The definition of insanity, CEO version: spend months creating a business strategy and expect something magical to happen. Here’s what to do instead.

Albert Einstein is often credited with coming up with the definition of insanity as ‘doing the same thing over and over again and expecting a different outcome’.

Einstein, a master at explaining things succinctly, is also said to have summarised one of his many discoveries in just eighteen words: “if a person fell freely from the roof of his house, he would not feel his own weight.” This was the beginning of his equivalence principle , which went on to shape the theory of gravity.

This same principle of weightlessness can also often be true of multi-page, multi-million dollar business strategies and whilst the idea may not contribute to our understanding of a universal force, it does hold important substance for CEOs.?

The grand business strategy often seems to be judged on the weight of the document alone, but throw them into the air (if you can lift them) and they will be, for just a millisecond, completely without weight, before they crash back to the ground with a thud.

The assumed worth of these grand strategy documents often seems to be tied up in the time and cost of producing them, yet that worth is rarely born out in meaningful execution.?

They are the CEO’s definition of insanity: keep producing large, weighty strategies and keep expecting that, at some point, one of them will turn your business around.

In the 2000s there was a three-horse race in the United States amongst the ‘big three’ discount retailers; Walmart, Target and Kmart.

As the decade progressed it became clear that Walmart and Target were pulling away as the leaders, leaving Kmart to be swallowed up as part of the ‘also rans’.

Kmart, following a filing for bankruptcy in 2002, decided that they needed a strategy and so spent some months coming up with the answer to how they would finally ace their competition. The summarised result of that strategy is a near-perfect example of corporate jargon. Kmart decided that their missions was:

"To thrive as a mass merchandising company that offers customers quality products through a portfolio of exclusive brands and labels. "

The results of Kmart’s strategy were fairly clear. By early 2013 the performance of Sears, Kmart’s owners, had fallen by more than 20% since 2008 . Walmart, on the other hand, was up over 21% and Target had risen over 14%. The strategy and mission statement, rolled out in 2012, had failed to impact the slowly declining curve over the previous 12 months by any discernible degree.?

So what happened? Why did this strategy fail? And why do so many of these large, sweeping strategies and transformation attempts fail dramatically?

Time spent on strategy is not as important as time on execution

The short answer, particularly for enterprise level companies, is that they are great at producing strategies and poor at execution.

A typical corporate strategy cycle involves a three year plan. Within that plan there is likely to be a big idea, whether it’s a new operating model, product, go to market route, digital transformation or something else. This big idea typically takes at least one year until it is ready in any concrete form. At this point the company’s customers are yet to see the big idea or how the big idea will impact them. The company crosses its fingers and shows it to customers, at which point it is almost certain that something, if not everything, is wrong. Doubts are created around the company’s? innovation approach, the project is stopped and a new three year plan gets the green light. In all of that time, very little practical execution has happened. Most of the time has been spent by the company looking inwards.

At the time of its troubles Kmart was regarded as “an exceptionally insular company ”. Reading the list of issues the company had is like reading a small checklist of vital execution failures.

• Inefficient ordering and supply chain management meant that goods at Kmart “cost more and arrive later than at Kmart's competitors”.
• Poor measurement of stock sales meant Kmart “continues to stock higher-margined goods in place of faster-moving products, leading to a decrease in inventory turn-over”.

So whilst Walmart and Target were optimising supply chains, revitalising stores to sell more fast-moving goods and creating an identity of service and product provision around this execution, Kmart were stuck on creating an identity, whilst execution lagged.

Walmart and Target were providing what customers wanted, when they wanted it at an attractive price point, whilst Kmart seemed to have lost focus on those core retail truisms.

The success of the Walmart and Target approach is as true for retail as it is for any other sector. Most businesses think that if they spend longer on planning, they can increase the likelihood of a successful execution. The inverse is true. No matter how good you are at planning you are really crossing your fingers that the plan is right until you start the implementation, or, phrased another way, the execution.

The darlings of business performance over the last decade have been the disruptive digital businesses, who operate in the opposite way to the grand strategy approach.

Digital businesses execute fast and iteratively. They understand that planning isn’t proof. They ideate quickly, test whether the customer likes the idea or not by executing the idea in a customer environment and then move on to the next idea. This is the inverse of the grand strategy approach. What can businesses learn from the digital disruptors and, instead of creating a grand strategy, how can CEOs spend more time on execution?

Customer centricity

Always crave proof of what the customer wants. “Nothing happens until someone sells something”, salespeople are fond of saying, but it is a useful guiding principle for strategy, innovation and execution. There is no point developing something over many years that no-one wants to buy. If you are truly customer centric then you will be craving customer behavioural data from the outset, to feed your innovation process with meaningful data on how you can better serve your audience.

Test your ideas

Establish this proof by testing your ideas through simple, short sprints of execution. This enables feedback, which allows you to refine your strategy and future sprints based on customer needs, rather than a crossed pair of fingers. Create the minimum possible strategy (maybe six days of work, instead of six weeks), leap into execution, refine your strategy and repeat your testing.

Involve every level of your team

You can fight against being insular by being more customer centric. You can similarly fight against a lack of execution by involving your execution team in the strategy creation. Teams that feel a connection or shared ownership of a strategy are more likely to work towards its success.?

Pivot as you execute

Unlike the three year strategy approach, you will get input on your direction of travel as you execute your strategy and this means your strategy must change as the feedback increases. Be prepared to execute quickly and in potentially unexpected directions. Pivot towards your product market fit as your discover it and your testing proves its presence.

Discipline and momentum

In his book ‘Why Digital Transformations Fail: The Surprising Disciplines of How to Take Off and Stay Ahead’ Tony Saldanha highlights two key factors for companies undergoing strategic transformation. Firstly, you must have discipline. This helps to ensure that your quick and iterative approach does not become haphazard and random. Secondly, you need a way to maintain momentum, otherwise you are at risk of crashing back to Earth, like a rocket that was propelled straight upwards from the launch pad and has now run out of fuel.

These are useful final points to consider, because spending less time on strategy is not the same as not having one. It is a conscious, strategic decision to focus on execution and strategise along the way. This structure needs discipline to maintain momentum, to continually iterate and to avoid being tempted back into a cycle of three year strategy whitepapers.?

If you have a grand strategy currently then perhaps start by asking some key questions;

• Have our customers seen the product, service or way of doing business our strategy contains? When will they?
• When was the last time someone revisited and changed the strategy?
• How far away are we from delivering the strategy, as it is described?
• How much time do we spend on execution, versus how much time we spent or are spending maintaining the strategy?
• Have you managed to deliver an output in every one of your sprints, over just a few weeks, or are you taking months to deliver something?

Please do share your answers with me and let me know how you get on in the brave new world of minimalist strategies, that do not make a ‘thud’ when they land on the floor.