Who's in Charge of Your Strategy?

Hint: It should be you.

Why do so many strategies fail? The examples are almost endless: In the past months alone we've seen the sad stories unfold at Kodak, Hewlett Packard, Nokia, Yahoo, RIM, and Sony, to name just a few -- and there will surely be more between the time I write this and the time you read it. My answer is that the right people aren't in charge.

Strategy became more about formulation than implementation.

This is not a knock on strategic planners per se --  few professions boast more analytical talent and sophisticated tools. What's missing is the one person who has the comprehensive, high-level, and even philosophical view needed to position a business for the future: you, the leader.  No one else can shoulder the overarching responsibility of setting its course and seeing the journey through. Who else understands the company fully in all of its parts, from its financial resources to its organizational capabilities and its leadership pipeline?  Equally if not more important, who else can draw all of your people into the process of creating a strategy and keeping it up-to-date and vital?

Only you can be the steward of your business's future.

I came to this understanding after the center of my teaching shifted from MBA students to executive education, particularly a five-year stint in Harvard's flagship program for owner-managed companies.  As I worked intimately on their real-world strategic issues with these dynamic leaders from nearly every industry and country, I increasingly saw limitations of strategy as it is conventionally taught and practiced. Many of these leaders had been remarkably successful. I saw how invested they were in making the right choices, and how much was at stake for them.  Yet almost none had the kind of long-run competitive advantage that is the Holy Grail of strategy. Especially in evening conversations in my office with a leader struggling to understand the strengths and weaknesses of a businesses, or to extend a competitive advantage, we would face the question of what to do when the limits of technical analysis had been reached and the way forward was still unclear.  More than anything else, I saw the tremendous potential these leaders had to make a difference in the life of a company. In those moments together, we both came to understand that if their businesses were going to pull away from the pack, it had to start with them.

The Basics of the Job

As strategist-in-chief, what do you do? Your aim is threefold:

·         Be clear about your company's purpose.

·         Live with your strategy on a daily basis.

·         Be the strategic leader of your team.

Purpose:  Most leaders I talk to find it extremely difficult to explain why their companies exist. They can tell me about the industries they're in or the products they make, but they can't meaningfully articulate the specific needs their businesses aim to fill, or the unique points that separate them from their competitors.  Nor have they spent much time thinking concretely about where they want their companies to be in 10 years, and the internal and external forces that will get them there. But every concept of strategy -- sustainable competitive advantage, positioning, differentiation, added value -- flows from purpose.  Nothing is more important to a company's survival and success than purpose -- the source that will generate its difference that matters .

Sony started with a clear purpose as a brilliant technological innovator. Then it decided to build an entertainment empire. It didn't take long for the company to lose its difference that mattered; management of its engineering prowess fell between the stools of running the other businesses, and its innovative edge vanished. Yahoo sank into decline because it stuck with an outdated purpose. Apple had one, lost it, and narrowly escaped death before Steve Jobs returned to rebuild it.

IKEA, by contrast, has continued to prosper and expand in a hypercompetitive industry for more than half a century because its founder, Ingvar Kamprad, had a powerful sense of purpose based on a deep comprehension of his customers and his industry. When he started in business, good furniture was too costly for most consumers.  His aim, as he put it, was to offer "a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them."  In this way, the company would create "a better everyday life for the many." He believed this passionately, repeated it endlessly in conversations, speeches, and writing, and institutionalized his purpose throughout the company. Both inspiring and pragmatic, his views drove Ikea's people to innovate consistently in everything from low-cost manufacturing and logistics to product lines, store design and marketing. All were linked and integrated to execute the purpose.

Kamprad created the sine qua non  of strategy, a system of value creation -- a clearly defined purpose tightly backed by a set of mutually reinforcing parts. If leaders lack a clear idea about what they want their business to be, they cannot create such  systems because they don't know what these should be designed to do or how they can be measured.

The four crucial questions your purpose has to answer are:

·         Who we serve

·         With what sort of products or services

·         What we do that's different or better

·         What enables us to do that

A good purpose puts a stake in the ground. It says, "We do X, not Y." Companies that don't choose, for whatever reason, run the risk of ending up in no-man's land, being nothing of distinction to anyone.

Live with your strategy day after day. Any strategy, no matter how carefully conceived and how well implemented, will eventually fail if leaders see it as a finished product. A strategy is not a problem to be solved and settled; it's a journey of change and evolution that needs continuous leadership. All too often, for example, managers zero in one competitive advantage, expecting it to be sustainable; when it gets into trouble, they're apt to hunker down and protect the status quo instead of rising to meet the needs of a new reality.  But any one advantage, even a company's underlying system of value creation, is only part of a bigger story, one frame in a motion picture. It is the need to manage across  frames, day by day, year over year, that makes a leader's role in strategy so vital.

The truth is that sustainable competitive advantages are rare. Whatever constitutes strategic advantage will eventually change, and defending one that has outlived its time will simply lock you into the past. As a leader/strategist, you must ensure that your company continues to add advantage over time.

Be the strategic leader of your team. In setting the strategic direction and tone, you will be guiding the entire organization: deal them in. Your ability to inform, motivate, and connect with others in your organization is as vital to your success as anything else you do. People throughout a business -- managers in marketing, production, service, as well as those near the top of the organization -- must make decisions every day that should be based on a shared sense of what the company is trying to be and do. If they disagree about that, or simply don't understand it, how can they make consistent decisions that move the company forward?

A strategy is not a problem to be solved and settled; it's a journey.

Accept that the communication has to be two-way. You need the input of not only those at the top but all the way down to the front lines. You need the knowledge and insight of those who face the customers, grapple with the realities of production and logistics, and compete for the resources they need.

We had a great discussion about this in class recently. One leader expressed his view that strategy was properly the exclusive province of a corporate elite -- 20 or so  people who had "the real picture" going to an offsite, from which wisdom would then trickle down. (This is what I have now come to think of as the old view of strategy). Later in the session another member of the class suggested that we hear from a manager whose company had made a remarkable turnaround in a very tough industry. He told his story: the idea was formed and everyone was brought on board. I then asked, what did he mean by everyone? He answered clearly "all 5,000."

A Nonstop Responsibility

The very act of taking on the job of strategist-in-chief can transform your business. But it's not a one-shot project. Leading strategy is a nonstop responsibility; it can't be outsourced or solved in one great brainstorming session. As a strategist, you're the person who must watch over the organization, guiding its course, making the choices that bring it back to center day after day and year after year even as you choose when the center -- the purpose itself -- should evolve. You must decide whether to lean into the wind or not, and judge whether your strategy is likely to withstand the winds you're heading into. You won't just wake up one morning to find that your company has a new advantage or that its purpose changed overnight. Rather, it will change because the industry changes. It will change because tastes change. It will change because our people change and bring new strengths and skills to the enterprise. And ultimately, it will change because someone made the call to do so -- you, the strategist.