Focusing on a common external threat is often an effective way for a company to execute its business strategy, according to a study of organizations in 20 industry sectors and 20 countries conducted by American Management Association (AMA) and Institute for Corporate Productivity (i4cp). The challenge is to not create a culture of fear in the process, which could stifle innovation and risk-taking.
The global study explores how organizations execute strategy. In other words, how leaders connect strategy to internal and external realities by using their talent, technologies, and operations. While it may be impossible to assess the strength of an organization’s strategy, according to the study, execution can be objectively measured and improved.
These and related findings are available from Executing Corporate Strategy: A Global Study, available exclusively to i4cp and AMA members.
The study found that four practices correlate highly with both market performance and effective execution of strategy: visible support from leadership; regular communication of progress to employees; recognizing execution as a top corporate priority; and focus on a common threat without creating a culture of fear.
"Drawing attention to competitive threats catalyzes employees," said Jeremey Donovan, Chief Marketing Officer at AMA. "Of course, this must be done with care in order to balance negative effects such as job security concerns. Consider a hot new product launch by a close competitor. In order to respond effectively, employees need to have a clear enough mind to innovate."
Cliff Stevenson, Senior Research Analyst at i4cp and lead author of the study explained that execution itself is frequently overlooked by organizations that have a strategy that would otherwise work. "Excellent strategies fail all the time because leadership fails to engage with employees, observe behaviors and find out why people act the way they do. Leaders need to do more than communicate expectations; they need to find out what’s driving behavior and why."
The bottom line, Stevenson said, is the study data show that execution of strategy is more important than the strategy itself. "Execution trumps strategy, and this is true regardless of industry, organization size or structure."
The research identified three leadership behaviors to help teams focus on a common threat and execute strategy more effectively:
- Regularly discuss relevant industry and competitor developments with the team.
- Ensure the organization has broad strategies and plans that address changing market conditions and client needs, and create competitive advantage.
- Market the strategy internally to employees, showing the customer value proposition, to gain buy-in and an understanding of the relevancy of external threats.
Executing Corporate Strategy: A Global Study, is based on input from 668 respondents in 20 industry sectors and 20 countries. Participants were drawn from two sources: AMA and its overseas affiliates and i4cp’s global survey panel. The study was completed in April 2015.
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