flevyblog

Flevy Blog is an online business magazine covering Business Strategies, Business Theories, & Business Stories.
MANAGEMENT & LEADERSHIP STRATEGY, MARKETING, SALES OPERATIONS & SUPPLY CHAIN ORGANIZATION & CHANGE IT/MIS Other

Strategy Execution: Would the Executives in Your Firm Qualify the 10 Strategy Tests?

Editor's Note: Take a look at our featured best practice, Strategic Planning: Hoshin Kanri (Hoshin Planning) (153-slide PowerPoint presentation). [NOTE: Our Hoshin Kanri presentation has been trusted by an array of prestigious organizations, including industry leaders such as Apple, Boeing, Shell, Cummins, Johnson Controls, Telefónica, Discover, Stryker, Thales, Saint-Gobain, AGCO, [read more]

Also, if you are interested in becoming an expert on Strategy Development, take a look at Flevy's Strategy Development Frameworks offering here. This is a curated collection of best practice frameworks based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. By learning and applying these concepts, you can you stay ahead of the curve. Full details here.

* * * *

Developing a winning strategy is an uphill task for leadership at most organizations.  One of the reason is not digging enough to answer the right questions.   The mainstay of a successful strategy is creation of Competitive Advantage.  However, for most organizations Competitive Advantage is a moving target, which is hard to pin down.

A global study by McKinsey pinpoints a possible cause: just 53% of executives characterized their companies’ strategies as underscoring the development of differential advantage over rivals.  The rest declared their strategies as merely matching industry best practices and delivering operational imperatives.

The research encompassed online survey of executives from across the world who went through a series of questions to test if their companies’ business unit strategies pass 10 tests that constitute a good strategy.  The overall sample size was 2,135 executives from various parts of the world, representing a range of industries, regions, tenures, functions, and company sizes.

The 10 tests in the strategy survey inquired the executives to rank their companies’ strategies in creating a wining market position, the basis of their companies’ strategy formulation, and their implementation planning.  The main test questioned the potential of a company strategy to overcome rivals by creating a Competitive Advantage.  The rest of the 9 tests validated the efficacy of their strategy, assessing how the strategy positions the company in the market, the insights and data incorporated to develop the strategy, and the robustness of their implementation plans.

The 10 Strategy tests included:

  1. Our strategy balances some major commitments with flexibility to make future choices.
  2. Our strategy highlights creating relative advantage over competitors.
  3. Our strategy incorporates a detailed understanding of our Competitive Advantages.
  4. Our strategy defines opportunities based on detailed market segments.
  5. Our strategy results in a concrete set of actions to reallocate resources.
  6. Our strategy consists of decisions based on vigorous debate about alternatives.
  7. Our strategy arises from management’s strong belief in basic assumptions that underpin it.
  8. Our strategy is mainly built to win in future market conditions based on major trends.
  9. Our strategy takes into account unavoidable uncertainties about the future.
  10. Our strategy relies on novel data and insights not available to competitors.

Although a company’s strategy can succeed even though it fails most of these tests, but leaders can stress-test their strategies through these tests.

Insights from the Tests 

The results from the respondents’ assessment of whether their company’s typical business unit strategies can pass these 10 tests revealed:

  • About 50% respondents regarded their companies to pass only 1 to 3 of the 10 tests.
  • Fifteen percent executives believed that their company strategies cannot pass a single test.
  • Only 2% of the respondents stated that their companies pass 9 or all 10 tests.

Region-wise Insights

Region-wise results revealed that:

  • 51% Indian, 37% Chinese, 49% North American, and 44% Europeans thought that their strategy balanced major commitments with flexibility.
  • Overall, just about 14% of the executives stated that their companies’ strategies were based on novel data and insights not available to their competitors. Region-wise, this was indicated by 20% Indian executives, 18% Chinese, 14% North American, and 13% European executives.
  • Chinese executives graded their companies’ strategies higher (43%) than those in the other regions (34% globally) on the basic test of pinpointing relative advantage.

What Organizations Do Well

Results from the test “what our organization does well” revealed:

  • Seventy percent (70%) of executives reported that their strategies provide a mix of commitments and flexibility.
  • Just about 29% respondents thought their strategy to be based on concrete plans that lock in key choices immediately.
  • Very few executives believed that their strategy relies on novel data and insights not available to their competitors.

Impact on Financial Performance

The survey participants’ response to the question: “which aspects of strategy have had the greatest positive effect on your company’s financial performance” was:

  • “Novel insights and data as the basis of strategy” test was rated least critical to financial performance.
  • More executives (46%) in the energy sector mentioned a focus on market trends to have a positive effect on their financial performance.
  • Executives from the manufacturing industry ranked “relative advantage” (43%) and “market segmentation” (40%) as the top contributors to bottom line.

