Strategy Implementation

• “A strategy, even a great one,  doesn’t implement itself” —Jeroen De

Flander
• The Strategy Palette
• BCG’s Strategy Palette
introduces five distinct
approaches to strategy,
helping leaders match
their approach to their
particular business
environment and
execute strategy
effectively. Learn more.
BCG’s Strategy Palette introduces five distinct approaches to strategy, helping leaders match their approach to their particular business environment and
execute strategy effectively, combine different approaches, and animate the strategic collage of approaches. The five strategy approaches are:

1. CLASSIC STRATEGY: BE BIG

Classical strategy is based on achieving sustainable competitive advantage by positioning a firm optimally in an attractive market. Since the basis of
competitive advantage in these environments is known and nonmalleable, advantage can be based on superior scale, differentiation, or superior capabilities.
2. ADAPTIVE STRATEGY: BE FAST
An adaptive approach to strategy rests on the idea of serial temporary advantage. In unpredictable and nonmalleable environments, the emphasis is on
continuous experimentation and real-time adjustment rather than on long-term analysis and planning. An adaptive approach works when the business
environment is hard to predict and to shape, and when advantage may be short-lived. Ongoing, substantial changes in technologies, customer needs,
competitive offerings, or industry structure may all signal the need for an adaptive approach.

3. VISIONARY STRATEGY: BE FIRST

A visionary approach empowers a firm to create or re-create an industry with some degree of predictability by seeing an opportunity and pursuing it single-
mindedly. Being first confers the advantage of superior size that comes with being ahead of rivals, and allows a firm to set industry standards, influence
customer preferences, develop a superior cost position, and determine the direction for an entire market. Deploy a visionary strategy when there is an
opportunity to create or re-create an industry.
4. SHAPING STRATEGY: BE THE ORCHESTRATOR
A shaping firm molds or reshapes an industry by influencing the development of a market in its favor through coordination with other players. A shaping
approach both permits and requires a firm to collaborate with others in a diverse ecosystem that distributes risk, supplies complementary capabilities and
resources, and builds the market quickly through strength in numbers. Deploy a shaping strategy when there is an opportunity to write or rewrite the rules of
an industry at a nascent stage of its development.
5. RENEWAL STRATEGY: BE VIABLE
A renewal approach to strategy refreshes the vitality and competitiveness of a firm when it is operating in a harsh environment. When circumstances are so
difficult that the current way of doing business cannot be sustained, changing course to preserve and free up resources—and later to redirect them toward
growth—is the only way to not merely survive but to eventually thrive again.
• Considering the first two elements, predictability and malleability, they came up with a matrix that revealed five distinct approaches:

• 1. Classical
• I can predict it but I can't change it

• This is the approach historically taught in business schools, where planners meet to figure out the important elements of the environment and how they can best position themselves within it, confident major disruption is unlikely. He points to the confectionery industry as an example of where this approach is still viable. The method's steps include analyzing, planning, and
executing. The overriding imperative: Be big.

• 2. Adaptive
• I can't predict it and I can't change it

• A lot of companies feel they are caught in this Twilight Zone of unpredictability with any advantage short-lived and not controllable. At best, you can gain an edge repeatedly over competitors that will only come through constant experimentation. The semiconductor and textile industries are caught in this drama. Companies need to vary their approach, select the most successful
paths, and scale up those opportunities. In short, Mr. Reeves says, vary, select, and amplify. The overriding imperative: Be fast.

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• 3. Visionary
• I can predict it and I can change it

• Leaders in this environment – Apple's Steve Jobs was a prime example – believe that they can reliably create or recreate an environment largely by themselves. They are usually the first to introduce a revolutionary new product or business model. Entrepreneurs have always done this but big companies are now getting in on the act. He says the success algorithm is envision,
realize the possibility, and persist in scaling up the opportunity. The overriding imperative: Be first.

