Why Do So Many Companies Come Up Short In Their Strategy Planning?
According to a 2020 survey, executives spent 44% of their time on non-strategic activities, including day-to-day tactical efforts, unproductive tasks and meetings, politics and firefighting, and convincing others to listen to their point of view.
Why do so many companies come up short in their strategy planning and implementation? Because their CEOs end up playing the role of firefighter, implementer or counselor. Four years of intensive data analysis conducted by the authors has shown the three roles repeatedly emerge, deflecting from strategy and keeping CEOs from elevating their companies.
To truly improve company performance, CEOs must escape the firefighter, implementer and counselor roles and function as strategy leaders.
The firefighter is a turnaround artist. A company might be struggling due to sudden adverse events or internal foibles. The firefighter swoops in to stabilize the situation.
After Uber Technologies parted ways with its CEO in 2017, the company installed a firefighter CEO while it looked for a new chief executive. In more ways than one, the firefighter takes on the role of an operating officer intent on stabilizing company functioning. But the firefighter does not take on a mandate to shape, lead or implement long-term strategy.
The implementer installs policies and processes to ensure employees perform key tasks with competence. The implementer functions as a caretaking manager who narrows the scope of their remit, delivers on time and stays within budget. The implementer works with middle management and frontline employees to clarify existing goals, policies and initiatives. Implementers are inward-looking and emphasize processes and ongoing initiatives, rather than pinpointing key initiatives or imagining new ways to do things.
For example, a private equity fund retained the chief technology officer of a large company as the CEO of a portfolio company to overhaul its IT infrastructure and implement e-commerce within nine months.
The counselor delegates strategy to others while focusing on relationships, personalities and conflict management. The CEOs then focus on smoothing interpersonal relationships among executives, building teams through hiring and mentoring, empowering their executive teams to act and championing employee engagement and motivation.
For example, the CEO of a healthcare-software startup viewed her role as developing and mentoring young and inexperienced team members. The counselor role can be invaluable for inventors and entrepreneurs launching companies, as the innovators can benefit from mature executive mentorship.
The Strategy Leader
The strategy leader adds value to a company, but not by firefighting, implementing or counseling. The strategy leader helps senior executives focus on customers and rank company-wide priorities. The priorities align the firm’s customers’ most important needs with its senior executives’ time and effort. Guiding sound implementation, the strategy leader helps senior executives develop the correct customer, operational and financial metrics to track employee performance and meet financial targets.
Even strategy leaders must occasionally firefight, counsel and implement. But strategy leaders do not make the functions their priority. They direct their human resources group to counsel, COO to implement and other senior executives to firefight when needed.
The strategy leading CEO focuses the collective energy of senior executives on implementing a clear, simple strategy to satisfy customers’ most important needs. Reassuringly, the process connects the CEO, senior executives and employees directly to their firm’s highest priority customer value drivers.
Case Study: How One CEO Became A Strategy Leader
In this example, an individual became CEO of a construction site management company with $2 billion in sales and more than 5,000 active sites worldwide. A strategy audit showed the company had more than 40 open initiatives that had remained unfinished for many years. Several senior executives disagreed about the company’s direction. The CEO also found a contract for a client with more than 200 sites was underperforming because the site management firm’s service costs were higher than the negotiated price.
The CEO worked with the company’s chief strategy officer to set long-term direction. Using several structured client-assessments they found the company’s two most important customer value drivers and used the results to prioritize their more than 40 open initiatives from most to least impactful. They focused on the six initiatives directly tied to client-value drivers, while pausing or deferring the remaining initiatives. Working with the company’s chief finance and commercial officers, the CEO renegotiated the large customer’s underperforming contract to bring it in line with the most critical value drivers. Determining the company’s customer value drivers also helped resolve differences among regional presidents.
Following the strategy realignment, the site management company’s sales and margins outperformed its peer groups over a one-year period. An executive assessment revealed all senior executives were 100% aligned on strategy by the year’s end, a vast improvement over their initial 21% alignment.
The CEO became a strategy leader by not getting mired into the firefighting, counseling and implementing that consumes many CEOs and, instead, aligning initiatives to customer value drivers.
Vikas Mittal is the J. Hugh Liedtke Professor of Marketing at the Jones Graduate School of Business.
Shrihari Sridhar is the Joe Foster ’56 Chair in Business Leadership and professor of marketing at Texas A&M University's Mays Business School.
To learn more, please see: Mittal, V., Sridhar, S. (2021). Focus: How to Plan Strategy and Improve Execution to Achieve Growth. (1st ed. 2021.) (Edition). Palgrave Macmillan..