Connect Your Firm’s Strategy to Its Identity
Leaders know they need to outperform their competitors to succeed — not by hitting the target with just one or two products, but by winning consistently across their businesses, time after time. To accomplish this, one must have clear answers to some basic strategic questions about the enterprise and its identity:
Who are we?
What makes our company unique?
What is the basis of our advantage?
What value do we create, and for whom?
Most companies, however, don’t have answers to these questions. We studied 14 exemplary companies that can answer them effortlessly, including Ikea, Apple, Natura, and Haier. The research led to the development of the Strategy That Works profiler, an online tool that can help you see how well your company is answering these fundamental questions. In completing the survey, you will find out how well-equipped you are to close the gap between strategy and execution — in other words, how likely you are to realize your strategy.
The questions in the profiler go deeper than any particular product or service. They are about the identity of your enterprise and the distinctive capabilities that enable it to create value. Early results of our study suggest that only slightly more than half of the leaders who responded, 57%, were able to describe a distinctive identity for their companies; only 26% thought that all their employees could do so.
It’s not that executives who can’t answer these questions lack management skills or ability. Most business leaders are experienced in solving problems and moving their enterprises forward. The problem is that conventional wisdom of mainstream business practice makes it difficult to think clearly about fundamentals. Many companies, for example, have been chasing growth at any cost in recent years, building a wide range of products and services to address interesting market opportunities. But pursuing growth without understanding the fundamental advantage that drives the enterprise’s success has left them with an undifferentiated portfolio of products and services. They are average-to-good across the board but great at nothing.
Leaders in such incoherent companies can learn to build long-term advantages from the management approach shared by the world’s leading companies. It consists of five acts of unconventional leadership. They begin with answering questions about the organization’s identity, and then build on that identity:
Commit to a clear identity that is defined by how you create value for customers, by the differentiating capabilities that enable you to do so, and by the portfolio that thrives in that value proposition and capabilities system. Don’t chase market opportunities where you have no right to win Be clear-minded about what you do best, and build your strategy around those strengths.
Translate the strategic into the everyday by designing and building your own bespoke capabilities that set you apart from competitors. Bring those capabilities to scale so that people across the organization work on executing your company’s strategy, day after day.
Put your culture to work, instead of trying to change it or reorganizing it, in order to change employees’ behaviors. Identify a few critical behaviors that you want to spread throughout the organization. Empower managers and employees who demonstrate the behaviors you want to see more of. Leverage emotionally resonant attributes that are closely tied to your company’s identity. This will allow you to move your culture closer to where it will help you thrive with your strategy.
Cut costs to reinvest in what makes you distinctive. Marshal your resources strategically: Double down on the capabilities that matter most, and prune back everything else.
Instead of reacting to change, create the change you want to see by continuously advancing what you’re already great at and gaining privileged access to your customers. This will allow you to deliberately shape your future by using your capabilities to attract customers, talent, and other companies around you.
Implementing these five acts may not be the only path to success, but it is the only path we know that closes the strategy-to-execution gap. And no other path seems to provide the same kind of long-term sustainable success. It is also an appealing path that feels intrinsically rewarding. Even taking a few steps down the path toward coherence can boost your company’s performance and morale.