, organizations
must create a written “action” plan before beginning implementation. Set realistic,
specific, measurable objectives, such as the exact number of widgets your company plans
to sell each quarter. Then figure out the steps you’ll need to take to reach your goals and
what resources you’ll require. Do departments have enough staff? Can employees handle
additional responsibilities? Will you need new technology? Do you have the money for
supplemental training or supplies? What are the financial implications of the strategy?
Keep these pointers in mind as you construct your action plan:
• “Keep it simple” – Complex plans confuse and annoy managers and employees.
Don’t make life any harder than it has to be.
• “Involve the people who will execute the plan” – This creates a sense of ownership.
Show employees that they matter.
• “Structure your action plan in achievable chunks” – Grandiose plans may be
discouraging, not encouraging. Employees will rebel if you overwhelm them.
• “Specify roles and responsibilities” – Employees should understand their tasks, and
accept responsibility and accountability for results.
• “Make it fl exible” – Don’t expect perfect execution. Stuff happens. Your plan should
have room for changes in schedule, resources and the market.
Stay the Course
You’re not being realistic if you think you can create and implement a foolproof plan.
Sometimes, it becomes painfully clear right away that the company won’t meet its
sales goals and financial objectives. Although such problems probably stem from
execution, not strategy, minimize the damage by systematically tracking and monitoring
implementation. Weekly or monthly progress reviews enable you to make timely
adjustments. One- or two-page written quarterly reports to senior managers should focus
on accomplishments, issues and dilemmas. Executives who turn a deaf ear to problems,
insisting that supervisors handle any difficulties with implementation, may exacerbate
the situation. Insist on keeping senior management in the loop.
Action plans go off track for these reasons:
• Expansion or reduction – Engineers add a component to a new product, extending the
manufacturing time. Or, they decide to eliminate a production step to save time and
money. Require everyone to inform the appropriate supervisor before making changes.
• Insuffi cient resources – As the action plan unfolds, employees realize they do not
have enough time to work on the new initiative. Build in some padding. Anticipate
shortfalls in staff, equipment and money.
• Lack of cooperation – Another division whose help you need doesn’t deliver. Upper
management is responsible for establishing collaborative guidelines and insisting
they be followed.
• Resistance – Change upsets people, for many reasons. They may feel threatened,
scared or insecure. Carefully explain the benefi ts of a new initiative to prevent too
much anxiety. Reassign employees who are determined not to cooperate.
All Aboard
Ultimately, your employees will determine the success or failure of your plan. Make sure
you have the right people in place. Be aware that egotists, backstabbers and recalcitrants
can sabotage attempts to create team chemistry and, if possible, isolate destructive
individuals. If you must include them, bring in an executive to explain the serious
consequences of not cooperating.
Strategy implementation is a roller coaster ride with peaks, valleys, and unexpected
twists and turns. Acknowledging progress or milestones will help employees maintain
their enthusiasm and commitment. Show your appreciation by taking team members out
to lunch or giving them the afternoon off. Acknowledge outstanding contributors with
movie tickets or gift certificates.
However, don’t get carried away and give the impression that all the hard work is
finished, or employees may lose their momentum. Keep the lines of communication open.
Reiterate the importance of the project, and how it will benefit the organization and the
individuals within it. Be realistic about challenges and obstacles, but try to establish a
positive overall tone.
Keep Your Eyes Open
Companies with a successful strategy frequently cruise along without giving much
thought to new strategy. But executives must monitor key indicators such as financial
reports and market trends to determine if a strategy requires tweaking or is obsolete.
Balance sheets clearly show whether profit margins are acceptable, but identifying
changes in the market is more challenging.
Look at questions such as these: Are you growing – or at least maintaining – your customer
base? Are your prices still competitive? Are customers satisfied with your company’s
service or have you heard complaints? How are people reacting to your new products?
Remember that imitation is the sincerest form of flattery. Other companies will always
copy your good ideas and products. Sustain your competitive edge with customers by
emphasizing the advantages of your products or services. If what you offer is not unique,
competitors will try to enter your market. Even Apple, with its dominant iPod, is not safe,
as companies such as Sony and Dell try to carve out their own niches.
Technological changes can be swift and stunning. For decades, Kodak was the leader in
“chemical-based photography,” but it was slow to react to the development and growing
popularity of digital photography. Kodak adjusted, though whether the company will remain
viable is not yet clear. Keep your eye on emerging technological and social trends, and put
mechanisms in place to evaluate their potential for causing serious damage to your company.
