Strategy Is Execution: Why the Cascade of Choices Matters Most

Beyond the Budget: Strategy is Not Planning

Many organizations equate strategy with planning. Strategic planning often results in a long list of initiatives based on affordability, lacking internal coherence and failing to specify how these actions collectively achieve a company's goals. Planning is comforting because it focuses on managing risks and resources.

Strategy, however, is a theory of winning. It requires a coherent, doable theory about which playing field you choose and how you will be better than competitors at serving customers on that field. It's about choosing goals and risks, rather than just managing risks on a predetermined path. A truly great strategy can often be written on a single page, clearly stating where you choose to play and how you choose to win.

Rethinking Strategy-Making: What Would Have to Be True?

Traditional strategy often focuses on analyzing data about "what is true". But to break through impasses and create winning strategies, you need to focus on "what would have to be true" for a potential strategy to succeed.

• Moving from focusing on problems or issues to exploring possible solutions and choices.
• Generating strategic possibilities (essentially "happy stories" describing how a firm might succeed) that have internal logic but don't require proof upfront. This requires imagination, not just data analysis.
• Specifying the conditions that must hold true for each possibility to be a terrific choice. This isn't about arguing what is true, but articulating what needs to be true.
• Identifying the barriers by assessing which conditions are least likely to hold.
• Designing tests for these critical conditions, ideally led by the most skeptical team members.
• Conducting tests, starting with the conditions least likely to hold true, saving resources if a possibility is quickly ruled out.

This approach turns strategy into a structured process of hypothesis creation and testing, engaging the team in inquiry rather than just advocacy.

The Execution Trap: Strategy Is Execution

The widely accepted idea that strategy formulation and execution are distinct is deeply flawed. The dominant model sees strategy as decided at the top and then handed down for others to implement.

A more powerful model recognizes that execution is the same thing as strategy. It's a cascade of choices throughout the organization. Senior leaders make broad choices (e.g., "In what businesses will we participate?"), and people at lower levels make more constrained, specific choices that are bound by the decisions made above them (e.g., a branch manager's hiring decisions influenced by the company's retail banking strategy).

True empowerment isn't about getting employees to "buy in" to a strategy formulated elsewhere. It requires leaders to explain the upstream choices and their rationale so that those downstream can make effective choices within that context.

Where Winning Truly Happens: The Front Line

Many companies view competition as a battle between organizations, managed from headquarters. But competition actually happens at the front line, around individual customers.

Peter Drucker was right: the primary purpose of a business is to acquire and keep customers.

Therefore, the role of every level of the organization above the front line is to help the level below serve the customer better.

Sustainable advantage isn't always about offering the perfect solution, but the easy one. You build cumulative advantage by helping customers avoid having to make a conscious choice, reinforcing comfortable buying habits. This involves becoming popular early, simplifying communication, and focusing on ease of access and habit reinforcement.

Talent: Feeling Special Trumps Compensation

In the knowledge economy, high-end talent is powerful because their unique skills are not easily replaced. While compensation is a factor, truly talented individuals are rarely solely or even highly motivated by pay.

The secret to managing top talent is making them feel like valued individuals; feeling special is more important than compensation. Treat them not just as members of a group, but as unique contributors. This means:

• Never dismiss their ideas: Talented people want input into how they apply and develop their skills. Blocking their path will lead them to seek opportunities elsewhere.
• Never block their progress: Ensure they have opportunities to grow and apply their unique capabilities.
• Never miss the chance to praise them: Recognize their specific accomplishments and acknowledge their evolution as individuals. Individualized praise is far more effective than generic recognition.

Innovation Requires Designing the Intervention

Creating innovative products or services (the "artifact") is only half the battle. Many great ideas sit on shelves because the focus wasn't placed on designing the intervention – the process that gets the innovation approved and successfully launched.

Bringing innovation to life requires a process of iterative interaction not just with users or customers, but crucially, with the decision makers or stakeholders who need to approve and adopt the change. By involving them early and often in defining the problem, exploring possibilities, and affirming analyses, the proposed innovation builds commitment gradually and is no longer a "jolt from left field".

Capital & M&A: Value is in Expectations and Giving

Traditional accounting sees capital investments on the balance sheet at cost less depreciation. However, capital markets constantly value companies based on expectations of future value creation, resetting the value of capital as soon as it is embedded in an asset. Investments in less convertible assets like facilities, brands, or patents are how companies use unfettered capital to create value. Using historical book values to calculate returns can be misleading and hide value-destroying investments.

Similarly, the dominant model in M&A is acquiring companies primarily for their assets or capabilities. A more effective model is to focus on how the acquirer can provide more value to the acquired entity than it receives. This could be through providing smarter capital, better management, transferring skills, or sharing valuable capabilities. Many M&A deals fail to create value and are often driven by perverse incentives for CEOs. Shifting the mindset to focus on giving value to the target company can transform M&A into a successful growth strategy.

Start Rethinking Today

These are just a few of the areas where traditional management models may be holding you back. From how you view competition and manage functions to executing strategy and investing capital, challenging the status quo is essential for superior effectiveness.

Don't blame yourself for models that aren't working. Experiment with alternative models. Watch the results, refine your approach, and contribute to advancing the practice of management. This is your guide to superior management effectiveness.