For large corporations, these forces create major opportunities but also major threats. Opportunities, because those making the change fast enough will be on the winning side. And threats because whoever cannot change fast enough will soon be left behind. The race against time is on. A gold rush for some, Titanic for others.
Another group of professionals racing against time is private equity. Cut one year off the value creation period and your internal rate of return takes a jump to a whole new level.
This puts top management under a new kind of pressure. The magnitude of the change is bigger than ever, and it should be executed faster than ever. At the same time, the solutions for executing the change are pretty much the same as in the 1900s.
In most cases, personnel are highly professional and committed. Substantial resources are allocated to business intelligence and strategic advisors provide cutting-edge insight for decision-makers. So, why is actual change so difficult? Where does the slow execution begin?
TRAILMAKER works with the leading corporations and private equity companies where our concept has been repeated over 300 times. We have identified three recurring reasons for slow execution.
Firstly, there is a severe lack of a common view. Many organizations share a vision or the strategic intent but changing a ship's course requires more than that. Every member of the crew must understand what is going to change.The common view is about me adopting what I personally need to change for our strategy to start being realized. People are committed, but surprisingly often to very different directions. We are all different, and very able to conclude the same thing in a different way.
An example. When two people start forming a common view, there is just one line of information between them. They will end up to the same conclusion overtime. Next, add two more people to the conversation, and you have six alternative lines of conclusions. Chances of forming common view dropped down to 16%. And with a 10-person management team, your odds for an automatic common view are down to 2%.
- You may want to draw this on a piece of paper to see for yourself.
Your second obstacle will be a lack of capability. In most cases, the level of strategic ambition is set much higher than the current capability can support. The organization – management included – repeatedly falls into the trap of over-estimating its own capability to deliver the planned change. It is good to remember that as a manager you have geared the organization to run the daily operations efficiently, not to deliver strategic change.
The third bottleneck is a lack of visibility. Management is typically following projects and action plans promptly. The problem is limited visibility to the overall progress. As a leader you see and hear plenty of details, but not the complete picture. Steering a ship in a thick fog slows down the speed dramatically.
First off, make sure you establish a concrete common view. Don't assume; make sure. Do not hesitate to use professional tools and advisors here. Remember, your chances of forming a common view on your own are about fifty to one.
Another vital point is to build sufficient capability into the execution. Building capability typically requires money and this is the wrong place to save money. Consider your planned strategy against your current resources and competences. Challenge over-confident statements about mileage and experience or learning by doing. These are good qualities, but often not enough to make the real change. Aim higher.
Furthermore, establish a systematic follow-up practice. Cover all functions, not only the ones within your comfort zone. Build a concrete and open culture to review progress, problems, and solutions.
Finally, make sure the common view that has been built is always maintained. Repetition of the message and persistence will be needed, within and above your team.
TRAILMAKER is a concept for faster strategy execution:
• Designed for top and executing management
• Forms concrete common view and commitment to execution
• Tests execution capability
• Brings transparency
The typical delay in strategy execution costs companies at least one year, and 90% of strategies fail in the execution stage, says Senior Advisor Juhani Elomaa. “Companies instinctively know that time is money, but no one calculates exactly what it costs to delay by a year.”
In the past years, powerful megatrends have started to impact our daily life. Climate change, the environmental impact of plastic usage and new energy sources are well known topics for all of us. For large corporations, these forces create major opportunities but also major threats. Opportunities, because those making the change fast enough will be on the winning side. And threats because whoever cannot change fast enough will soon be left behind. The race against time is on. A gold rush for some, Titanic for others.