Seven Strategy Questions: A Simple Approach for
Better Execution
Successful business strategy lies not in having all the right
answers, but rather in asking the right questions, says Harvard Business School
professor Robert Simons. In an excerpt from his new book, Seven Strategy
Questions, Simons explains how posing these questions can help managers make
smart choices.
Business leaders can't develop and execute effective strategy
without first gathering the right information, says Harvard Business School
professor Robert Simons. In his new book, Seven Strategy Questions: A Simple Approach for Better Execution, Simons explains
how managers can identify holes in their planning processes and make smart
choices. Here's an excerpt outlining the seven questions every manager should
ask.
1. Who Is Your Primary Customer?
The first imperative—and the heart of every successful strategy
implementation—is allocating resources to customers. Continuously
competing demands for resources—from business units, support functions and
external partners—require a method for judging whether the allocation choices
you have made are optimal.
Therefore, the most critical strategic decision for any business
is determining who it is you are trying to serve. Clearly identifying your
primary customer will allow you to devote all possible resources to meeting
their needs and minimize resources devoted to everything else. This is the path
to competitive success.
It's easy to try to duck the tough choice implied by the
adjective primary by responding that you have more than one type of
customer. This answer is a guaranteed recipe for underperformance: the
competitor that has clarity about its primary customer and devotes maximum
resources to meet their specific needs will beat you every time.
2. How Do Your Core Values Prioritize Shareholders,
Employees, And Customers?
Along with identifying a primary customer, you must also define
your core values in a way that ranks the priority of shareholders, employees,
and customers. Value statements that are lists of aspirational behaviors aren't
good enough. Real core values indicate whose interest comes first when faced
with difficult trade-offs.
Prioritizing core values should be the second pillar of
your business strategy. For some companies, shareholders come first. For
others, it may be employees. In other companies, it may be customers. There is
no right or wrong, but choosing is necessary. To illustrate this point, Example is Merck's $20 billion decision to pull Vioxx from the market with
Pfizer's decision to continue marketing Celebrex.
3. What Critical Performance Variables Are You Tracking?
Once you're confident that the foundation of your implementation
is sound—you've allocated resources correctly and provided guidance for tough
decisions—it's time to get everyone who works for you focused on the job at
hand.
Tracking performance goals—the third implementation
imperative—requires you to set the right goals, assign accountability, and
monitor performance. It's easy to fail this imperative by focusing on the wrong
performance indicators or monitoring scorecards that have an overload of
irrelevant measures. Underperformance is the result.
It's your job to ensure that your managers are tracking the
right things by singling out those variables that spell the difference between
strategic success and failure. Like the preceding two questions, the focus in
this question is again on an adjective, this time the word critical. Companies such as
Nordstrom and Apple illustrate some unorthodox performance measurement choices
that provide the pathway to superior results.
4. What Strategic Boundaries Have You Set?
Every strategy brings with it the risk that an individual's
actions will pull the business off course. Here again, it's easy to fail to
inoculate the business against this risk. As we will see, the trick is in
setting clear boundaries.
Controlling strategic risk is the fourth implementation
imperative. Strategic boundaries—which are always stated in the negative—ensure
that the entrepreneurial initiative of your employees aligns with the desired
direction of the business. Strategic boundaries can also protect you from the
types of errant actions that destroyed Enron and brought financial service
firms such as Fannie Mae and Lehman Brothers to their knees.
5. How Are You Generating Creative Tension?
Once you're satisfied that you are tracking the right
performance goals and controlling strategic risk, it's time to turn to the
fifth implementation imperative: spurring innovation. This imperative is
woven into the fabric of every healthy organization, and we all know that
companies that fail to innovate will eventually die. No company is immune.
But sustaining ongoing innovation in organizations is
notoriously difficult. People fall into comfortable habits, sticking with what
they know and rejecting things that cause them to change their ways.
To overcome such inertia, you must push people out of their
comfort zones and spur them to innovate. You have to generate creative tension to ensure that everyone is thinking
and acting like a winning competitor.
6. How Committed Are Your Employees To Helping Each Other?
For most companies, it's critically important to build norms so
that people will help each other succeed—especially when you're asking people
to innovate. But there are exceptions. Some organizations can, and should, be
built on self-interest, with every man or woman working for him- or herself.
I suspect that the choice between commitment to help others and
self-interest is deeply ingrained in your organization, yet has never been
discussed. But if you haven't addressed this choice explicitly—and worked to
make it happen—you have increased the potential that your strategy
implementation will fail.
Building commitment is the sixth implementation imperative. Foster commitment to achieving shared
goals. Or rewarding self-interest is more appropriate for your business.
7. What Strategic Uncertainties Keep You Awake At Night?
No matter how good your current strategy is, it won't work
forever. There will be booms and busts, customer preferences will change,
competitors will introduce new products, and disruptive new technologies will
emerge in unexpected places.
This brings us to the final
implementation imperative: adapting to change. Adapting is critical to
survival, but it's extremely difficult to do. With change constantly
surrounding us, employees often do not know where to look or how to respond.
Companies such as Johnson
& Johnson use to search for new information and ideas as markets inevitably
change. Your personal attention is the critical catalyst to focus your entire
organization on the strategic uncertainties that keep you awake at night.
After all, everyone watches what the boss watches. This principle will guide the emergence of new strategies for the future.
by Robert Simons
http://hbswk.hbs.edu/item/seven-strategy-questions-a-simple-approach-for-better-execution?cid=spmailing-13352306-WK%20Newsletter%208-24-2016%20(1)-August%2024,%202016
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