Bridging the Strategy Implementation Gap
Corporate leaders recognise that transforming a strategic vision into reality is crucial to success. Most companies, however, find this difficult in practice. In prior Economist Intelligence Unit (EIU) research, 61% of respondents acknowledged that their firms often struggle to bridge this gap, and just over half of strategic initiatives were completed successfully.
To gain a more in-depth understanding of this complex field, the EIU interviewed Joseph Jimenez, CEO of Novartis, and Donald Sull, Senior Lecturer at the MIT Sloan School of Management, about strategy implementation.
EIU: We know that many organisations have difficulties with strategy implementation. What are some issues people tend to misunderstand about it?
Jimenez: In my experience as CEO, I’ve been a bit surprised to find that people sometimes make the mistake of focusing on only one single time horizon. Strategy implementation is twofold—short-term and long-term. Making short-term adjustments can be part of the strategy, but focusing solely on “quick-fixes” can create gaps that undermine the sustainability of a new strategy. At other times, a disproportionate focus on the long term can slow momentum, and people become disillusioned. You have to balance them.
“Strategy implementation is twofold—short-term and long-term.”
Joseph Jimenez, CEO of Novartis.
Sull: The dominant metaphor we have for implementation is flawed in a way that hinders our understanding. Implicitly people think of an organisation as a machine, with a leadership team at the top, silos below and mechanistic levers of control. The idea is that if you pull these levers, you will get that outcome. As a result, many executives think you set strategy at the top, divide it up into chunks, reward people for achieving their chunks and punish them if they don’t. That widespread view is fundamentally wrong-headed.
It is much better to think about large companies as complex adaptive systems. In other words, they are built from teams, some of which are inside and some even outside the formal organisation. These teams focus, as they should, on their local objectives—you want salespeople focused on their customers, for example—but they also need to co-ordinate their activities with other parts of the organisation. Strategy implementation is less about pulling levers of control, and more about providing guardrails within which activities emerge
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