The Hidden Dimension of Strategy Validation

The logic of validation allows us to move between the two limits of dogmatism and skepticism.
~Paul Ricoeur

It is too often the sad truth that the only way we find out whether a strategy was good or bad is after it is implemented.  And then it gets confusing as to what caused the strategy to fail.  Was it a bad strategy or was it just badly implemented? This chicken and egg argument is currently rampant in academic business circles and in the literature on strategy.

Whenever I am asked to come into an organisation by the CEO and help improve performance through effective strategy execution, one of the first things I do is spend time validating the strategy.

Now there are a myriad of ways one can go about this.  Most strategy validation exercises conducted by the big consulting firms involve lots of market research, weeks of data analysis, and analysing the company strategy versus current and future market trends.  This is an important piece of the strategy validation process.

However, I have been surprised that even when the strategy gets the green light from the consulting firm, the strategy may still fail.  Ah, you are saying, poor execution is the culprit.  Maybe you are right, but it would be great if there was a better early warning signal that the strategy might fail, instead of waiting for 12 months to determine the outcome.

My approach to strategy validation has less to do with market and customer analysis and more to do with evaluating the alignment and commitment of the senior leadership team.

Here’s a good example.  Several years ago I was asked by the new CEO of a major european manufacturer to help with their turnaround through improved strategy execution.  He needed to it happen as they were losing both market share and millions of dollars.  The CEO was experienced, knew the business inside and out and had developed, along with a few other of his senior executives, an excellent turnaround plan.  The market research was solid, the financials stacked up and the forecasts were favourable. It was a good plan.

He asked me about his turnaround plan.  I told him it was going to fail.  And he’s why?

I had spent a week talking one-on-one with all the members of the senior team, a large number of key next level leaders and managers, and developing and implementing an on-line survey to all middle managers and above. My assessment was that this team, one of the most knowledgable in the industry, could not work well together.  And for the new go forward plan to succeed, it would take excellent cross functional teamwork and sharing of resources, especially since the turnaround plan also required considerable cost cutting to get the financials in line with the realities of the marketplace.

Over the past 30 years I have discovered that alignment, or in a case like this lack of alignment at the top, is a critical factor in deciding whether a strategy is valid or not for a business.  And this deciding factor is often overlooked and undervalued for its impact on the ability of a business to perform.  In this case precious time would be wasted in meetings where the senior executives would argue, defend their functional silos, play politics to look good in front of the new boss, and hoard resources. The had no common agenda since they were measured and compensated on functional objectives more than how well the overall business performed.

As a result of this insight, the new CEO revised the compensation of the senior team to focus totally on the turnaround of the company, instituted a Line-of-Sight execution roadmap that linked objectives across functions, pinpointed specific enterprise initiatives, and spelled out clear accountabilities within the strategy for each member of the senior team.  He had changed the “leadership processes” and as a result, created a shift in the leadership culture towards more collaboration and teamwork.

The company broke even the first year and made a significant profit in year two as well as reversing the downward slide of market share.  A good strategy delivered by a good team.

Strategy validation is more than just analytics and market insights.  There are people insights as well.

Tight Lines . . .

John R Childress

E | john@johnrchildress.com      T | +44 207 584 3774      M | +44 7833 493 999

About johnrchildress

John Childress is currently Visiting Professor in Strategy and Culture at IE Business School in Madrid and a pioneer in the field of strategy execution, culture change, executive leadership and organization effectiveness, author of several books and numerous articles on leadership, an effective public speaker and workshop facilitator for Boards and senior executive teams. In 1978 John co-founded The Senn-Delaney Leadership Consulting Group, the first international consulting firm to focus exclusively on culture change, leadership development and senior team alignment. Between 1978 and 2000 he served as its President and CEO and guided the international expansion of the company. His work with senior leadership teams has included companies in crisis (GPU Nuclear – owner of the Three Mile Island Nuclear Plants following the accident), deregulated industries (natural gas pipelines, telecommunications and the breakup of The Bell Telephone Companies), mergers and acquisitions and classic business turnaround scenarios with global organizations from the Fortune 500 and FTSE 250 ranks. He has designed and conducted consulting engagements in the US, UK, Europe, Middle East, Africa, China and Asia. Currently John is an independent advisor to CEO’s, Boards, management teams and organisations on strategy execution, corporate culture, leadership team effectiveness, business performance and executive development. John was born in the Cascade Mountains of Oregon and eventually moved to Carmel Highlands, California during most of his business career. John is a Phi Beta Kappa scholar with a BA degree (Magna cum Laude) from the University of California, a Masters Degree from Harvard University and was a PhD candidate at the University of Hawaii before deciding on a career as a business entrepreneur in the mid-70s. In 1968-69 he attended the American University of Beirut and it was there that his interest in cultures, leadership and group dynamics began to take shape. John Childress resides in London and the south of France with his family and is an avid flyfisherman, with recent trips to Alaska, the Amazon River, Tierra del Fuego, and Kamchatka in the far east of Russia. He is a trustee for Young Virtuosi, a foundation to support talented young musicians. You can reach John at john@johnrchildress.com or john.childress@theprincipiagroup.com
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