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WORK TITLE: Strategy That Works
WORK NOTES: with Cesare Mainardi
PSEUDONYM(S):
BIRTHDATE:
WEBSITE:
CITY: Chicago
STATE: IL
COUNTRY:
NATIONALITY:
http://www.strategyand.pwc.com/global/home/who_we_are/leadership/details/paul_leinwand * https://www.weforum.org/people/paul-leinwand/ * https://breakfastbriefings.stanford.edu/speakers/paul-leinwand-senior-partner-strategy-adjunct-professor-strategy-kellogg-school-management- * http://www.kellogg.northwestern.edu/faculty/directory/leinwand_paul.aspx
RESEARCHER NOTES:
PERSONAL
Male.
EDUCATION:Kellogg Graduate School of Management at Northwestern University, M.B.A. (management); Washington University in St. Louis, B.A. (political science).
ADDRESS
CAREER
PwC, Strategy&, global managing director and principal; Booz & Company, partner, chair of the Marketing Advisory Council; Kellogg School of Management, adjunct professor of strategy; strategy+business magazine, contributing editor.
WRITINGS
Contributor of articles to periodicals, including Harvard Business Review and strategy+business.
SIDELIGHTS
Paul Leinwand and Cesare Mainardi, both from Booz & Company, a global consumer, media, and retail practice, have developed the Capabilities Driven Strategy approach to value creation. They have collaborated on books that encourage companies to choose strategies that use their unique capabilities and lead to successful execution. Leinwand is a partner in Booz & Company. He serves as chair of the firm’s Marketing Advisory Council. He was previously global managing director with Strategy&, the strategy consulting business of PwC. He is also adjunct professor of strategy at the Kellogg School of Management and a contributing editor of strategy+business.
Cesare R. Mainardi is CEO of Booz & Company and was previously managing director of Booz & Company’s North American business and chief operating officer. He is also a member of the company’s Executive Committee. In 2005 Consulting magazine named Mainardi to its Top 25 Consultants list. He earned an M.B.A. from the Kellogg Graduate School of Management at Northwestern University, and a master’s degree in manufacturing engineering, also from Northwestern.
In 2011 Leinwand and Mainardi published The Essential Advantage: How to Win with a Capabilities-Driven Strategy. The book explains how companies need to achieve a tight match between their strategic direction and their unique capabilities in order to succeed in any market. The key is to exploit key elements that reinforce each other rather than work at cross purposes. The authors teach companies why they should focus on a few primary capabilities, identify their place in the market, design a strategy for growth, align business behind their capabilities, and clarify growth, costs, and human resources. Leinwand and Mainardi use case studies from companies that successfully capitalize on their unique capabilities, such as Pfizer, Amazon, Johnson & Johnson, Tata Sons, and Procter & Gamble.
Leinwand and Mainardi next collaborated with Art Kleiner on the 2016 Strategy That Works: How Winning Companies Close the Strategy-to-Execution Gap, in which they explain why some organizations do not have the capabilities to support their corporate strategy. They describe ways that companies can erase the gap they have unintentionally created between strategy and execution so they can surpass their competitors. Using IKEA, Natura, Danaher, Tesla Motors, Under Armour, and Lego as case studies, Leinwand and Mainardi describe five key principles: they explain how companies can commit to their core competencies instead of trying multiple opportunities, devise their own unique capabilities instead of imitating others, exploit their corporate culture instead of changing it, wisely invest in certain areas rather than cutting costs across the board, and determine their own future rather than reacting to it.
Writing in Choice, C. Wankel described the book as “a practitioner-oriented, prescriptive book of the In Search of Excellence sort.” However, Wankel admitted that “a more inspiring approach to strategy” is Adam Grant’s Originals: How Non-Conformists Move the World. Dylan Schleicher commented on the 800-CEO-READ Web site that the authors “have written a book that upends that expectation, disenchants the reader with the strategy dogma of the day, and replaces it with a new proposition.” Schleicher agreed with the authors that “Companies become truly successful by differentiating themselves and their capabilities from other organizations.”
