Recently Motorola CEO, Ed Zander, commented on the challenges of building and executing to their strategy: “Today, this is about execution in the mobile-device area. It’s been more challenging to figure out the strategy than we initially thought.” I previously shared my observations on Motorola, specifically their single-minded focus on strategy and innovation. So, this blog is devoted to reminding us of the challenges surrounding successful execution of strategy.

The word strategy originates from the efforts of military leaders as they utilized their troops based on their own as well as their enemy’s resources and capabilities, examination of the external forces including the terrain, weather and the likelihood of uncertain events and developments, in order to triumph in combat. In the world of business, the battle is the effective utilization of a firm’s scarce resources to bring in profits in the face of fierce competition. This requires good understanding of the needs and wants of the potential customers, and the ability differentiate oneself so that customers would choose you over your competitors.

As strategy is a long term plan of action to achieve a particular goal and objective, it requires execution with fluidity, especially in the presence of uncertainty. Effective execution is a competitive business advantage: better execution = better performance. Creating a strategy is easy, but implementing it successfully is where the challenge lies.

The following are my personal experiences and challenges that I have encountered in building and implementing strategies successfully. Reviewing this against your current strategy and its implementation, and devising action plans to avoid these common pitfalls will help improve your chances of a successful outcome.

Strategy is about making tough choices and defining trade-offs; it is about what you are going to do, but more importantly what you are NOT going to do. This requires strong leadership, as successful strategy is about being different regardless off all the nay-sayers inside and outside of your firm. Unfortunately, on too many occasions a firm chooses to keep its options open, and provides an environment that enable its people to ignore the firm’s strategy. However, when things go wrong, the end result will be wasted effort, a disappointed and cynical workforce, and not to forget the loss of credibility of the leaders.

Many aspects of a firm’s strategy can be copied by its rivals, as in the case of fast followers. It’s incredibly arrogant for a company to believe that it can do what its rivals do, and do it better and longer. How well a firm can execute its strategy is determined by its assets and the core competencies. At the same time, immediate availability of market research and competitive intelligence data, continuos changes in customer buying habits, government regulations, convergence of technologies and globalization are making what once was a clear differentiation of the firm’s competencies a temporary competitive advantage.

Strategy is about the basic value you are delivering to your customers: who, what, and how. With this, strategy must have continuity; it can’t be constantly reinvented. Without continuity, your organization will be confused, and your customers won’t know what you stand for. At the same time, strategy formulation and implementation is an on-going process requiring continuous reassessment in the face of ever-changing marketplace and customer demands. Strategy will not need to change often, but will require periodic adjustments based on external circumstances. With that, it is important to keep your strategy flexible, and give your people the freedom and empowerment to respond and adjust as needed.

Strategy and its execution requires ownership at all levels, from the CEO on down. Executive leadership must embed strategy in the organization: from its people, to its processes, to its culture and values. Any strategy, however brilliant, will fail unless people are emotionally committed to its success. In order to achieve unwavering commitment, people need to be involved in the strategy process early, they need to understand and believe in the strategy, and they need to feel included. The organization’s culture, values, incentives, people, structure and processes all contribute to how the existing internal environment will support its strategy. Through establishment of performance targets and incentives, it is important to direct the existing behavior and culture. After all, what gets measured gets done.

Execution is a process, not an action or a step, and it requires time. Though strategy might be built by few, execution requires everyone. With that, it is about change and management of that change. If change is not managed effectively, it will generate internal resistance. Though speed of execution is important, you need a cohesive approach to communicate, align, motivate, focus and enable people to execute the strategy: self-supporting environment that will follow through even where the organizational structure and processes fails.

Strategy must be attainable. The executive management team needs to assure that the organization’s objectives, performance targets, and strategically critical business processes are all in alignment with its strategy: horizontally and vertically across the various departments. Each of the strategic initiatives identified needs to be budgeted and managed. Most importantly, there needs to be recognition of both the existing competencies and the required competencies for success, and a plan to bridge the knowledge-doing gap. Establishing tangible and practical steps, along with key milestones, will help achieve early victories that will generate momentum and excitement for the whole organization.

Technorati Tags: successful execution of strategy, strategy, implementing strategies

In a previous post, I mentioned using SWOT analysis for analyzing the forces impacting your innovation. SWOT (Strengths, Weaknesses, Opportunities, Threats) is a flexible and simple tool that can be used in many different contexts: strategic planning, organizational evaluation, career evaluation, technology competence analysis, product or service analysis, strategic partnership evaluation, and so on. There are numerous sites that cover the basics of SWOT analysis. As such, instead of going into the HOWTO of SWOT, this post will focus on best practices for SWOT.

