In the world of business, it’s a sobering truth: most projects, initiatives, and companies often don’t realize their aspired goals. Whether it’s revenue enhancement, cost reduction, or customer satisfaction, many fall short. As discussed in The Space Between Strategy and Execution, “Most of these efforts may achieve a small portion of their desired results or even none at all.”
But where does this discrepancy stem from? A primary cause, as highlighted in the book, is the failure to “fully develop and execute their strategies. Execution is key.” Without the right execution, even the most brilliant strategies might falter and lose their essence in the real world.
It’s not an isolated observation. The Harvard Business Review, in its article “Turning Great Strategy Into Great Performance,” underscores a noticeable gap between the theoretical potential and the actual realized performance when strategy comes into play. Disappointingly, HBR’s research suggests “that companies on average deliver only 63% of the financial performance their strategies promise,” identifying a strategy-to-performance gap that occurs when the execution of the best-laid plans fails to measure up.
What’s even more alarming is the frequency with which organizations find their strategies unraveling when they transition from planning to the execution phase. Another insightful piece from HBR, “Why Strategy Execution Unravels—and What to Do About It”, shatters prevailing myths surrounding strategy execution. It unravels the sobering realities and challenges businesses face (many of which they may be oblivious to) from top-down communication gaps to a stubborn insistence on sticking to the plan – even if it’s not working.
Real-World Examples: Sears and Netflix
One such example is Sears, which for many years was the go-to destination for a wide range of products from tools to appliances to clothing. As competition from specialized retailers and big-box stores grew, Sears aimed to reposition itself, investing in its proprietary brands and attempting to revitalize its image. In the 2000s, under the leadership of Eddie Lampert, Sears merged with Kmart with the vision of leveraging combined assets and resources to reclaim market leadership. Sears also aimed to transition to a more integrated retail approach, emphasizing online sales in conjunction with its physical stores.
Yet, despite these strategic efforts, Sears encountered significant execution gaps that hindered its success, as detailed in The Big Store: Inside the Crisis and Revolution at Sears by Donald R. Katz. The merger with Kmart, instead of creating a retail juggernaut, led to operational inefficiencies and diluted brand identities. Their push into e-commerce, although timely, was inadequately executed, leaving them trailing behind digital-first giants like Amazon. Internally, the company grappled with management decisions that often fostered competition between divisions, reducing collaboration and alignment on overarching objectives. These missteps culminated in a stark reality: despite having a clear strategy in place, Sears faltered in its execution, illustrating the profound consequences of the gap between planning and implementation.
As a counterexample is the success of Netflix which can be attributed to its consistent foresight, adaptability, and seamless execution of strategic shifts. Initially starting as a DVD-by-mail service, Netflix astutely recognized the burgeoning potential of streaming technology. Instead of clinging to its original model, the company boldly pivoted to online streaming, investing heavily in both licensed content and producing its own original shows and movies.
Unlike Sears, which struggled with digital integration, Netflix’s foray into the online realm was timely and adeptly managed. Their continual reinvestment in content and technology, coupled with an understanding of evolving consumer preferences, allowed them to stay ahead of competitors. Furthermore, Netflix’s internal culture (highlighted in No Rules Rules: Netflix and the Culture of Reinvention by Reed Hastings and Erin Meyer) emphasizes freedom and responsibility, fostering an environment where innovative ideas and strategic alignment coexist. This harmony between vision and execution is a testament to the fact that with the right approach, companies can successfully bridge the strategy-execution gap.
The Pandemic’s Profound Impact on Strategy and Execution
The sudden onset of global events, especially the COVID-19 pandemic, disrupted the conventional business playbook. It underscored the critical need for businesses to not only chart out a clear strategy but also to ensure that there’s an agile and actionable pathway to its execution.
When the pandemic hit, many traditional businesses, like brick-and-mortar stores, found their revenue streams threatened. Their success was no longer about long-term strategies but about the immediate ability to adapt. Many restaurants, for example, which had predominantly relied on dine-in customers swiftly incorporated delivery models. The strategy was straightforward: adapt or perish. But its execution, involving the swift integration of digital platforms and maintaining service quality, was paramount.
Interestingly, the pandemic wasn’t solely a disruptor. It also unveiled opportunities for businesses prepared to pivot. For instance, Zoom, previously a business-focused video conferencing solution, witnessed an unprecedented influx of diverse users. Their strategy expanded to cater to a broader demographic, but execution was critical. They had to promptly address scalability, security, and user experience – all while ensuring service consistency.
The pandemic offered businesses a crash course in adaptability, demonstrating that the distance between strategy and execution needs to be short, clear, and flexible. While the challenges were plenty, they also served as a testament to human ingenuity and resilience. Firms that could align their immediate strategies with swift execution not only weathered the storm but emerged stronger, ready to navigate future uncertainties with agility and foresight.
Questions and Implications for the Modern Business
This raises some potent reflections, as posed by Gregg Harden in his book The Space Between Strategy and Execution: “What if your company failed less, and succeeded more? What would an extra 10% to 20% increase in performance do to your organization?” As emphasized in the book, it becomes pivotal to think introspectively on how your company can successfully develop a better business transformation process and/or evaluate your current process.
MIT Sloan Management Review, in its article “Closing the Gap Between Strategy and Execution,” adds another layer of perspective. The piece enumerates the organizational hurdles standing tall between strategy development and its practical application. It isn’t merely about designing a strategy; it’s about nurturing a company culture, creating adaptable processes, and ensuring that all organizational components are synchronized in the journey from ideation to realization.
The Space Between Strategy and Execution doesn’t claim to have all the answers, but it provides a beacon: “This guide will not provide you every step, every detail. What it will do is help you understand what’s important; what you should focus on,” emphasizing the need to continuously strive to be better than before. Indeed, success might not always be about having a detailed roadmap but more about understanding the terrains, acknowledging potential pitfalls, and being equipped with the right mindset and tools.
To further aid in this journey, the book generously provides sections at the end of each chapter to provide you with key questions to ask, common pitfalls and examples. This hands-on approach, combined with a reflection journal, ensures that readers aren’t just passive consumers but active participants in their strategic evolution.
The Pursuit of Continuous Improvement
In the relentless pursuit of success and greatness, it’s essential to remember that incremental progress is still progress. A resonating sentiment from the book beautifully captures this: “We all want to be the greatest; the best. But what if we just started by being better? Better than what we were yesterday; better than what we were last year.” It’s a call to action for continuous improvement, to constantly bridge the widening space between strategy and execution.
To navigate the space between strategy and execution, it’s essential to arm oneself with knowledge, be aware of pitfalls, and strive for consistent improvement. Let’s endeavor not just to set strategies, but to bring them to fruition.
Dive deeper into understanding the intricacies of strategy formulation and execution with The Space Between Strategy and Execution. Discover insights, reflective questions, and hands-on guidance to transform your business strategies into actionable results. Order your copy today!