Online at Blogging on Business, Bob Morris remarked that Leinwand and Mainardi are “among the most insightful business thinkers now publishing books and articles that provide information, insights, and counsel of incalculable value to senior-level executives as well as to those who aspire to reach that level.” Morris concluded that Strategy That Works “is their most important work thus far…[because] I think it will have a wider and deeper impact on any organization, whatever its size and nature may be.”
BIOCRIT
PERIODICALS
Choice, June, 2016, C. Wankel, review of Strategy That Works: How Winning Companies Close the Strategy-to-Execution Gap, p. 1516.
Reference & Research Book News, April, 2011, review of The Essential Advantage: How to Win with a Capabilities-Driven Strategy.
ONLINE
Blogging on Business, http://bobmorris.biz/ ( February 9, 2016 ), Bob Morris, review of Strategy That Works.
800-CEO-READ, http://inthebooks.800ceoread.com/ (February 4, 2016 ), Dylan Schleicher, review of Strategy That Works.
Kellogg Graduate School of Management at Northwestern University Web site, http://www.kellogg.northwestern.edu/ (May 11, 2017), author faculty profile.
Paul Leinwand
Chicago
Contact
E-mail Paul Leinwand
Paul Leinwand is a thought leader on strategy, growth, and capability building for Strategy&, PwC's strategy consulting group. Based in Chicago, he is a principal with PwC U.S.
Focus areas:
Advises clients on the topic of strategy, growth, and capability building, with a focus on the consumer product and retail sectors.
Recent Publications:
Co-Author of three books, Strategy That Works: How Winning Companies Close the Strategy-to-Execution Gap (Harvard Business Review Press, 2016), The Essential Advantage: How to Win with a Capabilities-Driven Strategy (Harvard Business Review Press, 2010) and Cut Costs and Grow Stronger (Harvard Business Review Press, 2009), as well as several articles in the Harvard Business Review and strategy+business.
"Pay Attention to Revenue Growth. But How?", which appeared in strategy+business.
"The Power of Operational POS – From Managing at the Mean to Managing the Meaningful", a Strategy& study.
"The End of Trade 'Spending'? Two New Approaches Can Recoup This Investment", a Strategy& study.
Education:
Mr. Leinwand earned an MBA with Distinction from Northwestern University’s Kellogg Graduate School of Management and a Bachelor of Arts in Political Science from Washington University. He currently teaches at Kellogg as an Adjunct Professor of Strategy.
BA in Political Science, Washington University; MBA (Hons), Kellogg Graduate School of Management, Northwestern University. Senior Partner, Strategy&, Chicago; advises clients on strategy, growth, and capability building, with a focus on the consumer product and retail sectors. Adjunct Professor of Management & Strategy, Kellogg. Member, Global Agenda Council on the Future of Consumer Industries, World Economic Forum. Co-Author of two books: The Essential Advantage: How to Win with a Capabilities- Driven Strategy (2010) and Cut Costs & Grow Stronger (2009). Co-Author of articles in Harvard Business Review and strategy+business.
Paul Leinwand - Senior Partner, Strategy&; Adjunct Professor of Strategy, Kellogg School of Management, Northwestern University
Paul Leinwand is a Senior Partner at Strategy& (formerly Booz & Company and now part of the PwC network) in their Chicago office. He advises clients on the topic of strategy and growth, with a focus on the consumer product and retail sectors. In his 17 years as a management consultant, Mr. Leinwand has worked with many of the world’s largest companies to help them identify and build the essential capabilities they need to outperform.
Based on these experiences, Mr. Leinwand has been a principal architect of the firm’s differentiated approach to strategy and capability building. He has co-authored the books The Essential Advantage: How to Win with a Capabilities-Driven Strategy and Cut Costs and Grow Stronger, both published by Harvard Business Press. He has also co-authored several articles on business strategy published in leading journals such as the Harvard Business Review and strategy+business, including “The Coherence Premium,”“The New Supercompetitors,”and “Beyond Functions.”
