Strategy Conception vs. Execution: Gaining True Competitive Advantage

The concept of “business strategy” has different meanings for businesses of different sizes.

To a publicly listed corporate business, strategy means days – perhaps even weeks – of discussion and refinement, focus groups, and motivational slogans. To a start-up business, it could be aspirational, given that everyone is doing everything that they can to survive and build the product and client base.

Would two identically sized businesses with similar products in similar industries be differentiated by the adoption of a different strategy? In other words, is a business strategy a competitive advantage? Business leaders would inevitably say yes, given that strategy is a point of differentiation upon which they often measure themselves or allow themselves to be measured by their board. A director therefore sees the creation and implementation of a business strategy as the value that they bring to the business.

The management team’s view of strategy is not substantiated in business research. There is no positive correlation between strategy, which is influenced by the management team, and the financial performance of the business. One might argue the evidence of absence: that any business that survives does so only because of good strategy because countless others have failed and, therefore, cannot be measured. There are simply too many variables when factoring in the industry sector, customer base, geographic location, macroeconomics, seasonality, and consumer behaviour. Does this mean that a business should forgo its beloved “strat session” where anecdotally, executives take themselves away for a weekend of heavy … thinking?

The answer is that you can set a strategy relatively easily and intuitively in an afternoon with key role players in the business and feedback from the customers and suppliers. This process will be superfluous, though, if the moment that it has been completed, the product is printed, bound, and put in a drawer. The competitive advantage comes from the execution of a strategy, not its conception. A poorly conceived strategy, well executed, will trump one that languishes in the cabinet in the boardroom.

How do you effectively implement a strategy? Here are 12 thoughts (adapted by the author from Jeroen Kraaijenbrink’s The Strategy Handbook) to make the case for execution, and while it is not an exhaustive list, any business that follows these will benefit from the journey:

1. Think about it. Often the strategy document is crafted in business shorthand that contains acronyms and corporate jargon. Translate it into easy-to-understand next steps.
2. Do it. Focus on what needs to be done next and then do it. Hold team members and the management team accountable for delivery.
3. Don’t fiddle. Great chefs know this. Be confident in the team’s ability to get the next thing done without entertaining more iterations of the same idea.
4. You can’t have everything. Make tough decisions, make them early on, and be decisive.
5. There is no perfect way to do it. Micromanaging your team will not make the task go any faster. Find good people and empower them to do it.
6. Don’t be afraid of failing. Encourage the team to try things within a framework of what you have agreed should be achieved. Create an experimental culture by being consistently open to trying new things that make a real impact. Don’t do it for the novelty.
7. Ignore the sunk cost fallacy. If you all agree that it isn’t working, then stop. Be decisive.
8. Trust the system. Be patient. If you are doing what you have agreed needs to be done, wait for the results.
9. Simplify the process. The business environment is complex. Executing your strategy must be simple.
10. Lead by example. Forcing junior employees to do tasks that directors don’t or won’t do, means that the strategy will be ineffectual.
11. Foster a sense of team and belonging. If the strategy is being executed properly by the whole team, it benefits the whole business. Everyone wins.
12. Keep going. Often short- and medium-term wins are distracting. There is a temptation to stop executing the full strategy and do more of what seems to be working. Don’t get distracted by either failure or success.

We live and work in the information age. Disintermediation and disruption are held to be ideals for modern business and badges of honour for those innovators who have used technology and technological innovation to be more responsive and accommodating to the needs of the potential customer. Everyone has great ideas. You cannot own – or, more importantly, monetise – an unimplemented idea. Ideas are exciting. Assembling the team in a creative space, away from the office and the daily distractions to discuss these ideas, dreams and aspirations for the business is not a wasted exercise. Building a winning culture always starts with knowing what it is that you want to achieve and setting realistic goals for the business. It is the fun part. The magic is not in the conception; it is in the execution.

Often executing the business strategy is delegated to the most junior employees to accomplish, without explaining the context of the strategy to the whole business. The leadership team and those who created the strategy occupy themselves with coming up with the next great idea and are left frustrated or embarrassed when the results of the poor strategy implementation manifest themselves in the poor financial performance of the business. Analysis of the problem then involves benchmarking against competitors in a traditional SWOT. In a worst-case scenario, the leadership team will abandon its own strategy and imitate a competitor that it has determined has achieved success within the context of this analysis.

By relinquishing control of its own strategy, the business will lose any potential competitive advantage that may have existed and relegate itself to a strategy of opportunism, waiting for a competitor to fail or become a victim of its own success. It is clear to see that implementation is the differentiator and the real competitive advantage in any business, not the business strategy. As can be seen from the examples above, a good governance framework will enable the directors to focus on what is important to the sustainability of the business.