Fix the execution gap
JOHANNESBURG – Most major corporations struggle with developing a business strategy that works. Fifty percent of business leaders don’t believe they have a winning strategy to begin with and almost all report missing major opportunities in the market.
About two-thirds of business executives say that their company’s capabilities do not support the way they create value in the market. And 80% of senior executives say that their overall strategy is not well understood – even within their own company. These problems are not caused by external forces. They are the outcome of the way most companies are managed. These are some of the findings of ongoing global research on senior executives carried out by Strategy&, PwC’s strategy consulting division.
Jorge Camarate, a partner at Strategy& said “Worldwide and across the African continent we are seeing companies battle with how to develop strategies that keep them competitive in an increasingly complex global marketplace. All too often companies don’t think about strategy and execution together.
“We have a number of business leaders who understand this problem, but very few who know how to overcome this.”
There are few companies that are able to successfully close the gap between their strategy and their execution. Coherent companies usually have the ability to align their value proposition with their distinctive capabilities and their portfolio of products and services. These elements shape a company’s identity, culture and approach to managing resources.
The results of the study suggest that there is a need for a new growth strategy that builds on and enhances companies’ existing capabilities. This will create more shareholder value than purely seeking out markets based on their intrinsic attractiveness.
It is critical that companies expanding into Africa should focus on their own capabilities. They need to align their efforts in order to successfully execute their strategy with what they are best at. One of the key success factors is that it takes unconventional leadership to foster the behaviour required of coherent companies. In other words, organisations need to bridge the gap between strategy and execution. Our independent research of multinationals that have expanded across the African continent demonstrates how the effective execution of a winning strategy is what sets successful companies apart.
Advocating unconventional leadership, Camarate named five crucial elements in an overall strategie.
1. Commit to an identity
A true identity expresses what a company does best and why it matters. Choosing and developing an identity requires some reflection, where your company can go in the market- what products and services you can offer and to whom – is a function of who you are and what you do well.
2. Translate the strategic into the everyday
In order to achieve its targeted identity, an organisation must create a blueprint of its capabilities. It must integrate diverse processes and technologies while preserving the strategic value of the enterprise.
3. Put culture to work
An organisation’s culture is multidimensional, complex and influential. Most business leaders understand the power of a company’s culture – but it is not always clear how to harness that culture. A company’s culture should reinforce the distinctive capabilities and strengths that differentiate it from the competition.
4. Cut costs to grow stronger
Coherent companies tend to invest heavily in activities that support their identity and distinctive capabilities. They will need to regard costs as an investment and focus on investing in those areas that are necessary for executing strategy.
5. Shape the future
Coherent companies acknowledge that their value proposition is never fully achieved and their capabilities system should always be open for further progression.