Mr Leinwand currently teaches at the Kellogg School of Management as an Adjunct Professor of Strategy. He is a member of the World Economic Forum’s Global Agenda Council on the Future of Consumer Industries.
He earned an MBA with Distinction from Northwestern University’s Kellogg Graduate School of Management and a Bachelor of Arts in Political Science from Washington University.
Paul D. Leinwand
STRATEGY
Adjunct Professor of Strategy
Overview
Teaching
Print Overview
Paul Leinwand is a partner at Booz & Company in their Chicago office and has been with the Firm since 1998. He advises clients on the topic of strategy and capability development, with a particular focus on the consumer product and retail sectors.
Mr. Leinwand has co-authored two books, The Essential Advantage: How to Win with a Capabilities-Driven Strategy (Harvard Business Press, 2010) and Cut Costs & Grow Stronger (Harvard Business Press, 2009), as well as several articles in the Harvard Business Review and strategy+business. He has also spoken at many corporate and other functions on the topic of strategy.
Mr. Leinwand had previously worked for Federated Department Stores / Macy’s before Booz. He has an MBA with Distinction from Northwestern University’s Kellogg Graduate School of Management, and a Bachelor of Arts in Political Science from Washington University.
Full-Time / Evening & Weekend MBA
Strategic Decisions: A Guide to Making Winning Choices (STRT-960-5)
This course was formerly known as MGMT 960-A
This course focuses on a different approach to strategy that is capability centered -- the premise that organizations will succeed in markets and offerings that best match what they are great at doing. Through case studies and current examples, the class will cover both the logic for why a capabilities-driven approach to strategy works - and how through effective execution it leads more often to success. Senior executives from winning companies leveraging this thinking will provide an inside view of what it is like to develop and execute this type of strategy approach.
Paul Leinwand is Global Managing Director, Capabilities-Driven Strategy and Growth, with Strategy&, PwC’s strategy consulting business, and a principal with PwC U.S.
Mr. Leinwand is one of the principal architects of the Capabilities Driven Strategy approach to value creation, and has advised leaders in many industries and regions on the topic. He has coauthored several books all published by Harvard, including Strategy That Works (2016), The Essential Advantage (2011) and Cut Costs and Grow Stronger (2009), as well as many articles in Harvard Business Review and strategy+business.
Leinwand is also an Adjunct Professor of Strategy at the Kellogg School of Management and a contributing editor of strategy+business. He holds a master’s degree in management with distinction from the Kellogg Graduate School of Management at Northwestern University, and a Bachelor of Arts in Political Science from Washington University in St. Louis.
A Conversation with Paul Leinwand and Cesare Mainardi, co-authors of The Essential Advantage
Posted on: August 26th, 2011 by bobmorris
Paul Leinwand
Here is an excerpt from another in a series of conversations sponsored by Booz & Company. In this instance, with Paul Leinwand and Cesare Mainardi, co-authors of The Essential Advantage: How to Win with a Capabilities-Driven Strategy, published by Harvard Business Review Press (2011). In this interview, they point out that in this unpredictable economy, traditional approaches to strategy are a luxury most companies cannot afford. Instead they need to follow a Capabilities-Driven Strategy, starting by conducting a clear-eyed assessment of what they as a firm already do exceptionally well, and then doubling down on those differentiating capabilities. Further, they need to limit their focus to, at most, six capabilities, and make those capabilities work together as a mutually reinforcing system that perpetuates competitive advantage.
To download a PDF and read the complete conversation, please click here.
* * *
Cesare Mainardi
Why did you write The Essential Advantage?
Turbulent markets demand focus and discipline. In this unpredictable economy, traditional approaches to strategy are a luxury most companies cannot afford. They cannot chart a future course based on a wide-eyed search for external growth: “There’s an attractive, adjacent market. Let’s go after it.” Rather, they need to conduct a clear-eyed assessment of what they as a firm already do exceptionally well, and then double down on those differentiating capabilities. Further, they need to limit their focus to, at most, six capabilities, and make those capabilities work together as a mutually reinforcing system that perpetuates competitive advantage.