• 4. Shaping
• I can't predict it but I can change it

• When a company can write or rewrite the rules of an industry at a nascent stage of its evolution, this strategic approach is recommended. It can apply in highly fragmented, young, dynamic industries, freshly disrupted industries, and emerging markets. Shaping is often done with others, an ecosystem collaborating, as with software apps or Amazon's online platform. The shaper
orchestrates the effort following a three-pronged approach: Influence, co-evolve, and maintain. The overriding imperative: Be the orchestrator.

• In a harsh environment, however, a company may need to turn itself around, restoring vitality and competitiveness. That leads to a fifth approach they call:

• 5. Renewal
• My resources are severely constrained

• You need to step back and transform the organization, acting decisively, knowing that the odds of a turnaround succeeding is probably only 25 per cent. Often cost-cutting will be an immediate goal. But after balance is restored, you must shift your approach to one of the other four elements on the palette. The overriding imperative: Be viable.

• A painter wouldn't succeed with one colour. And you probably won't succeed with just one strategy on your palette. Different arms of your organization are probably competing in different environments, and you must select accordingly.

• It's hard for companies to embrace contradictory strategies. They might, for example, be pushing cost restraint. But a new business unit within the company might require deliberate inefficiency in order to test the market and find its way.

• This is not a dilettantish idea, despite the artistic metaphor. He says that statistics show that 32 per cent of companies will be gone in five years' time, dead or swallowed by another organization. In such stark conditions, some argue that strategy is dead. But you need strategy – and that strategy needs a properly picked approach.

• "Strategy is not dead. It's more important than ever. What you learned in business school – classical strategy – is not a panacea. It works in some situations and not in others," he warns.

• Harvey Schachter is a Kingston, Ont.-based writer specializing in management issues. He writes Monday Morning Manager and management book reviews for the print edition of Report on Business and an online work-life column, Balance. E-mail Harvey Schachter
Turning strategy into organisational Action
• What causes market leader to lose their dominance?
• Why do some companies with proven innovation decline and fade
away?
• Why do organisation with surefire products and services never get off
the ground?
Why does Strategy so often fail?
• “Why CEO’s fail”, Ram Charan and Geoffrey Colvin (1999).
• “70% of all strategies fail to achieve their desired results and 30% fail to
achieve anything at all.”

• The Conference Board’s CEO Challenge, a survey of hundreds of CEOs

from corporations worldwide, identified execution as the number one
challenge facing executives for two years in a row (2009 and 2010)
An Ineffective or Broken Strategy Process
• Firms believe that strategy formulation and strategy execution are
separate processes conducted sequentially.
• Misunderstand the rigors and requirements of strategy execution;
• “The Big Lie of Strategic Planning,” Roger Martin
• Frustrated by the rapid obsolescence of traditional strategic planning
and the growing irrelevance of strategic planning departments, have
given up on them.
• “The Execution Trap,” Roger Martin
• choices cascade from top to bottom
A Focus on Maintaining the Status Quo
• The very structures and processes that successful companies optimize
to achieve efficiency and manage complexity, also make change an
expensive and difficult proposition.
• Structural inertia, resistance to change rooted in the size, complexity,
and interdependence in the organization’s structures, systems, and
formal processes.
• Cultural inertia encompasses the institutionalized learning and
common expectations that are manifest in the informal norms, values,
social networks and other aspects of culture over time.
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• The dynamic shifts in customer needs, technologies, and competitors’
strategies require organizations to experiment continually with new
business models, customer value propositions, and technologies.
• A singular focus on current businesses prevents many companies
from successfully innovating for these shifts.
 Implementation
ImplementationNetwork
Network

Marketing
Re
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op
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Manufacturing nt

Research &
Development
Finance

Strategy
Center
Distribution

Relatively well- Studied

Not well-studied
 Implementation Stages and Cross-functional Issues

••Pooling
Poolingresources
resources
••Resolving
Resolvingfunctional
functionalconflicts
conflicts
••Determining
Determiningimplementation
implementationleadership
leadership
••Developing
Developingananimplementation
implementationplan plan
••Developing
Developingpartnerships
partnerships
••Understanding
Understandingthethecapabilities
capabilitiesand
andconcerns
concernsof
ofother
otherareas
areas