In basic terms, SWOT is a great tool for structured brainstorming, with an intent to map out the landscape of the strategic question being evaluated, and determining the potential next steps that the organization should take action on. A successfully conducted SWOT will give insights on existing strengths to maintain, build and leverage on, weaknesses to minimize or remedy, potential threats to counter or minimize, and opportunities to prioritize and exploit.

Given the simplicity and the flexibility of SWOT process, it is quite easy to fall into traps that would result in inaccurate, incomplete and subjective analysis. However, by keeping a few best practices in mind, you can ensure that you have a comprehensive, methodical and objective study. Here are some of the practices that worked for me in the past; please add on to this list.

Emphasize Detail

The simplicity of the process can easily result in 2-3 word phrases that don’t mean anything:our technology platform is superior. Remember, the goal is to come away with insightful and actionable areas. One method to achieve that would be to ask the Why? question at least 5 times.

1. our technology platform is superior — why?
2. it is superior because we have a flexible platform architecture — why?
3. it is a flexible architecture because we had to implement some specific functionality for a few customers — why?
4. we needed to enable our customers to optimize their operations — why?
5. they needed to streamline the workflow and customize the starting point for improved job flow and they didn’t find any company or product to do what they needed, so we quickly did the work for them

With these 5 quick questions, you just identified your strength in building customized solutions, and opportunities to market the strength of your product architecture, to investigate new product extensions to support this existing need, and the potential of offering customized solutions.

Another method for getting to details is to do a further breakdown of the given statement and analyze each attribute separately. As an example, our product quality is poor could be further broken down to:

• Product quality — does the product meet the agreed upon specifications;
• Product specification — does the product specification reflect the customer needs, benefits and problems;
• Product usability — is the product easy to learn and use;
• Product performance — does the product performance meets the customer needs;
• Quality assurance (QA) process — is the QA process effective;
• …

The bottom line is that there are many things that could contribute to overall product quality, and some more important than others. Again, by focusing on the details, you have more accurate information for your decision making process.

Apply/Do Objectivity

Unfortunately, SWOT’s simplicity can also result in a biased analysis. However, even in the areas of high subjectivity, you can apply objective analysis by bringing in varying opinions. If you haven’t already done so, visit the Periodic Table of Visualization Methods, and check out potential tools that you can use for aiding on your objective data analysis, such as performance charting or radar charts. But, remember, quantitative is not automatically synonymous with being objective. As human beings we tend to be optimistic, even when we think otherwise.

Align With Organizational Strategy

The SWOT process does not have favorites; it just states the findings and observations. However, you can link the analysis results with your strategy, previous market and competitive analysis reports. This creates a personalized SWOT analysis that would better aid in your decision making process. After all, not every opportunity and threat is equal, and your strategy will highlight the necessary tradeoffs: what are we not doing. During your objective analysis, you can weight and rank each of the areas. This can be as simple as using a scale of 1-5, or percentage based evaluation.

Your strategy also will highlight the evaluation of important intangible resources: capabilities, competencies and reputation. Although these may not come up during your SWOT analysis, these intangible resources play into a firm’s competitive differentiation. Through this analysis, you can identify opportunities (ex. new application of existing technologies) as well as threats (ex. revamping of the workforce with new technologies).

Recognize The Moving Target

SWOT analysis captures the landscape at a given point in time. Today, everything moves at the speed of light. However, with some additional work, investigation and competitive intelligence gathering, you can distinguish between where your organization is today and where it can be in the future. This is where the gap analysis can help to identify potential strategic and tactical actions your firm can take.

Technorati Tags: SWOT, best practices, decision making process

Creativity, invention and knowledge are key ingredients to the innovation process. As I mentioned before, innovation is about the implementation of a new idea(s) for the purpose of creating value: value for the firm, and value for the consumer. As Isaac Newton indicated, innovation is built on existing ideas, knowledge and inventions: “If I have seen further it is by standing on the shoulders of giants”.

Ideas are nothing more than representation of new thoughts, concepts, beliefs or feelings that are generated as a result of some mental activity. Creativity is about combining these ideas in a unique and unexpected way, and/or establishing useful associations among what seems disparate ideas.

We are all creative, even when we don’t recognize our creative powers. The question is not if we are creative, but how close are we to our creative potential. Imagination, observation, experimentation, curiosity, experience, and sharing of ideas are some of the elements that fuels the creativity and the creative process. The process of invention (creating something that is “brand new”) and knowledge creation begins with this creative spark.

Innovation is the result of combining these creative ideas, inventions and knowledge in a novel way for the full intent of creating value. This process of transforming that creative spark into robust innovation requires just as much creativity as before: “It takes almost as much creativity to understand a good idea as to have it in the first place”, Alan Kay (Xerox PARC). This is the cycle of innovation: creation of new ideas, inventions and knowledge through the process of innovation to generate products, services, processes, technologies…

Maybe that is why the concept of innovation is complex: innovation is the input, the output and the process. Regardless, what is important is that the innovations do not occur by themselves: they are generated and sustained through the efforts of individuals and people. Creativity, commitment and persistence drives the innovation process. How well an organization cultivates and nurtures the creativity, knowledge creation and invention process plays into their innovation capability. Yet, important to note that these are necessary but not sufficient conditions for successful innovation; but they do make up the foundation that innovations are built upon.