What is the “coherence premium”?
Coherent companies—those that possess a capabilities system that aligns their strategy with their product/service portfolio—generate superior performance over time, which is what we call the coherence premium. For a company to be described as “coherent,” according to our definition, it must be resolute and clear-minded in three critical ways: in the way the company creates value in the market (its chosen “way to play”); in the system of capabilities it deploys; and in the products and services it provides to its customers. The goal is balance: A coherent company strikes a balance where the right product and service portfolio naturally thrives within a capabilities system consciously chosen and implemented to support a deliberate strategy or way to play. We believe coherence confers a substantial premium, and we’ve measured it. We’ve established a strong correlation between coherence, as we define it, and superior performance over time in a number of industries.
What does it mean to have a “right to win”?
The right to win is the confidence held by a company that its combination of way to play, system of capabilities, and products and services will outdeliver those of its competitors, drive sustained earnings growth, and thus give it an essential advantage in its market. The right to win is the ability to enter or participate in any competitive market with the reasonably justified belief that you will succeed and create value. That belief stems from having chosen a differentiated way to play that is supported by a strong system of mutually reinforcing capabilities. A right to win isn’t a guarantee that things will go your way, but it reflects your relative coherence: the fact that you are better prepared to attract and keep customers than any of your competitors. A right to win can be measured in having share or margin advantage relative to competitors who compete within the same market.
What is “capabilities-driven strategy”?
Capabilities-driven strategy (CDS) is a pragmatic series of choices designed to lead you to increasing levels of coherence and thus to gain an essential advantage for your company over time. CDS starts with what you as a company do best—better than anyone else—and builds from that internal base of strength in making market participation choices. Traditionally, the practice of strategy has moved in the opposite direction. Companies scan the market for attractive expansion opportunities and build capabilities to suit those opportunities. We think they have it backward. It’s much harder to build capabilities than to leverage what you already do exceptionally well in capturing value. Those companies that focus on building a system of three to six best-in-class, interlocking capabilities that support their way to play achieve a right to win in their industries. They exploit their strengths over and over again, becoming even better at what they already excel at.
We’ve established a strong correlation between coherence, as we define it, and superior performance over time in a number of industries.
Can you measure the success of a capabilities-driven strategy?
We have established a strong correlation between capabilities coherence and superior returns over time. In fact, we have devised a way to measure the success of a capabilities-driven strategy and applied it to a number of industries. We call this measure the “coherence premium.” To demonstrate it, we’ve examined a number of industries and mapped the level of capabilities coherence in the portfolio of each of the major players against their operating margins over the past five years. We have confirmed that coherence in capabilities correlates strongly with greater profitability (as measured by EBIT margin over a five-year period). Our approach to scoring coherence is similar across industries and can be distilled into three essential steps. First, we define the segments each company serves. Next, we identify the capabilities that drive value for the company in each segment. Finally, we determine the number of common capabilities across all the segments a company serves. The resulting score is then mapped against EBIT margin to determine the coherence premium. Our research shows that companies that invest mindfully in a capabilities system that supports their way to play and their product and service portfolio outperform the competition in their industry.
In a messy, incoherent world, those companies that can look through a capabilities lens set a straighter and more sustainable course and avoid costly missteps.
Why haven’t more companies adopted capabilities-driven strategy as “the” way to develop strategy?
It’s easier to accommodate incoherence than to fight for coherence.
Companies today operate in a business environment that encourages incoherence. Efforts to improve customer insight, for example, seem laudatory—but they can lead a business unit leader to propose bringing out a product line extension (“Consumers are asking for it”) without considering how it fits with the company’s capabilities system. Or a benchmarking exercise might lead a functional leader to argue for new investment in distribution networks (“Our competitors have them” or “We must be great at this”) without recognizing that your existing distribution network, while it may not be the best, is more than adequate for your way to play, and the investment is better made elsewhere. It’s easier, or certainly less risky, to focus on incremental improvement in specific areas than sweeping change across the board.
