Successful strategy and execution results in the business transformation that leaders need to bring about, if they are to ensure their organisations thrive and survive. The fact that over 40% of the companies that were at the top of the Fortune 500 in 2000, were no longer there in 2010, should encourage boards to demand “transformational leaders”, as opposed to leaders who simply keep the lights on.
The term transformational leadership was first coined by James V. Downton in his book ‘Rebel Leadership: Commitment and Charisma in a Revolutionary Process’(1973).
Leaders Come Out With Their Hands Up
PwC recently published an excellent paper on organisational DNA, which was an interesting read. But what really caught my attention were four bullet headlines (see 1 to 4 below) that reflected the sentiment of CEOs towards the gap between strategy and execution.
In an earlier report, it was revealed that leaders in nearly half of all organisations today, are not ready to execute new business strategies in response to rapid, transformational change, and that the gap between strategic intent and strategy execution creates a drag on performance and morale, while increasing risk exposure.
The world is becoming increasingly excited about the potential that new technological trends are making available, and the ability to create ‘sexy’ strategies seems endless. But the sad reality remains that most leadership teams are not equipped to execute on those strategies, and CEOs have been admitting that.
Two Sides to Transformation
As shown below, there are nine management disciplines required in BTM²business transformation. While Meta Management spans the other eight, the eight are grouped into two types: Direction and Enablement.
It is clear to see that strategy is but a small component in business transformation, albeit a critical one, because the wrong strategy can make the remaining journey, one that sends everything in the wrong direction, wasting time, money and any hope of injecting new value into the business.
Value Management and Risk Management are key to the strategy component, but these are often neglected, allowing organisations to inherit undertakings that they are not set up for.
1. CEOs See The Gap
This paper on organisational DNA reports that 78% of global CEOs surveyed expect to transform their organisations, yet only 54% are satisfied with their ability to execute on their strategic vision. Leaders need to ensure they acquire the business transformation management capability required to move away from this unsavoury state of affairs. Such capability should bring with them, not only the right skills, attributes and capabilities; but also a proven business transformation management methodology, such as BTM², to help safeguard the success of the organisation’s business transformation efforts.
2. CEOs Are Re-organising
80% of leaders in this annual global CEO survey recognise the need to change their operating model and have either developed or implemented a change programme. It is crucial that leaders ensure that any new operating model “enables execution”. In other words, once leaders establish clarity on who their organisations are, and what they do, they need to define how to do it, using the right business transformation management capability and approach.
3. Missing Capabilities
Two thirds of leaders in a recent Strategy& survey admit they don’t have the capabilities needed to create value in the marketplace. It is vital that CEOs and their leadership teams enable the engagement of the right management capabilities at the Strategy, Programme and Project layers, within a business transformation. The Business Transformation Academy (BTA) assesses highly experienced business transformation managers, issuing certification such as GBTM (Global Business Transformation Manager) and BTPM (Business Transformation Programme Manager). PRINCE2 and PMP are the common credentials at project level.
4. Weak Execution Link
Only 44% of the 100,000-plus respondents to Strategy&’s public online Org DNA Profiler survey agree that their organisations “quickly translate important strategy and operational decisions into action.” Once again I reiterate the point that the right over-arching business transformation management capability and business transformation approach, such as BTM², can help leaders change this.
CEOs and their leadership teams need to bring in the right transformation management expertise, if they are to ease the pain being caused by the current gap between strategy and execution.
The Cost of Not Closing The Gap
How much do you think a low level of transformation capability could cost your company?
As I wrote at the top of this post: over 40% of the companies that were at the top of the Fortune 500 in 2000, were no longer there in 2010. Many will have had bold and innovative strategy; but not the transformation capability to realise that strategy.