7 June 2017

The successful strategy

The successful strategy

Just one in three companies succeed when implementing a new business strategy. Too often a strategy ends up as a document no one acts upon, says Danish Strategy Expert Jørgen Lægaard.

“Formal strategy processes often end up as a decoration lacking essence. Too much time is spent at endless meetings and often the destiny of the ‘strategy’ is to serve as a document that few people read and no one acts upon.”

The statement comes from Jørgen Lægaard, who is the man behind a study of 500 companies and the author of ‘Strategy With Success’.

His merits include working as a teacher, a coach, a board director and as a strategic partner on more than 300 strategy processes. He knows what will make a strategy succeed, as well as the factors that mean it will often fail.

There are four main mistakes that executives often make when a new strategy is implemented, Jørgen has discovered. His study, which took in more than 500 companies, shows that 30 percent succeed with the implementation of a new strategy but a whopping 70 percent fail.   

Below, he outlines the four most common errors companies make.

1. The strategy becomes a showpiece that lacks essence
The first and most profound error often happens when the strategy process becomes a showpiece, mostly for the eyes of the Board and top management.

“Top management book a hotel for a few days and determine a strategy, not paying attention to changes outside the company – and with no regard to the flexibility such a strategy must contain. The strategy then becomes nothing more than a manifesto to show everyone else that top management are in control,” Jørgen explains.

2. Day-to-day performance overshadows the strategy
The second pitfall is to do with how management and employees are often working in separate, disconnected, silos. If management does not involve employees in the strategy-making process, then the employees will see it as something that is being forced upon them from above.

“Often, a new strategy results in a lot of extra tasks. And if management hasn’t shown understanding for the new challenges facing employees, it will become an issue on a day-to-day basis. I usually say that day-to-day tasks eat strategies for breakfast.”

“ It is a huge impediment when executives do not conform to their own strategy.”

3. Management work against their own strategy
The third pitfall is when management forget or ignore their own strategy – either because they don’t believe in it or else they have issues getting it embedded in their daily work routine.

“It is a huge impediment when executives do not conform to their own strategy,” Jørgen underscores.

4. Consultancy reports become like an out-of-order lighthouse
The fourth pitfall is companies’ tendency to hire a bunch of external consultants who formulate a new strategy programme – often with the primary objective of temporarily pacifying the bank, the Board, or other stakeholders, in order to win time and get some better results.

“Obviously, this has nothing to do with strategy,” says Jørgen Lægaard.

How to strengthen the effects of your strategy
So, bearing the above points in mind, what is required to succeed with the implementation of a strategy? Research shows it is crucial that top management is visible during the process and that they become role models for any changes included in the new strategy.

The executive should:

  1. Be a role model for the change process
  2. Set clear targets and have a vision for success
  3. Engage in storytelling about the change

Be a role model for change
“First of all, the executive must communicate the strategy and create storytelling around it – and not just once — it must be continuously repeated to become a part of the company’s DNA,” says Jørgen.

Jørgen cites Billund Airport, in Denmark, as a great example of a company where the CEO acts as a role model for change. In this case, top management decided to change the airport from being merely an infrastructure company to one that encompassed services as well.

“The CEO of Billund Airport, Kjeld Zacho Jørgensen, leads the way. He wants every traveller to have a great start in Billund. He books conference and meeting rooms in the opposite end of the airport, with the purpose of making sure to walk through the entire building every day and talking to customers as well as employees,” Jørgen Lægaard explains.

He continues, “In this way he can have an eye on all the processes, ensure that customer service is good and check if any improvements are needed anywhere. He is in the starting line-up, following the game plan, and the strategy works”.

Set clear targets and have a clear vision for the change
Next, Jørgen Lægaard points to Danfoss as another great example. The company has successfully transformed from being a deliverer of heavy technology to become a very market-oriented company. 

“The company strategy is focused on breaking barriers for what you can achieve with energy efficient solutions. And they have succeeded in creating a ‘one-company-feeling’ and have a vision across many departments and countries,” says Jørgen Lægaard.    

“The executive must break the story into small pieces, so it becomes relevant for each employee.”

Tell stories about the change
Another important requirement for success is that the executive should craft a narrative and engage in storytelling about the change – and tell these stories repeatedly.

“The executive must break the story into small pieces, so it becomes relevant for each employee. The employees must know how the strategy affects them. If the top executive can explain a new strategy, the new visions and the new targets, the implementation will usually succeed. And that procedure must be continuously repeated,” he says.

“Not Invented Here”
Again Jørgen Lægaard points to Danfoss as a great example of the successful implementation of a new company strategy.

“Danfoss used to have a culture where the employee aimed to invent and code everything from scratch. The CEO, Niels B. Christiansen, wanted to change this culture, because he was sure that Danfoss was better off buying and building on inventions from other companies.”

“Niels B. Christiansen coined the phrase ‘Not Invented Here’ as a lighthouse for the new strategic direction. He kept repeating that sentence every quarter over five years, until it was embedded in the DNA of the company,” Jørgen explains.

He concludes by emphasizing the importance of involving all employees:

“Our study proves that by involving your employees in developing the strategy, you are creating an effect that is 30 percent more powerful than if you don’t. The involvement should happen as early as possible in the process and preferably from day one.”  

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