What many people don’t realize is that CDS can be implemented at any level—function, business unit, subsidiary, enterprise. The complete coherence we’ve described is an ultimate destination, but there is also value created in the journey, in staking and exploiting “pockets” of coherence. In an incoherent world, the relatively coherent company can prosper. In an incoherent company, the relatively coherent division can grow.
* * *
To download a PDF and read the complete conversation, please click here.
Paul Leinwand is a Booz & Company partner based in Chicago. He works in the consumer, media, and digital practice and focuses on capabilities-driven strategy for consumer products companies.
Cesare Mainardi is managing director of Booz & Company’s North American business and a member of the firm’s executive committee. In his 23 years with the firm, he has worked with global Fortune 500 companies to help them achieve major business transformations.
Resources
Paul Leinwand and Cesare Mainardi, The Essential Advantage: How to Win with a Capabilities-Driven Strategy, Harvard Business Review Press, December 2010.
Paul Leinwand and Cesare Mainardi, “The Coherence Premium,” Harvard Business Review, June 2010. (Download free copy by clicking here.)
Shumeet Banerji, Paul Leinwand, and Cesare Mainardi, Cut Costs and Grow Stronger
Leinwand, Paul. Strategy that works: how winning companies close the strategy-to-execution gap
C. Wankel
53.10 (June 2016): p1516.
Copyright: COPYRIGHT 2016 American Library Association CHOICE
http://www.ala.org/acrl/choice/about
Leinwand, Paul. Strategy that works: how winning companies close the strategy-to-execution gap, by Paul Leinwand and Cesare Mainardi with Art Kleiner. Harvard Business Review Press, 2016. 264p bibl index afp ISBN 9781625275202 cloth, $32.00
53-4460
HD30
2015-26915 CIP
Strategy That Works, by top consultants Paul Leinwand and Cesare Mainardi, is a practitioner-oriented, prescriptive book of the In Search of Excellence sort. It focuses on crafting strategy with a mind to where an organization wants to go, grounded in what it can practically accomplish. A winning company is one seen as managing itself around several differentiating capabilities and integrating them so they are coherent. "Coherence" involves combining a distinctive value proposition with a set of distinctive capabilities, as well as products and services using those capabilities. The authors "looked at fourteen enterprises closely," including Amazon, Apple, and IKEA, focusing on their aspects of coherence. Companies that have built capabilities for success deliberately, such as Tesla Motors and Under Armour, were also used for examples. The authors focus on five unconventional leadership practices that have enabled these companies to be winners: committing to an identity, developing ongoing strategies, establishing a strategy-reinforcing work culture, cutting costs, and aspiring to a great future. Perhaps an even more inspiring approach to strategy is Adam Grant's Originals: How Non-Conformists Move the World (2016). Summing Up: ** Recommended. Upper-division undergraduates, graduates, professionals.--C. Wankel, St. John's University, New York
Source Citation (MLA 8th Edition)
Wankel, C. "Leinwand, Paul. Strategy that works: how winning companies close the strategy-to-execution gap." CHOICE: Current Reviews for Academic Libraries, June 2016, p. 1516. General OneFile, go.galegroup.com/ps/i.do?p=ITOF&sw=w&u=schlager&v=2.1&id=GALE%7CA454942871&it=r&asid=aeefd1c5e0eca5ef80e37dc61e90763f. Accessed 27 Mar. 2017.
Gale Document Number: GALE|A454942871
The essential advantage; how to win with a capabilities-driven strategy
26.2 (Apr. 2011):
Copyright: COPYRIGHT 2011 Ringgold, Inc.
http://www.ringgold.com/
9781422136515
The essential advantage; how to win with a capabilities-driven strategy.
Leinwand, Paul and Cesare Mainardi.
Harvard Bus. School Press
2011
227 pages
$29.95
Hardcover
HD30
Leinwand (partner, Booz & Company's global consumer, media, and retail practice) and Mainardi (managing director, Booz & Company's North American business) contend that success in any market comes from what they describe as a 'coherence premium'--that tight connection between strategic direction and the capabilities that make a company unique. They offer a variety of tools, exercises, and examples from several industries such as Walmart, Pfizer, and Amazon to help companies learn how to create a strategically coherent company in which key elements reinforce each other rather than work at cross purposes.