About the Authors
The Harvard Business Essentials series, which began in 2002, provides advice, coaching,
information and guidance on business topics. Drawing on content from Harvard Business
School Publishing and other sources, these guides provide a practical resource for readers in a
variety of fields. To assure quality, a specialized content adviser closely reviews each volume
Having great ideas is terrific, but they won’t do you much good if you can’t execute them. Years ago, Sam Walton may have suspected that high volume and low prices would lead to extraordinary retail success, but he understood that he would need a dependable system to deliver the goods. This practical manual supplements clear explanations with sidebars that call attention to common stumbling blocks and offer useful tips, lists, charts, sample plans and forms, and with chapter summaries. The book also includes an appendix that provides worksheets, the address of a companion Web site, a glossary and useful suggestions for further reading. getAbstract believes that any executive or manager will be able to relate to the book’s underlying message: If you’re going to do something, do it right.
Making Strategy Work
Military commanders understand that even the best battle plan is useless unless their
soldiers can carry it out. The same principle applies to business strategy. But proper
implementation is not enough to ensure success. Businesses must create a “competitive
advantage” that separates them from their rivals. Survival depends on offering the
customer a better product or service. For example, Southwest Airlines established its
competitive niche and distinguished itself from other air carriers by offering low fares
and superior customer service. eBay created a unique way for people to buy and sell
merchandise, and established the standard for online auctions.
Sound business strategy takes into account an organization’s strengths, limitations, and
long- and short-term objectives. Unlike a “business model,” which defines how a company operates, strategy describes the methods it will use to gain the competitive upper hand.
The “SWOT” Team
The first step in formulating a business strategy is analyzing four key aspects of your
business environment. Remember them with the acronym SWOT:
• “Strengths” – Abilities you can “leverage.”
• “Weaknesses” – What’s getting in your way?
• “Opportunities” – “Trends, forces, events and ideas” that will help you advance.
• “Threats” – These may be outside your control, but you must respond to them.
Look at the external factors, opportunities and threats, first. Social and cultural changes
can alter the business landscape. For example, fast-food restaurants must respond to
consumers’ new concerns about healthy eating or risk losing market share. Computer
companies that react slowly to changes in technology and customer preferences will also
lose ground. Corporations that are not sensitive to economic conditions and their effects
on consumers are bound to falter.
Next, look inward at your business’s “core competencies.” Select a trusted, impartial
individual to lead a SWOT team with representatives from various departments that will
analyze your company’s internal strengths and weaknesses.
The team should examine these kinds of questions: Are customers satisfied with the
quality of the company’s products and distribution channels? Do new products get to
the market quickly? Do customers identify with the brand? Is the company financially
stable? Can it access capital when it needs to? Do managers and employees work well
together? Can they adapt to change?
The best way to measure your core competencies is to compare them to those of the
companies that set the standards in your industry. When Xerox started to experience
customer service problems, it sent a team to Freeport, Maine, to learn how mail-order
expert L.L. Bean processed requests so efficiently.
Once the team has collected the data it needs, it should get together for a brainstorming
session, with the facilitator listing everyone’s ideas on a flip chart. The first objective
of the meeting is to arrive at a consensus about the company’s top three strengths. Next,
determine weaknesses. Include the SWOT team’s findings in a report for top management and others involved in creating the strategic plan.
Basic Strategic Approaches
Four primary strategies create and sustain market presence and increase profitability:
1. “Low-cost leadership” – Companies such as Wal-Mart offer their products or
services at lower prices than the competition. This strategy requires highly efficient
production and distribution.
2. “Product/service differentiation” – Ford, Chrysler and Toyota all sell cars, but
Toyota’s customers believe Japanese automobiles are the most dependable. Maytag
stresses reliability to differentiate its washing machines from others.
3. “Customer relationship” – This strategy focuses on customer service. It explains
why small operations can remain viable despite the looming presence of giant chain
stores. Customers are willing to pay premium prices for quality and service.
4. “Network effect” – Growth begets growth. For example, as more people accepted
eBay, which was very novel at first, its user network grew and exponentially attracted
even more customers.
Putting Strategy into Action
Implementation is arguably more important than strategy. Unless properly executed, a
strategic plan is worth little more than the paper on which it’s printed. All employees
should become involved with implementation – and to do so, they must have the right
skills and experience. Thus, implementation may require you to offer additional training,
provide incentives or bring in new workers who are more attuned to the organizational
mission. Establish performance goals and reward good performance.
How you organize your business also affects implementation. Align the business
hierarchy, and the relationships and functions of the various divisions and departments,
according to the requirements of your strategic plan.
Company leadership and culture are crucial. Initiatives that lack management support are
doomed, as are those that conflict with company values and culture – which may be difficult
to change. For example, a strategy that encourages employee creativity probably will not work
in an organization with little tolerance for mistakes. Always match strategy and culture.
