The latest article from our guest contributor, Cambridge Judge Business School, explores the detail needed to execute a growth strategy.
How to execute your growth strategy
“The devil is in the details.” The often quoted phrase was carved in golden letters on a plaque, only decoration in the office of Jonas, a tall, stern South African who was going through his 4th year as a CEO of a small but growing winery. This family heirloom carried emotional significance, as the plaque was passed on to him from a long line of family businessmen who established the winery. and resonated with Jonas personally. Being a detail-oriented person, he always made sure that the business ran smoothly. But somehow recently, all his efforts were not paying back much, he felt.
His recent decision to grow the business through a higher end offering, based on a new pinot noir variety seemed to go from challenge to challenge. This was barely making sense to him. He had made no change to the core team; his people had been with the business for decades and had always done an excellent job in terms of his mainstream cabernet sauvignon varieties. Sales and marketing had brought robust results year after year; quality management had achieved almost automation and perfection; his agricultural team had mastered any challenge with the cabernet varieties. Since the start of the pinot line however everything had turned into a challenge. Everyone was complaining. The results were not as planned. And the decision to launch a new line had come under attack from his brothers, the other shareholders in the business.
What went wrong? Many SME CEOs, like Jonas, craft well thought-out strategies for growth, only to find out how many devils hide in the details later on. And often enough the outcomes are detrimental for the business, leaving organizational scars and reversing any positive predisposition for growth. Moreover, the leadership team ends up being blamed for the wrong strategy. “If the strategy was good to begin with, we would not have these problems,” is repeated in internal meetings and very quickly the CEO and his lieutenants are left with minimal support. But are these growth pains always the outcome of bad strategies?
Sometimes yes; but not too often. Like every plan, a growth strategy is a slightly more ambitious and sophisticated plan. It is the evolution of a creative and novel – at least for the company – idea into a more detailed value proposition backed up with a combination of data analysis and gutfeel commitment. And in most cases the business case is written for outsiders like the shareholders, the lenders and the “market.” And any plan is built for external consumption, with little focus on internal processes or buy in.
The internal stakeholders are those responsible for the implementation, and equally often they find themselves listening to great aspirations accompanied by little thinking on how they will become reality. The failure is not happening at the plan. It is happening at the implementation of the plan, and first and foremost at the translation of this plan into functional objectives and tasks that the frontline “experts” can take and turn into actions. This is a process called cascading.
The effort to cascade the strategy lies with the leadership team It requires a few basic steps that rest upon close monitoring and attention:
- First, senior management needs to articulate their business growth strategy clearly enough, so that every member of the organization understands what their offering is, who is their customer, why are they pursuing these particular products and markets and how these objectives will be attained (i.e. what key processes, knowledge competences and ecosystem partnerships might be required). This high level exercise achieves an important result: aligns everyone’s knowledge around the company’s strategy as much as possible.
- Second, the top team should deploy a similar exercise within the business functions, that is the sales people, the IT team, the people at the plant and so on. An articulation of more detailed functional strategies and objectives needs to take place; what are the answers to these four basic questions when the head of sales and marketing and her/his team responds? What is the offering of the sales team? Who is the customer of the R&D unit? How is the plant crew achieving their cost efficiencies? Note that articulating what offering from a functional standpoint is trickier. An R&D group does not develop products, but most likely it develops prototypes; and their customer is an internal customer, e.g. a product manager or an account colleague.
- Third, once the functional objectives are set, the functional leaders should in turn cascade these objectives to their frontline members. A way to do this is through a series of discussion that explicitly delineate how an objective needs to meet a target and what actions can be taken to meet that target and achieve the objective. Essentially the identified set of actions become the next level objectives and the cascading effort can iteratively continue until a clear set of operational tasks is identified. As an example, to make any objective in sales happening, the sales team needs to set a target; to attain this target they need to define a set of clear actions for each product line; but then each product line level action becomes the objective for this product line, for which they need to have a target and which leads to yet another sort of actions… and so on and so forth.
Unfortunately, these three steps can lead to communication overload for an organization, especially for a small organization. Yet they are the “cost” to be paid to achieve (i) clarity of the growth plan across the entire organization, (ii) alignment and (iii) support for the growth objectives. Alignment that is the only antidote to the “devils”.
Co-authored by Prof Christoph Loch, Dean of Cambridge Judge Business School (CJBS); Hanadi Jabado, Executive Director of the CJBS Entrepreneurship Centre; and Prof Stelios (Stylianos) Kavadias, Academic Director of the CJBS Entrepreneurship Centre Cambridge – 13.01.2017