([c]2011 Book News, Inc., Portland, OR)
Source Citation (MLA 8th Edition)
"The essential advantage; how to win with a capabilities-driven strategy." Reference & Research Book News, Apr. 2011. General OneFile, go.galegroup.com/ps/i.do?p=ITOF&sw=w&u=schlager&v=2.1&id=GALE%7CA253494440&it=r&asid=b5fb5c60060b4d5db04b93592b6799f7. Accessed 27 Mar. 2017.
Gale Document Number: GALE|A253494440
Strategy That Works: A book review by Bob Morris
Posted on: February 9th, 2016 by bobmorris
Strategy That WorksStrategy That Works: How Winning Companies Close the Strategy-to-Execution Gap
Paul Leinwand and Cesare Mainardi with Art Kleiner
Harvard Business Review Press (2016)
How and why getting strategy and execution in cohesive alignment “is a worthwhile legacy for any leader in any enterprise”
Those who have read Cut Costs + Grow Stronger (2009) and/or The Essential Advantage (2011) already know that Paul Leinwand and Cesare Mainardi are among the most insightful business thinkers now publishing books and articles that provide information, insights, and counsel of incalculable value to senior-level executives as well as to those who aspire to reach that level. That said, I think Strategy That Works (written with Art Kleiner) is their most important work thus far. Why? Because I think it will have a wider and deeper impact on any organization, whatever its size and nature may be.
Just as Jeffrey Pfeffer and Robert Sutton focus on the “knowing-doing gap,” Leinwand and Mainardi focus on another, equally important gap. As they explain, “There is a significant and unnecessary gap between strategy and execution: a lack of connection between where the enterprise aims to go and what it can accomplish. We have met many leaders who understand this problem, but very few who know how to overcome it…Some business leaders try to close the gap on the strategy side, looking for a better market position. Others double down on execution, improving their methods and practices. Despite their efforts, both groups struggle to achieve consistent success.” Alas, few companies have solved this problem. I agree with Leinwand and Mainardi that the problem cannot be solved with conventional wisdom and I also agree with Albert Einstein: “We cannot solve our problems with the same thinking we used when we created them.” Five acts of unconventional leadership are needed:
1. Instead of focusing on growth, commit to an identity: Differentiate and grow by being clear-minded about what you can do best
2. Instead of pursuing functional excellence, translate the strategic into everyday life: Build and connect the cross-functional capabilities that deliver your strategic intent
3. Instead of reorganizing to drive change, put your culture to work: Celebrate and leverage your cultural strengths
4. Instead of going lean, cut costs to grow stronger: Prune what doesn’t matter to invest more in what does
5. Instead of becoming agile and resilient, shape your future: Reimagine your capabilities, create demand, and realign your industry on your own terms
“The five acts of unconventional leadership take different forms in different companies, but there is a family resemblance across all of them. They are all critical to engendering management habits that keep strategy and execution closely integrated, so there is no gap between them. Together, they comprise a playbook for creating sustainable value.” All five are discussed in some detail (Pages 12-19).
Leinwand and Mainardi correctly stress the critical importance of organizational and operational coherence in terms of alignment among three strategic elements: “A value proposition that distinguishes a company from other companies (we sometimes call this a ‘way to play’ in the market); also, a system of distinctive capabilities that reinforce each other and enable the company to deliver on this value proposition; and, a chosen portfolio of products and services that all make use of those capabilities.”
