Closing the gap between strategy and execution: The strategy | London Business School video transcript

Welcome. My name is Don Salt. I’m a professor at London Business School and today is the third in our series on strategy and its discontents and we’ll talk about how to put the notion of a strategy loop into practice in your own organisation.

So just to recap what we’ve talked about. In the first podcast we talked about the linear view of strategy – plan, implement, sustain and its fatal flaw – that it failed to incorporate new information. In the second podcast we presented an alternative view of strategy as a loop that managers can go through in terms of making sense, making choices, making it happen and making revisions. In this podcast we’ll talk about how you can make that happen in your own organisations. So there are many things that either help or hinder the strategic loop in practice. There is the information systems that you have in place, there’s the culture of the organisation, there’s the organisational structure, many things of course but what’s interesting, one of the most important either, obstacles or enablers of putting the strategic loop into practice is how good managers are at leading discussions in each of the four stages. And what I’ve found in working with a lot of companies and managers over the years is that most managers are good at one or two stages and are either bad or just avoid the other stages. So what I’d like to do is quickly talk though each of them. I’ll give you a little flavour of what it takes to make them work, a common obstacle or 2 and what you can do to address those.

So let’s start with making sense. The goal in this step is to observe data and come to a shared mental model of the situation, sufficient not for absolute truth but to get through this iteration. So what is the tone of the discussion that you want to put into place? Well it’s a tone of open inquiry, it’s characterised by a lot of questions, by a lot of what-ifs. It’s not people shutting down the discussion, its people opening up the discussion. What are some of the things that can go wrong here? One of the killers is action orientated when managers have a bias for discussion and they want to very quickly cut down the discussion to make sense and jump to what we should do. How do you deal with that? Well you can’t in an action orientated organisation say ‘no we can’t talk about action’ people will. That’s how they’re wired. What you can do however is when someone makes an action proposal, rather than taking it forward into how to implement it, take it backward, ask questions like ‘what assumptions would have to be true for that to be a good way forward’ or if that is the answer, what is the question? These kinds of questions can take an action plan backwards to surface assumptions about what’s going on.

Making choices. Here the objective is to come down to a small set of priorities that are agreed on by folks both on what to do and particularly on what not to do. The tone here is different. The tone here is about respectful argumentation. This is where folks are arguing their corner. They’re saying this really matters, that really matters, you need to be able to argue at this point and argue in a respectful and productive way.

Now how can this go wrong? One of the most common ways it can go wrong is when a group talks and talks around in circles without ever coming to a choice. They just talk talk talk and never make choices. One of the most powerful ways to address this is to agree as a group upfront what rules we’ll use to break ties when we cannot come to a consensus. It’s what Professor Kathy Eisenhart of Stamford calls ‘qualified consensus’. So what might be some rules? 1 – if we can’t reach a consensus in the desired time, we take a vote or the boss decides or whoever feels strongest decides or the functional head decides. The nature of the rules isn’t so important as having rules to get past this cul-de-sac.

2 – Making it happen. That’s primarily about getting good promises from people and making sure they deliver. The tone here is about supportive discipline. As a manager you need to hold people accountable for what they’ve promised but on the other hand, you have to support them and help them achieve what they’ve promised. These like the other conversations can go wrong in many ways. One of the common ones is when deals are made in smoke-filled rooms in private and no-one really feels compelled to honor them because there’s no monitoring. One of the way that many organisations have dealt with this is to have public monitoring of commitments. So people in half the largest brewery in the world for instance, managers work in an open office environment and behind their desk sits their five key promises and how they’re doing in red, yellow and green.

3 - Finally making revisions. A discussion that most organisations struggle with. The objective here is to one, note anomalies. Things that don’t fit with our point of view, not things that confirm our point of view those are easy but things that don’t fit with our point of view, then revise our assumptions based on that. The tone of this kind of discussion, it has to be dispassionate analysis like a scientist exploring the results of an experiment rather than a school teacher looking for somebody to blame. Otherwise it can degenerate into a blame game too easily. What are some of the ways that this can go wrong? Well one of the ways this goes wrong is that people search out information that confirms what they wanted to believe rather than searching out information that disconfirms that. And one way to deal with that is to bring in outsiders into the revision process who are less emotionally bound to this who may be better positioned to disconfirming information.

So its not easy to move from a linear view of strategy to a loop view of strategy but the pay-off is enormous and there are many companies that have done it.

So I wish you the best of luck in doing it in your own organisation – thank you.

Closing the gap between strategy and execution: The strategy | London Business School video

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