Pre-
Pre- Organizingthe
the
Organizing
Implementation
Implementation ImplementationEffort
Effort
Implementation

••Involving
Involvingininstrategy
strategyformulation
formulation
••Focusing
Focusingthe
thefunctional
functionaleffort
effort
••Choosing
Choosingfunctional
functionalrepresentation
representation
••Education
Education
Implementation Stages and Cross-functional Issues

••Informal
Informalnetwork
network
• Instillingaa‘sense
• Instilling ‘senseofofurgency’
urgency’
••Achieving
Achievingbuy-
buy-inin

Managing the Maximizing Cross-

Implementation process functional
performance

••Physical
Physicalbarriers
barriers
••Turf
Turfbarriers
barriers
••Interpretive
Interpretivebarriers
barriers
••Communication
Communicationbarriers
barriers
••Personality
Personalityissues
issues
••Differing
Differinggoals
goals
••Organizational
Organizationalresistance
resistance
••Subversives
Subversives
Nissan
• From seven out of eight years of operating losses to profitability within the first 12
months. Since 1999, Nissan has shown four consecutive semi-annual operating
profits, and the year 2001 was marked by the best-ever, full-year earnings at
Nissan. The current operating margin is 7.9%, over 3% greater than commit- ted to
in the NRP.
• Net automotive debt is the lowest it has been in 24 years (down from $10.5 billion
to $4.35 billion).
• The company developed eight new car models to be launched by late 2002/early
2003, including the award- winning, revamped Altima, and the new 350Z.
• Supplier costs were reduced by 20%, as per the NRP, mainly through sourcing and
other strategies to minimize exchange rate issues, as well as the reduction of the
number of parts suppliers by 40% and the number of service providers by 60%.
• Five plants have been closed, according to the NRP.
• Headcount was reduced by 21,000, according to the NRP, mainly
through natural turnover, retirements,
• pre-retirement programs, and by selling off non-core businesses to
other companies.
• The number of car models that were profitable increased to 18 of 36
models from 4 of 43 models.
Managerial Levers

- Goals
- Organisational Structure
- Leadership
- Communications
- Incentives
 Figure 3: Managerial Levers by Implementation Stage

Stages

LEVERS Pre-implementation Organizing the Managing the Maximizing cross-

Implementation Implementation functional
Effort Process performance

Goals Ensure that all Introduce goals of Maintain the Develop and focus
managers are aware of the strategy being flexibility to adapt on common goals
the strategic goals of implemented, goals based on to encourage
the firm including fit within environmental cross-functional
firm’s broader changes cohesiveness
strategic vision

Organizational Ensure that functional Establish a formal Ensure equal Temporarily

structure areas have the slack implementation representation by suspend key
resources needed to be unit and ensure its all affected implementation
able to contribute to an visibility functional areas team members
implementation effort throughout the normal
firm responsibilities to
allow them to
focus on the
implementation
effort
Leadership Develop employees Establish a Ensure that leaders Balance visible
knowledge and “champion” who show equal and charismatic
appreciation of multiple has both official attention to all leadership with a
functional areas cross-functional functional-level maintenance of
authority and concerns autonomy for
general respect in functional-level
the firm implementation
efforts

Communicati Maintain regular cross- Discuss and Update Communicate

ons functional resolve implementation implementation
communications to implementation team frequently on progress across the
foster understanding details early in the progress and entire organization
and appreciation process changes in to foster buy-in
objectives

Incentives Reward the Develop time and Adjust incentives Establish visible
development of cross- performance-based as strategy and and consistent
functional skills incentives for environmental cross-functional
implementation conditions change rewards for
team while during successful
lessening implementation implementation
traditional efforts
functional
incentives