Your Game Plan
Just as a football team develops a game plan before running onto the field, organizations
must create a written “action” plan before beginning implementation. Set realistic,
specific, measurable objectives, such as the exact number of widgets your company plans
to sell each quarter. Then figure out the steps you’ll need to take to reach your goals and
what resources you’ll require. Do departments have enough staff? Can employees handle
additional responsibilities? Will you need new technology? Do you have the money for
supplemental training or supplies? What are the financial implications of the strategy?
Keep these pointers in mind as you construct your action plan:
• “Keep it simple” – Complex plans confuse and annoy managers and employees.
Don’t make life any harder than it has to be.
• “Involve the people who will execute the plan” – This creates a sense of ownership.
Show employees that they matter.
• “Structure your action plan in achievable chunks” – Grandiose plans may be
discouraging, not encouraging. Employees will rebel if you overwhelm them.
• “Specify roles and responsibilities” – Employees should understand their tasks, and
accept responsibility and accountability for results.
• “Make it fl exible” – Don’t expect perfect execution. Stuff happens. Your plan should
have room for changes in schedule, resources and the market.
Stay the Course
You’re not being realistic if you think you can create and implement a foolproof plan.
Sometimes, it becomes painfully clear right away that the company won’t meet its
sales goals and financial objectives. Although such problems probably stem from
execution, not strategy, minimize the damage by systematically tracking and monitoring
implementation. Weekly or monthly progress reviews enable you to make timely
adjustments. One- or two-page written quarterly reports to senior managers should focus
on accomplishments, issues and dilemmas. Executives who turn a deaf ear to problems,
insisting that supervisors handle any difficulties with implementation, may exacerbate
the situation. Insist on keeping senior management in the loop.
Action plans go off track for these reasons:
• Expansion or reduction – Engineers add a component to a new product, extending the
manufacturing time. Or, they decide to eliminate a production step to save time and
money. Require everyone to inform the appropriate supervisor before making changes.
• Insuffi cient resources – As the action plan unfolds, employees realize they do not
have enough time to work on the new initiative. Build in some padding. Anticipate
shortfalls in staff, equipment and money.
• Lack of cooperation – Another division whose help you need doesn’t deliver. Upper
management is responsible for establishing collaborative guidelines and insisting
they be followed.
• Resistance – Change upsets people, for many reasons. They may feel threatened,
scared or insecure. Carefully explain the benefi ts of a new initiative to prevent too
much anxiety. Reassign employees who are determined not to cooperate.
All Aboard
Ultimately, your employees will determine the success or failure of your plan. Make sure
you have the right people in place. Be aware that egotists, backstabbers and recalcitrants
can sabotage attempts to create team chemistry and, if possible, isolate destructive
individuals. If you must include them, bring in an executive to explain the serious
consequences of not cooperating.
Strategy implementation is a roller coaster ride with peaks, valleys, and unexpected
twists and turns. Acknowledging progress or milestones will help employees maintain
their enthusiasm and commitment. Show your appreciation by taking team members out
to lunch or giving them the afternoon off. Acknowledge outstanding contributors with
movie tickets or gift certificates.
However, don’t get carried away and give the impression that all the hard work is
finished, or employees may lose their momentum. Keep the lines of communication open.
Reiterate the importance of the project, and how it will benefit the organization and the
individuals within it. Be realistic about challenges and obstacles, but try to establish a
positive overall tone.
Keep Your Eyes Open
Companies with a successful strategy frequently cruise along without giving much
thought to new strategy. But executives must monitor key indicators such as financial
reports and market trends to determine if a strategy requires tweaking or is obsolete.
Balance sheets clearly show whether profit margins are acceptable, but identifying
changes in the market is more challenging.
Look at questions such as these: Are you growing – or at least maintaining – your customer
base? Are your prices still competitive? Are customers satisfied with your company’s
service or have you heard complaints? How are people reacting to your new products?
Remember that imitation is the sincerest form of flattery. Other companies will always
copy your good ideas and products. Sustain your competitive edge with customers by
emphasizing the advantages of your products or services. If what you offer is not unique,
competitors will try to enter your market. Even Apple, with its dominant iPod, is not safe,
as companies such as Sony and Dell try to carve out their own niches.
Technological changes can be swift and stunning. For decades, Kodak was the leader in
“chemical-based photography,” but it was slow to react to the development and growing
popularity of digital photography. Kodak adjusted, though whether the company will remain
viable is not yet clear. Keep your eye on emerging technological and social trends, and put
mechanisms in place to evaluate their potential for causing serious damage to your company.
About the Authors
The Harvard Business Essentials series, which began in 2002, provides advice, coaching,
information and guidance on business topics. Drawing on content from Harvard Business
School Publishing and other sources, these guides provide a practical resource for readers in a
variety of fields. To assure quality, a specialized content adviser closely reviews each volume
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