Devoting a separate chapter to each, they explain HOW TO
o Avoid or overcome the “strategy-to-execution gap”
o Commit to an identity
o Translate the strategic to the everyday
o Put a culture to work
o Cut costs to grow stronger
o Shape the future
o Remain bold and fearless
These are among the several dozen passages of greatest interest and value to me, also listed to suggest the scope of Leiwand and Mainardi’s coverage:
o The Unanswered Question (Pages 6-10)
o Five Acts of Unconventional Leadership (10-19)
o How the Five Acts Fit Together (19-22)
o Defining Who You Are (42-51)
o The Triggers of Identity (60-65)
o Blueprinting the Capabilities System (77-85)
o Building Distinctive Capabilities (86-107)
o Scaling Up Your Capabilities System (107-117)
o Fostering a Distinctive Culture (121-125)
o Mutual Accountability (130-133)
o Deploying Your Critical Few (138-144)
o Rethinking Next Year’s Budget (169-172)
o Recharge Your Capabilities System (175-178)
o Create Demand (179-184)
Readers will appreciate the provision of several mini-case studies (e.g. Amazon, CEMEX, Danaher Corporation, Frito-Lay, Haier, IKEA, Lego, Qualcomm), nine “Tools” (e.g. “Parking-Lot Exercise,” “Super Competitor Workshop,” and “Questions and Behaviors for Leaders”) that are inserted throughout the narrative as well as five appendices: A History of Strategy, The Capable Company Research Project, Puretone Ways to Play, Examples of Table-Stakes Capabilities, and a Selected Bibliography. These supplementary resources all by themselves are worth far more than the cost of this book.
Joined by Art Kleiner, Paul Leinwand and Cesare Mainardi ask their reader to think of this book as a call to action — “an invitation to become a better leader through the alignment of strategy and execution. Coherence makes every aspect of leadership easier in the long run. It continually focuses your attention on the most important things your company does. It enables you to define a world that your company can help to create. It is a worthwhile legacy for any leader in any enterprise.” As Michelangelo is reputed to have observed centuries ago, “The greater danger for most of us lies not in setting our aim too high and falling short, but in setting our aim too low and achieving our mar
Editor's Choice: Strategy That Works: How Winning Companies Close the Strategy-To-Execution Gap
By: Dylan Schleicher @ 9:41 AM – Filed under: Innovation & Creativity, Leadership & Strategy
Strategythatworks
Strategy That Works: How Winning Companies Close the Strategy-To-Execution Gap by Paul Leinwand & Cesare R. Mainardi, with Art Kleiner, Harvard Business Review Press, 288 pages, $32.00, Hardcover, February 2016, ISBN 9781625275202
You might expect a book coming from institutions like the Harvard Business Review and consulting firm Strategy& to be a bit traditional, safe, or stodgy. A title like Strategy That Works: How Winning Companies Close the Strategy-To-Execution Gap doesn’t do anything to belie that expectation. But Paul Leinwand and Cesare R. Mainardi, along with Art Kleiner, have written a book that upends that expectation, disenchants the reader with the strategy dogma of the day, and replaces it with a new proposition.
In Strategy That Works, the authors explain why the current, cookie cutter conventional wisdom of business strategy is misguided, and espouse five acts of unconventional leadership to replace them.
Conventional management practices lead to conventional strategies, and because such strategies are not specific to your company, there’s a good chance it won’t fit. (Think of last week’s review in which we discussed how anything designed to fit “the average” ends up effectively fitting no one.) Companies become truly successful by differentiating themselves and their capabilities from other organizations.
So rather than a focus on growth and chasing down any opportunity for it, which often leads to organizations getting trapped in a “growth treadmill” that never ends, the authors want you to commit to an identity. Rather than trying to pursue functional excellence, “striving to be world-class at everything but mastering nothing,” they would have you translate the strategic to the everyday. Rather than having to reorganize your entire organization to drive change, they suggest you put your culture to work. Rather than go lean and cut costs across the board, they explain how you should cut the nonessentials so that you can more heavily invest in the things that really matter, how to cut costs to grow stronger. And rather than attempting to become agile and resilient, reacting to the market winds and constantly changing course, the authors teach you how to shape your future.
