Your Strategy Won’t Work If You Don’t Identify the New Capabilities You Need
While strategic plans identify what your organization should do differently, very few provide a roadmap for how to build the skills, knowledge, and processes needed to carry out and sustain the critical changes. But without building these capabilities, it’s very difficult to achieve the results you want.
For example, a multi-product technology firm we advised laid out a strategy to significantly increase business with its large enterprise customers by creating single points of contact and focusing on providing solutions as opposed to delivering products. The strategy was sound, but making it happen required many new capabilities: dozens of sales people had to learn new approaches to selling and relationship building, different sales divisions needed to share information and collaborate, new roles for coordinating enterprise accounts had to be created, financial information had to be presented and analyzed differently, and so on. These changes meant that hundreds of people in the company had to work differently in some way – but the plan said nothing about developing capabilities. So despite general agreement that the strategy made sense, the missing capabilities made it impossible to carry out.
Capabilities lie at the heart an organization’s ability to achieve results, so it’s hardly a surprise that different results require different capabilities. But strategic plans often get this simple equation wrong, for one of two reasons.
First, many strategic planners and senior executives assume that if the strategy is logical, then people will figure out what to do, and don’t build capabilities development into their plans at all. And yes, every organization has people who are highly adaptable, learn quickly, and can operate in this mode. Unfortunately, they often comprise a small group, and leaders end up over-relying on these “usual suspects” to tackle challenging execution assignments; and since these few people can’t do it all, the efforts founder.
At the other extreme, some planners like to be prescriptive and can spend significant resources mapping out in great detail what everyone should do differently. But a “paint by the numbers” approach to strengthening organizational capabilities rarely works. Developing capabilities requires experimentation, trial and error, and iterative learning to figure out what will work in each organization’s unique culture, functional structure, and environment. Faced with lengthy lists of best practices and new processes that don’t match reality, teams simply give up and revert to old patterns of behavior.
Overcoming these pitfalls requires thinking of capability development in a different way: as an integral part of strategic execution. The key is to link each strategic priority to the capabilities needed to drive that opportunity, and to frame accountability for each strategic priority around both results and capability development. Let’s look at one company that we helped take this approach.
When leaders of Rich Products, a global food manufacturer, launched a strategic initiative focused on accelerating innovation, they recognized that helping the organization simultaneously strengthen its innovation “muscles” was critical to addressing the challenge. So, while some work focused on innovation strategy – the customary task of identifying where the company should place innovation bets – equal attention was paid to understanding the capabilities needed to execute the strategy. Formal diagnostics and substantive discussions across the organization generated a clear picture of the specific innovation capabilities that would need to be strengthened if the organization was to achieve its innovation targets in the necessary time frame.
As teams were chartered to pursue promising opportunities, they were also tasked with developing specific capabilities that were critical to the innovation strategy. For instance, a team trying to introduce a promising cooking technology was also tasked with learning how to do effective customer immersions, a key capability gap for the organization. Another team trying to launch a new platform of food products was also made responsible for finding ways to strengthen new product introductions. In each case, leadership regularly reviewed progress with teams, not just on the business outcomes but also on what each team was learning about their assigned capability. As successive phases of this work took place, teams brought learnings to new iterations and new teams, helping to scale and sustain the development of these capabilities. Now Rich is embedding this approach in its ongoing multi-year innovation efforts.
The technology company mentioned in the beginning also eventually used this approach, but in a slightly different way. They created three small teams of sales, HR, and finance people and challenged them to increase revenues from three enterprise accounts while also figuring out what capabilities they needed to be successful. The three teams then began to test new ways of working with their actual clients, configured different financial reports, carved out new roles for team members, and more. As they proceeded, they met together regularly to share what they were learning. Eventually, the three teams developed a successful model for how to work with their accounts and increase sales results. Each team then mentored two other new teams and helped them learn what worked for their clients – while all the teams continued to share best practices and refine the model. Over the next two years this iterative cascade approach continued until 150 of the largest accounts were being handled in this new way.
As these examples illustrate, combining capability development with strategy execution does not need to be a complex undertaking. The key is to make capability learning as overt and intentional as possible. This will allow you to build organization muscle at the same time that you are getting business results.
To get started with this approach, think about your company’s own strategy, and what capabilities are critical to achieving results. Then identify opportunities for teams to create or strengthen those capabilities while actually executing some aspect of the strategy. Doing this will ensure that capability development is a real and tangible part of your organization’s growth, instead of a hope or an afterthought.