Strategy Development Process

The respondents’ responses to the test of using strong Strategic Planning practices for decision making included:

  • Not too many companies develop their strategies based on a concrete, logical process.
  • Forty-four percent respondents declared that their companies hold a regular planning cycle. In contrast, 35% respondents mentioned that their companies make decisions as the need arise.
  • A majority of the study respondents—56%—reported that their companies now make strategic decisions more frequently than before. This trend of speedy decision making can cause some companies to fail in conducting a thorough evaluation of each decision.

Interested in learning more about the Strategy Tests and their impact on the organization?  You can download an editable PowerPoint on Strategy Execution: The 10 Strategy Tests here on the Flevy documents marketplace.

Are You a Management Consultant?

You can download this and hundreds of other consulting frameworks and consulting training guides from the FlevyPro library.

138-slide PowerPoint presentation
Our Strategic Planning Process, based on Hoshin Policy Deployment, provides an organization with proven and effective methods to develop, communicate and align its strategic goals, objectives, and initiatives. The Strategic Planning - Hoshin Policy Deployment Training Module includes: 1. MS [read more]

Want to Achieve Excellence in Strategy Development?

Gain the knowledge and develop the expertise to become an expert in Strategy Development. Our frameworks are based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. Click here for full details.

"Strategy without Tactics is the slowest route to victory. Tactics without Strategy is the noise before defeat." - Sun Tzu

For effective Strategy Development and Strategic Planning, we must master both Strategy and Tactics. Our frameworks cover all phases of Strategy, from Strategy Design and Formulation to Strategy Deployment and Execution; as well as all levels of Strategy, from Corporate Strategy to Business Strategy to "Tactical" Strategy. Many of these methodologies are authored by global strategy consulting firms and have been successfully implemented at their Fortune 100 client organizations.

These frameworks include Porter's Five Forces, BCG Growth-Share Matrix, Greiner's Growth Model, Capabilities-driven Strategy (CDS), Business Model Innovation (BMI), Value Chain Analysis (VCA), Endgame Niche Strategies, Value Patterns, Integrated Strategy Model for Value Creation, Scenario Planning, to name a few.

Learn about our Strategy Development Best Practice Frameworks here.

Readers of This Article Are Interested in These Resources


306-slide PowerPoint presentation
Curated by McKinsey-trained Executives Unlock Success with the Complete Strategy Management Office (SMO) Business Toolkit Are you ready to elevate your organization's strategic capabilities, boost performance, and lead your company to unparalleled success? The **Strategy [read more]


 
48-slide PowerPoint presentation
 
 
21-slide PowerPoint presentation

About Mark Bridges

Mark Bridges is a Senior Director of Strategy at Flevy. Flevy is your go-to resource for best practices in business management, covering management topics from Strategic Planning to Operational Excellence to Digital Transformation (view full list here). Learn how the Fortune 100 and global consulting firms do it. Improve the growth and efficiency of your organization by leveraging Flevy's library of best practice methodologies and templates. Prior to Flevy, Mark worked as an Associate at McKinsey & Co. and holds an MBA from the Booth School of Business at the University of Chicago. You can connect with Mark on LinkedIn here.

, , , ,





Complimentary Business Training Guides


Many companies develop robust strategies, but struggle with operationalizing their strategies into implementable steps. This presentation from flevy introduces 12 powerful business frameworks spanning both Strategy Development and Strategy Execution. [Learn more]

  This 48-page whitepaper, authored by consultancy Envisioning, provides the frameworks, tools, and insights needed to manage serious Change—under the backdrop of the business lifecycle. These lifecycle stages are each marked by distinct attributes, challenges, and behaviors. [Learn more]

We've developed a very comprehensive collection of Strategy & Transformation PowerPoint templates for you to use in your own business presentations, spanning topics from Growth Strategy to Brand Development to Innovation to Customer Experience to Strategic Management. [Learn more]

  We have compiled a collection of 10 Lean Six Sigma templates (Excel) and Operational Excellence guides (PowerPoint) by a multitude of LSS experts. These tools cover topics including 8 Disciplines (8D), 5 Why's, 7 Wastes, Value Stream Mapping (VSM), and DMAIC. [Learn more]
Recent Articles by Corporate Function

  

  

  

  

  


The Flevy Business Blog (https://flevy.com/blog) is a leading source of information on business strategies, business theories, and business stories. Most of our articles are authored by management consultants and industry executives with over 20 years of experience.

Flevy (https://flevy.com) is the marketplace for business best practices, such as management frameworks, presentation templates, and financial models. Our best practice documents are of the same caliber as those produced by top-tier consulting firms (like McKinsey, Bain, Accenture, BCG, and Deloitte) and used by Fortune 100 organizations. Learn more about Flevy here.


Connect with Flevy:

     
  


About Flevy.com   /   Terms   /   Privacy Policy
© . Flevy LLC. All Rights Reserved.