Each of those five acts gets its own chapter. As the authors see it, these are not five separate strategies, but five pieces of a holistic approach to company strength and wellness. Following this approach may lead to a rather idiosyncratic company, but that is a strength in itself. It means no one can copy you. Companies, like individuals, each have a separate makeup and history that makes what they offer the world unique. And each of the fourteen companies the authors focus on closely in Strategy That Works (and the many others they look at from a greater distance) are idiosyncratic, which leads to differentiated capabilities unique to them and a stronger position because of it. Speaking of the companies they chose to profile, they write:
[A]t first glance, they seem to have little in common, and they are rarely thought of together. And yet, they have all built the kind of differentiating capabilities that give them a major strategic advantage.
Capabilities are the link between strategy and execution. They are the place where a company truly differentiates itself, and where the work takes place. But it’s not enough to simply have good capabilities; all companies have them, or they couldn’t compete. A truly winning company is one that manages itself around a few differentiating capabilities—and deliberately integrates them. When companies accomplish this, we say they are coherent.
My favorite part of that quote is the acknowledgement that a company’s capabilities are “where the work takes place.” Because even the wisest management theory and most carefully constructed strategy in the world isn’t going to work if it isn’t executable “where the work takes place.” That means it has to be understood and implemented almost seamlessly across the organization. To be a coherent company, the strategy needs to be coherent—almost obvious—to those executing it on the ground floor. Or as the authors put it:
[W]e articulated some of the tangible reasons why coherence yields these benefits: it leads to greater effectiveness, greater efficiency, more focused investment, and an atmosphere where every employee understands what the company does well, how their efforts fit in, and how all of this creates value.
The ultimate goal is, of course, to close the gap between strategy and execution. And the best way to do that is understand your organization and what you already do well:
Your strategy is no longer just about where you go or where to grow. Now, it’s primarily about who you are and what you’re great at.
Reading a book that peels back the layers of organizations like this causes any reader to reflect on their own company. That became even truer for me as the authors discussed the importance of putting company culture to work. While we can certainly always do better here at 800-CEO-READ, I think we have a solid foundation in all five acts of unconventional leadership, but I believe it is our commitment to our culture that has kept so many of us here for so long. Like many companies, we’ve gotten off track at times, but we’ve also had near uprisings amongst our employees to protect the identity and the culture we’ve built over the years. Since this review is in danger of becoming too self-aware, I’ll wrap this up by simply saying that this book reinforces that fighting for our culture was the right thing to do.
But it’s not just us. When the authors asked the leaders of the companies they had found that closed the strategy-to-execution gap what their company’s biggest asset was, “they nearly always named their culture.”
In a coherent company, the elements of the culture, often dismissed as merely personal, reinforce what the company is trying to be.
IKEA CEO Peter Agnefjäll, speaking to why their culture is such a differentiating strength, says:
You could copy our Billy bookcase or the retailing format or our warehouses, but how do you copy our culture?
It is that non-duplicability that makes it such a strength. And when people find a culture they enjoy working in, they tend to stick around.
But while all cultures are unique to the companies they exist in, all the companies they studied all seem to have three facets in common: “emotional commitment, mutual accountability, and collective mastery.” So rather than focusing on culture change efforts that almost always prove futile, the authors will teach you how to identify the aspects of your existing culture that align with the companies identity, find and tell stories that support it, and “accelerate the cultural evolution already going on there.” But it all has to be based on what your company believes and already does well:
The culture reflects not just what people believe, but what they do exceptionally well. Behaviors lead to stories, stories engender new behavior, and everything ties in with the value proposition and capabilities system.
In other words, your company culture is not just about your values; it is about the value your company creates. Closing the gap that exists between your strategy and execution enhances that value.
The surest way to do that, and what I believe the book boils down to (if I may be so bold), is this: define the underlying identity and strengths of your company and the people in it, align your strategies to the unique and idiosyncratic value that exists in that strength, support and spread the authentic storylines and behaviors within your company that support those strengths, cut bait and costs on everything else so you can invest in what you do best, and build the future of your business on that unique vision and value you have to offer your customers and the world.
So, rather than chasing what you think is working elsewhere or trying to implement others’ best practices, staying true to what is unique about your organization and your employees and strengthening those capabilities turns out to be a strategy that works.