Good Strategy Execution Requires Balancing 4 Tensions
The primary obstacle to strategy execution is a failure to balance inherent tensions. In particular, there are four core tensions that leaders need to balance. First, setting an inspiring end state while also including specific and challenging mid-state targets; second, top-down control versus democratizing change; third, developing new capabilities while also pressuring workers to deliver results; and fourth, striking the balance between creativity and discipline. Getting strategy done well often calls for trade-offs. Companies that can achieve a balance between opposing forces are far more likely to realize successful strategies that endure.
Putting strategy into practice is notoriously difficult. In our experience, the primary obstacle to strategy execution is a failure to balance the inherent tensions that characterize any major execution effort. Successful strategy execution calls for skillful orchestration of sometimes opposing forces and competing needs. In particular, there are four core tensions that leaders need to balance.
A vision of an inspirational ”end state” is essential for getting people to commitment to change: a simple narrative that articulates not only why change is necessary but also what life will look and feel like once change is successfully implemented.
However, aggressive “mid-state” targets are also required to provide direction and to challenge people to give their all. Among workers, an inspiring end state without challenging targets will likely elicit the response, “I will give this a go, and we can see where we land.” That’s not optimal. But at the same time, challenging targets without an inspiring end state leads to a grind in which workers often ask themselves, “Why am I doing this?”
Consider the experience of a major utility that made the strategic decision to undertake a broad-based initiative aimed at improving efficiency and reining in costs. When a detailed cost assessment identified significant savings potential, executive leadership boldly added another five percentage points to the target. The team tasked with overseeing the effort designed an aggressive implementation plan that tied targets to manager compensation. However, beyond the strategic goal of becoming an industry leader in terms of cost structure, there was no “story” for how this effort would complement the business’s broader ambitions. After about six months, the effort began to falter, due primarily to staff frustration and a sense that the initiative lacked a compelling purpose.
When everyone in the organization feels empowered to make decisions that can influence change, it creates a palpable energy: People tend to work harder, offer more ideas, and become far more invested in the process. If every activity is the result of a command from on high, the company runs the risk of sucking all the energy out of the room. But the flip side can be myriad groups of enthusiastic change agents dashing off in multiple, uncoordinated directions.
The successful but challenging experience of a large pharmaceutical company illustrates the tension between top-down and decentralized change efforts. The company defined a new growth strategy that would require a significant improvement in its ability to innovate rapidly. While there was broad consensus on the strategy, there was disagreement within the leadership team regarding the best way to implement the strategy — especially when it came to making critical decisions, involving and empowering managers and staff, and holding people accountable for results. Tensions arose, and significant debate ensued over several months as the leadership team tried to work their way through an initial set of critical decisions that would guide execution. Ultimately, leadership managed to strike a balance across these areas, continuing to drive the change effort while soliciting contributions of a broad set of managers and staff. The result was a far stronger and more efficient R&D organization.
Many strategies call for significant changes in the ways a company works, which raises questions of whether the organization needs to develop new capabilities. But the pressure to deliver immediate results is often so intense that an organization may be forced to forge ahead with its existing capabilities.
Take the example of a global industrial products company that was in the early stages of implementing a growth strategy. The strategy called for significant changes to the company’s organizational structure and the way it marketed, sold, and serviced customers across numerous geographies. But as a publicly traded company, it was under the gun to deliver results every quarter. As the leadership team held numerous conversations across the organization about strategy execution, they came to the realization that most midlevel managers and frontline staff perceived serious capability gaps. This candid feedback allowed leadership to identify those capabilities most in need of strengthening in order for the strategy to be successful. At the same time, they were able to achieve some early wins that bought them time to develop these critical capabilities.
Creativity is a part of any distinctive strategy. Fearing that discipline will stifle creativity, it is not uncommon for executives to choose to “let the creatives run free.” At its best this can lead to unanticipated insights and outcomes, but at its worst it can lead to chaos and complete unaccountability for results. In fact, creativity and discipline are not mutually exclusive — yet this tension can be the hardest one to balance.
Consider the experience of a services business that had an iconic reputation for its one core service. Entering a new space had been elusive for many years, and in desperation the company gave the business development function complete freedom. It moved to a new building, changed its business cards, hired “disruptive thinkers,” and experimented with all manner of innovation techniques. Several months (and several tons of Post-It notes) later, they were called in to report back — only to serve up a raft of tired ideas and zero outcomes.
Getting strategy done well often calls for trade-offs between delivering short-term results and implementing foundational changes that require time. Yet companies that can achieve a balance between opposing forces are far more likely to realize successful strategies that endure.
Simon Horan is a managing director at L.E.K. Consulting.
Michael Connerty is a managing director in L.E.K. Consulting’s Chicago office, where he helps lead the firm’s organization and operations practices.
Good Strategy Execution Requires Balancing 4 Tensions
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