Technorati Tags: innovation, creativity, invention, innovation process

Jeff De Cagna of the Principled Innovation is hosting the first-ever Innovation Bloggers Virtual Forum on April 26, 2007.

This certainly promises to be an insightful and engaging discussion. Participating in the forum is free, and if you are one of the first 20 to comment on his post you will get an invite. So, go ahead and check out his post and the current Forum line-up.

Well designed metrics programs enable firms to focus on what is important and what really adds value for themselves and for their customers. However, designing and executing a metrics program requires work and effort. At the same time, it is too easy to misuse the metrics. You have probably seen these classic examples of metrics gone bad, and have plenty to share of your own.

• Scott Maxwell on his post highlights the 10 best ways to lie with metrics.
• Dilbert tackles the challenges of establishing software metrics where Wally writes himself a new minivan.
• Joel Spolsky shares his customer service experience and the impacts of measuring customer service representatives based on the number of calls taken per hour.
• Yet another airline is proud to achieve successful on-time gate departure, while you sit on the tarmac for the next 2 hours before the actual take-off.

As valuable as the metrics are, falling into common traps can result in dysfunctional behavior, cultivate the wrong intents, and ultimately hurt the firm, its customers and shareholders. Here are some of the most common metrics mishaps:

• Too many (or too few) metrics — Your metrics should be aligned to support your strategy. Too many metrics is a clear distraction, not to mention a ton of work. At the same time, too few metrics will not help track the real issues or progress. Your metrics should be insightful and actionable, and not become your self-imposed prison.
• Ill defined metrics — Your metrics should not be left to interpretation by your team, and create additional confusion. They should bring clarity to your strategy, and to your performance measures. Take the time to explore and define your intents and objectives with your metrics, especially when it comes to measuring intangibles such as building an innovative culture, delivering quality products, and even increasing customer satisfaction.
• Conflicting metrics — Your metrics are the levers you will use to maximize the performance of your company. So, beware of conflicting metrics, as they will send mixed messages to your organization: are we cutting cost or becoming more innovative? Where needed, you can use weighted methods to prioritize your metrics.
• Lack of communication and training — Metrics have the power to build teamwork by pulling everyone in the same direction. However, this requires the leaders of the organization to clearly communicate the strategy, explain the purpose of the metrics program, and provide the needed training to support the teams.
• Inaccurate metrics — You may have your metrics well defined, but are you measuring them correctly and accurately? As an example, before you celebrate the large number of visits you received on your web site, ensure that you are not counting the search engine crawlers, or the number of comments you received do not include spams (my latest headache…).

So, what do you do, and where do you start? I have recently finished reading Bob Phelp’s Smart Business Metrics: Measure What Really Counts & Manage What Makes The Difference. This book is a good reminder of measuring what really counts, along with several case studies that discusses the process of building these metrics. In the past, I used Balanced Score Card performance metrics, which is a good management tool for aligning your organization top to bottom. However, I enjoyed the simplistic approach Bob shared in his book for building metrics program to specifically address the business issue at hand, and ensure that it is aligned with the business strategy. He refers to this as the value web: “a framework for the sort of measures that are needed to guide a business and its managers.”

Since the value web framework is focused on building value for the organization, the process starts by identifying a few key output metrics: things that really matter and should be measured as the output your business produces or wants to produce. Once you have determined your output metrics and ensure their alignment with your organization’s strategic direction, the next step is to determine the value drivers (factors that drive present value) and value builders (factors that drive future value) that impact the output metrics you identified. This clear separation of roles in the value web framework brings clarity, focus on what really counts and ensures present and future value is included in the metrics. Once the value web is built, the next step is to identify process improvements to support the objectives: reward and recognition programs, communication programs, training programs, etc. It is important to note that creating the value web requires in-depth analysis of drivers and their impact on the value whenever possible, using tools such as variation analysis, decision trees, regression analysis, or conjoint analysis.

However you build your metrics, make sure your metrics are clear, actionable, supports business objectives, and based on data and facts. Also remember, metrics drive behavior, so understand how your organization’s behavior might change before you launch into your next metrics program.

Technorati Tags: Bob Phelp, Smart Business Metrics, metrics program

This Sunday (March 4, 2007), CNBC is starting a series of programs on innovation: The Business of Innovation. Each program will explore different aspects of innovation by bringing in experts. You can access the program schedule here. Make sure to check it out!

Technorati Tags: innovation