It helps explain why 85% of growth strategies fail due to internal problems (culture, resourcing, communication issues, missing capabilities, etc.), not external ones. Promoting clarity and avoiding the growth paradox requires CEOs to devote a significant amount of time to translating strategy into action. This means ensuring that the strategy dialogue extends well beyond the typical "where to play" questions to include a deep analysis of "how to win." The best CEOs focus on six things:
1. Customers: Translating strategy into action starts with the customer and the ambition to create customer advocacy. This requires putting the right systems into place to segment customers and identify which are the most important. It is also critical to collect the right feedback from customers and the front line in order to learn continually and act on that learning.
2. Repeatable Models: The best CEOs translate their strategy directly into a repeatable model—a set of capabilities and frontline behaviors that define how the company wins in the marketplace. CEOs favor growth initiatives that take advantage of this model because it allows for growth with less complexity. They de-prioritize growth initiatives that demand new Repeatable Models as these increase complexity. The CEO needs to be the champion of the company’s repeatable model, reinforcing it in all communications and making heroes of its best practitioners.
3. Behavioral pain points: Effective CEOs recognize that the best strategies will inevitability create "behavioral pain points." This often happens when the talent that really matters—your best people—eventually have to do something different. Say you need to ask your market GMs to give up operations and focus on sales because it would allow operations to benefit from scale and local sales to thrive with customer intimacy. Such a move, if not managed well, could radically alter the sense of worth of your best GMs, who derive huge satisfaction from their manufacturing role. The best CEOs anticipate these pain points and invest time and talent to work through the behavioral change required.
4. Capability add-ons: Any great strategy will stretch the organization. So as CEOs put strategy into action, they need to focus on capability building immediately. In our recent work on the Founder’s Mentality, we found that one thing many of the most extraordinary transformations shared in common was a CEO committed to investing huge time in building new capabilities through recruitment or M&A. These CEOs sweat the assets that can prove transformational—starting with IT.
5. Operational excellence: Is the company managing its cost structure and assets more efficiently than its closest competitors? Are its products and services consistently superior and more reliable than others in its market segments? Does it have speed and flexibility where it counts? Operational excellence—world-class performance in cost, quality, time-to-market and other indicators of effective operations—is not absolute; it is measured relative to the competition and to a company’s own history of performance. If operations and IT systems do not provide a distinct competitive advantage, a company will find itself at the mercy of more-efficient rivals. That said, very few firms can aspire to be lowest cost and highest quality everywhere they operate. The best CEOs recognize this and focus on aligning operations with the firm’s strategy to ensure it becomes the leader in quality, functionality and cost where customers value it most.
6. Simplifying the rest: Moving strategy into action will massively increase the demands on the organization. It will stretch your people; it will require them to do new things and change behaviors. While it is critical for the CEO to do these things, it is equally essential to do do whatever it takes to simplify everything else. As Steve Jobs pointed out repeatedly during his second life at Apple, real results are as much about saying no as saying yes. The CEO must constantly ask the question: how do I make a more focused company?