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February 4, 2016

Editor's Choice: Strategy That Works: How Winning Companies Close the Strategy-To-Execution Gap

By: Dylan Schleicher @ 9:41 AM – Filed under: Innovation & Creativity, Leadership & Strategy

Strategythatworks

Strategy That Works: How Winning Companies Close the Strategy-To-Execution Gap by Paul Leinwand & Cesare R. Mainardi, with Art Kleiner, Harvard Business Review Press, 288 pages, $32.00, Hardcover, February 2016, ISBN 9781625275202

You might expect a book coming from institutions like the Harvard Business Review and consulting firm Strategy& to be a bit traditional, safe, or stodgy. A title like Strategy That Works: How Winning Companies Close the Strategy-To-Execution Gap doesn’t do anything to belie that expectation. But Paul Leinwand and Cesare R. Mainardi, along with Art Kleiner, have written a book that upends that expectation, disenchants the reader with the strategy dogma of the day, and replaces it with a new proposition.

In Strategy That Works, the authors explain why the current, cookie cutter conventional wisdom of business strategy is misguided, and espouse five acts of unconventional leadership to replace them.

Conventional management practices lead to conventional strategies, and because such strategies are not specific to your company, there’s a good chance it won’t fit. (Think of last week’s review in which we discussed how anything designed to fit “the average” ends up effectively fitting no one.) Companies become truly successful by differentiating themselves and their capabilities from other organizations.

So rather than a focus on growth and chasing down any opportunity for it, which often leads to organizations getting trapped in a “growth treadmill” that never ends, the authors want you to commit to an identity. Rather than trying  to pursue functional excellence, “striving to be world-class at everything but mastering nothing,” they would have you translate the strategic to the everyday. Rather than having to reorganize your entire organization to drive change, they suggest you put your culture to work. Rather than go lean and cut costs across the board, they explain how you should cut the nonessentials so that you can more heavily invest in the things that really matter, how to cut costs to grow stronger. And rather than attempting to become agile and resilient, reacting to the market winds and constantly changing course, the authors teach you how to shape your future.

Each of those five acts gets its own chapter. As the authors see it, these are not five separate strategies, but five pieces of a holistic approach to company strength and wellness. Following this approach may lead to a rather idiosyncratic company, but that is a strength in itself. It means no one can copy you. Companies, like individuals, each have a separate makeup and history that makes what they offer the world unique. And each of the fourteen companies the authors focus on closely in Strategy That Works (and the many others they look at from a greater distance) are idiosyncratic, which leads to differentiated capabilities unique to them and a stronger position because of it. Speaking of the companies they chose to profile, they write:

[A]t first glance, they seem to have little in common, and they are rarely thought of together. And yet, they have all built the kind of differentiating capabilities that give them a major strategic advantage.

Capabilities are the link between strategy and execution. They are the place where a company truly differentiates itself, and where the work takes place. But it’s not enough to simply have good capabilities; all companies have them, or they couldn’t compete. A truly winning company is one that manages itself around a few differentiating capabilities—and deliberately integrates them. When companies accomplish this, we say they are coherent.

 

My favorite part of that quote is the acknowledgement that a company’s capabilities are “where the work takes place.” Because even the wisest management theory and most carefully constructed strategy in the world isn’t going to work if it isn’t executable “where the work takes place.” That means it has to be understood and implemented almost seamlessly across the organization. To be a coherent company, the strategy needs to be coherent—almost obvious—to those executing it on the ground floor. Or as the authors put it:

[W]e articulated some of the tangible reasons why coherence yields these benefits: it leads to greater effectiveness, greater efficiency, more focused investment, and an atmosphere where every employee understands what the company does well, how their efforts fit in, and how all of this creates value.

 

The ultimate goal is, of course, to close the gap between strategy and execution. And the best way to do that is understand your organization and what you already do well:

Your strategy is no longer just about where you go or where to grow. Now, it’s primarily about who you are and what you’re great at.

 

Reading a book that peels back the layers of organizations like this causes any reader to reflect on their own company. That became even truer for me as the authors discussed the importance of putting company culture to work. While we can certainly always do better here at 800-CEO-READ, I think we have a solid foundation in all five acts of unconventional leadership, but I believe it is our commitment to our culture that has kept so many of us here for so long. Like many companies, we’ve gotten off track at times, but we’ve also had near uprisings amongst our employees to protect the identity and the culture we’ve built over the years. Since this review is in danger of becoming too self-aware, I’ll wrap this up by simply saying that this book reinforces that fighting for our culture was the right thing to do.

But it’s not just us. When the authors asked the leaders of the companies they had found that closed the strategy-to-execution gap what their company’s biggest asset was, “they nearly always named their culture.”

In a coherent company, the elements of the culture, often dismissed as merely personal, reinforce what the company is trying to be.

 

IKEA CEO Peter Agnefjäll, speaking to why their culture is such a differentiating strength, says:

You could copy our Billy bookcase or the retailing format or our warehouses, but how do you copy our culture?

 

It is that non-duplicability that makes it such a strength. And when people find a culture they enjoy working in, they tend to stick around.

But while all cultures are unique to the companies they exist in, all the companies they studied all seem to have three facets in common: “emotional commitment, mutual accountability, and collective mastery.” So rather than focusing on culture change efforts that almost always prove futile, the authors will teach you how to identify the aspects of your existing culture that align with the companies identity, find and tell stories that support it, and “accelerate the cultural evolution already going on there.” But it all has to be based on what your company believes and already does well:

The culture reflects not just what people believe, but what they do exceptionally well. Behaviors lead to stories, stories engender new behavior, and everything ties in with the value proposition and capabilities system.

 

In other words, your company culture is not just about your values; it is about the value your company creates. Closing the gap that exists between your strategy and execution enhances that value.

The surest way to do that, and what I believe the book boils down to (if I may be so bold), is this: define the underlying identity and strengths of your company and the people in it, align your strategies to the unique and idiosyncratic value that exists in that strength, support and spread the authentic storylines and behaviors within your company that support those strengths, cut bait and costs on everything else so you can invest in what you do best, and build the future of your business on that unique vision and value you have to offer your customers and the world.

So, rather than chasing what you think is working elsewhere or trying to implement others’ best practices, staying true to what is unique about your organization and your employees and strengthening those capabilities turns out to be a strategy that works.


About Dylan Schleicher


Dylan Schleicher has been a part of the 800-CEO-READ claque since 2003. Even though he's stayed on at the company, he has not stayed put. After beginning in shipping & receiving, he joined customer service and accounting before moving into his current, highly elliptical orbit of duties overseeing the ChangeThis and In the Books websites, the company's annual review of books and in-house design. He lives with his wife and two children in the Washington Heights neighborhood on Milwaukee's West Side.