Which CEO can say that the execution of the company strategy is going fast enough? Which CEO can say that every single leadership team member is delivering on his/her part, that most managers know and follow the new strategy, or that the company lives up to its values in the majority of daily interactions between company managers, or that the new capabilities required to win in the future are well under way to being fully integrated into the company? According to corporate advisor Brian Petersen, not many. And when it comes to troubled companies, the news is equally unpleasant. “When I look at the statistics, whether you look at McKinsey or Pricewaterhouse Coopers or Harvard Business Review, what you always see is a failure rate around 70 per cent for company transformations,” Petersen says. Despite this rate of failure and general disorientation, corporate heads are better trained than ever, they have access to better consultants than ever and have implemented more advanced human resources processes – evaluations, development plans, leadership pipeline, strategy communications and such – than ever. So what’s missing?
According to Petersen, the missing ingredient is a second or third pair of eyes. He is not talking about the kind of eyes that come from your typical consultancy organisation. “What the traditional consulting companies do is sell teams of young graduates for a limited period of time,” says Petersen. “And they will say, ‘alright, you need to figure out whether try to go big in China or not, whether to build a new factory or what your overall strategy should be, you have to figure all of that out, so we’re going to go and analyse everything there is to analyse, the market, the consumers, your competitors, your profitability, your costs – everything to figure out what are the right decisions.’ And they’re going to come back and recommend decisions. ´When they’ve done that, they leave.” In other words, consulting firms plan, but they do not implement. And that is what the typical executive needs. According to Petersen, there needs to be the realisation that while the skills needed to achieve an acceleration of strategy execution can be described in books and PowerPoint presentations so forth, they cannot be mastered at a personal level in the same way as technical skills.
In Petersen’s opinion, consultants provide road maps, and no algorithm or road map can help in strategic execution, which is fundamentally volatile, uncertain, complex, and ambiguous or VUCA. “Driving a car was like that. You had to keep your eye on the road for everything that happens around you, your hand on the steering wheel and basically adjust every second of way to get to your destination. Now recently we are about to have driverless cars. It’s now more or less possible to turn all of that complexity into an algorithm, into a computer programme that can actually be programmed and navigate you through the landmines, the problems and so on. That’s not where we are in the execution of company strategies. We’re still back when you needed the driver to adjust every second of the way.”
One way of looking at a 70-percent failure rate in company transformations is that 7 out of 10 CEOs should have their driving licences revoked. An alternative view is that leading a company through a strategic transformation is comparable to driving a thousand cars, so as Petersen says, the CEO “will have more blind spots than a normal driver would have. And blind spots are what are causing the failure of this company’s transformation.” That’s what makes implementation of those detailed consultants’ plans so difficult. “If you look at the roadmaps that do exist, they say things like make sure your strategy is simple enough that everybody can understand it, make sure that your teams work well together and so on. How do you know when that’s the case? How do you know as the CEO that the strategy is simple enough? ´It should be understood by thousands of people. How do you know that your team is effective enough? How do you know when you have the right people in the right jobs?” For Petersen, the solution is another acronym CAD – context, awareness, and differentiation, or in simpler terms, the CEOs adjusting their actions to the specific context. This means that the CEO needs to learn to diagnose the situation constantly (overall and for every touchpoint he has with the organisation).
That means pulling out from a very large arsenal the exact skills that fit in the particular context. That’s a tall order, which may call for that second pair of eyes to see the blind spots. “What the outside person can also do is to set a benchmark, so he can look at the character of his strategy, the choice of company values, the priority setting all these sorts of things, and tell him that he is not actually at the level of most successful companies. And so, the outsider spots the issues the CEO can’t see and gives him a benchmark to let him know when you’re standing in the green zone and when you’re in the red zone.” But who are these famed outsiders who see these blind spots?
There is a growing list of companies offering the services of such people, not traditional consultants but former executives who understand the full scope of the executional issues that a corporation might run into. They are not specialists in any particular facet of corporate transformations, as they will not know in advance which issues that will come up. They need to be able to see any and all of them and be able to help us with any and all of them. As an executive, they ideally would have gone through 3 or 4 company transformations, and afterwards have helped 10 other companies in doing so. As these companies deal specifically with execution of company strategy, they will work completely differently from the typical consultancy, which is why consultancies don’t want to be part of the implementation process. ´“The help the CEO needs during implementation is somebody to help him out for week here, a day there, a phone call here and then maybe nothing for a month and so on. And that doesn’t fit with selling a team of 10 graduates for 3 months,” says Petersen. And the solutions they come up with tend to be more creative. Petersen gives as an example, the dilemma of one medium-sized company that he counseled.´One of the company’s divisions was headed by a salesman who grew the company’s sales by 25 percent a year, but at the same time, produced very unsatisfactory results in fulfilling orders, with customers sometimes complaining that they did not get what they were sold.
The executive consultant, who in this situation as Petersen himself, talked with the division head to learn more about him, and came to the conclusion that the identity of the man in question was bound up in his ability to make sales, and he would thus sell anything and everything, despite the fact that he was no longer a mere salesman but the head of a division. On the other hand, the thought of actually managing the deliveries filled this manager with horror.
In the end, Petersen advised against demoting the manager, as this would have stripped him of the motivation that made his sales work so commendable. Instead, he advised the firm to provide the manager with a framework for what he could and could not sell, put someone else in to take care of operations, and to do it all in a way that it did not make him feel like he had been put on notice or that he was somehow “a loser”. The point is in considering VUCA, there are no rules or roadmaps. In the context of implementation of company strategy, the company, its CEO and if need be, an external consultant, need to look at all the context each time a decision is made, and then make the decision that is best overall. “The world is ever-changing and execution does not accept algorithms and roadmaps,” Petersen says.