Strategy to Execution - The Secret Sauce for the Digital Era (Part 1)
by Carl Edwards, on Oct 26, 2016 1:04:27 PM
As any good business strategist, enterprise architect or C-Suite leader will acknowledge - there is a constant level of alertness and focus on failure and success factors, in other words, staying on top of the overall risk profile of the enterprise. We know that some companies do this better than others. The famous 2014 study that showed that 88% of the Fortune 500 companies in 1955 are either gone or no longer in the list is a good data point. Even though the precision and accuracy of that study has some issues, the overall conclusion is still valid – which is that enterprises must constantly identify and react to threats and opportunities. (Examples of issues with the study are; the criteria for entering the Fortune 500 has changed over time, and the study did not take into account different types of ownership).
This series of blogs is devoted to asking and answering the question; Is there a pattern or model that can alert us to higher levels of risks for corporate growth and survival in the new digital era and are there techniques that allow us to address them?
Enterprise Eco-system Dynamics
While at Microsoft, I learned the power of developing simple but highly insightful (insight-to-noise ratio) two axis graphs. These would be used for example to help us identify which type of companies were more likely to move to the cloud in the short term. The one below is one that I have recently developed to help answer the question posed in the introduction.
Several insights drawn from the chart are the following: (others will follow in the next editions of this blog series)
Companies in Quadrant 1 & 2 need an S2E (Strategy-to-Execution) discipline and methodology immediately
The rate of disruption and change is so high that companies in these quadrants need to explore new offerings, business models and platforms continuously. What this means, is that for the first time in corporate history, strategies have to be updated, added and removed almost as frequently as the general ledger is updated. Most enterprises today neither have an S2E methodology nor have they instituted the discipline, in short, they have not built this muscle.
Most are aware of the now famous book ’The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail’ by Clayton Christensen published in 1997. The work documents disruption as a major force at work in the business landscape. What has also become clear is that the rate of disruption continues to grow. For example, Steve Denning points out in a 2011 Forbes article entitled ‘Peggy Noonan On Steve Jobs And Why Big Companies Die’; “Half a century ago, the life expectancy of a firm in the Fortune 500 was around 75 years. Now it is less than 15 years and declining even further.”
Gartner addresses this phenomenon with a concept they have coined the Nexus of Forces; “The Nexus of Forces — the convergence of mobile, social, cloud and information — has become the platform for digital business. Digital business is the creation of new business designs by blurring the digital and physical world”. Recently things like IoT (Internet of Things) and Machine Learning have been added to the Nexus of Forces.
Companies in Quadrant 3 & 4 also need S2E but companies in Quadrants 1 and 2 need it in the very short term
At Microsoft, we primarily used these type of charts to establish rough guidelines that allowed us to identify companies more likely than others in the very short term to adopt or need a cloud strategy. In a similar fashion, here the chart helps us identify companies that likely will need S2E in the very short term (even if they don’t yet know it). The reality is that almost no business today is not impacted by the Digital Revolution. However, some will need a strong S2E discipline sooner than others to survive and grow given their location in the Business Ecosystem Dynamics Matrix. Just like in previous eras of major transformation (e.g. quality, customer focus, etc.) progressive leaders in companies, regardless of which quadrant their enterprise primarily falls in, will recognize the need for and champion S2E.
How S2E can help
S2E is the equivalent of Six Sigma, Lean, and Agile for Business Strategy. S2E will do for business strategy what these methodologies did for product and software innovation. Moreover, in a digital ecosystem where the Nexus of Forces is at play, strategy is king since the enterprise must continuously maneuver to stay ahead of the rapidly changing developments in its ecosystem. S2E methodology will build the muscle in the Enterprise of continuous disruption from within so as not to be disrupted from without (or at the very least – to stay ahead of the disruption from without). S2E gives enterprises facing turbulent forces a way to master those forces instead of the other way around.
The bottom line: _____________________________________________________
S2E is emerging as a powerful discipline that delivers on the promise of radically improving strategy execution. S2E is, therefore, a major ‘secret sauce’ ingredient for the success of digital era enterprises. Additionally, aligning the organization on threats and opportunities is a critical requirement of leaders. If your organization embraces simple heuristic tools like the Ecosystem Dynamics Matrix, getting people aligned on the path forward can be much easier.