Challenge of Execution – III Shaping Goals and Charting the Path

The first step in execution is to convert vision or mission statements into clear, simple, precise and measurable goals. For example, the new Chairman of Unilever, Paul Polman, has projected an audacious environmental vision for his company: “To reduce our overall environmental footprint, to source our agricultural resources sustainably and to help 1 billion people get access to nutrition and wellbeing.” This vision was converted into 50 measurable goals in six categories: health and hygiene; nutrition; greenhouse gases; water; waste; sustainable sourcing; and better livelihood. (Polman P, 2012). Similarly Rockwater, a global engineering and construction company has the vision to be an “industry leaders in providing the highest standards of safety and quality to our client.” And this vision was converted into the following strategic goals:

  • Service needs
  • Customer satisfaction
  • Continuous improvement
  • Quality of employees (Kaplan S and D.P.Norton, 2012).

The website of Mind-tree, an IT consultancy firm, states its mission as: “We engineer meaningful technology solutions to help business and societies flourish” and explains further each word, what does it mean. According to Subroto Bagchi, Chairman of Mind-tree, a company’s vision should have three types of goals:

  • A financial goal: reaching a certain level of business, profitability and return on investment in a specified time-frame.
  • An admiration goal: being among the best employees in a given category or to win an industry-level award or recognition.
  • A goal towards social sensitivity, something that organization would stand for.

The vision of Mind-tree for the year 2007-2008 was:

  • To achieve $ 231 million in revenue.
  • To be among the top 10 percent in our business in terms profit after tax and return on investment (ROI).
  • To be on the top 20 globally admired companies in our industry.
  • To give a significant portion of our PAT (Profit After Tax) to support primary education. (Bagchi S, 2006).

Charting the Path

This is the essence of strategy. Strategy should figure out the broad direction in which company has to move to reach its goals or vision of the future. When Jack Welch became the CEO of GEC, his mission was to “become the most competitive enterprise in the world” and charted a three fold strategy:

*        Move away from businesses that were being commoditized towards businesses that manufactured high-value, technology products and sold services instead of things.

*        To be No. 1 or No. 2 in every market and fix, sell or close to get there.

*        Massively upgrade human resources with a relentless focus on training and development. (Welch .J, 2005)

GEC, in its more recent website states its mission as “Finding solutions in energy, health and home, transportation and finance, building, powering and curing the world” and its strategic advantage as “placing its bet on 40 high impact projects that will help increase our speed to market, improve the quality of our products and services, significantly reduce costs, and drive competitive advantage for our customer and our company”.

Apart from this broad direction, strategy must provide a more detailed plan or inputs in the following domains:

*        A clear, objective assessment and understanding of the present conditions of the firm and the business environment

*        What are the conscious steps to be taken to move from this present condition towards the strategic goals

*        Both these factors have to be described interms of present condition and future plans of requirements in the area of human resources, skill-set, knowledge, infrastructure, products or services, quality, competitive landscape, opportunities, threats, trends.

From the angle of execution, there must be a constant stress on realism or practicability while building the strategy. Most of the strategic thinking turned out by consultant and academics tend to be theoretical and conceptual. Though conceptual, big-picture thinking may be necessary for strategy it must be balanced by down to earth realism. One way to do this is to encourage probing questioning and debate on the practicability of ideas during strategy sessions. Larry Bossidy and Ramcharan give the following example to illustrate this point.

A divisional leader of a multinational firm presents his strategy for entering successfully into the German market. The CEO of the firm very much appreciates the presentation and says, “It was inspiring.”   But the CEO asks probing questions which exposes the pragmatic weakness of the strategy. For example, the CEO asks the leader, “How many sales people you have now in Germany.” The leader says, “Ten.” The CEO probes further and asks “How many your main competitor has?” The leader says “two hundred.” The CEO doesn’t ask the further question, “How you are going to succeed in this market with such a large gap in the sales force.” The very question brings out the loopholes in the strategy. After some more such probing questions, the CEO suggests to the leader to tone down the strategy. “Instead of trying a broad assault” says the CEO “Segment the market and look for competitor’s weak spots. What are the gaps in the product line? Can you innovate something which can fill them.” The main lesson we have to learn from this example is that while vision can be inspiring, strategy has to be more realistic. The strategy-team should have people who are not overawed by the inspiring tone of the presentation or the brilliance of the idea but probe deeply into the pragmatic value of the strategy. (Larry Bossidy and Ram Charan, 2011)

There is one more factor which is vital in our present environment to create a winning strategy: differentiation. The strategy has to provide an innovative idea which differentiates the company from the competitors. In this task, an innovative new concept is “Blue Ocean Strategy” by Chan Kim and Renee Mauborgne. As they explain the distinctions between blue and red ocean:

“Imagine a market universe composed of two sorts of oceans: red oceans and blue oceans. Red oceans represent all the industries in existence today. This is the known market space. Blue oceans denote all the industries not in existence today. This is the unknown market space. —In the red oceans, industry boundaries are defined and accepted, and the competitive rules of the game are known.—Blue oceans, in contrast, are defined by untapped market space, demand creation, and the opportunity for highly profitable growth.”(Kim.C and Mouborgne. R, 2005).

A good strategy has to provide an innovative idea for breaking into the uncontested market-space in blue-ocean. For example, South West Airlines created a blue ocean of low-cost flying, by providing the speed of air travel with the cost of automobile transport.

M. S. Srinivasan

 

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