A View From INSEAD
Strategy Making Process
Michael Jarett and Quy Huy
Programme Directors of Strategy Execution Programme
The strategy making process is the activity by which an organisation defines its strategy and ensures that the defined strategy becomes a reality rather than just an abstract wish list. It involves not only coming up with a strategy but also planning how to execute it and adjusting to unexpected events. The strategy making process is obviously key to business success – and therefore central to research and Executive Education at INSEAD. Indeed, two of our most highly respected professors in this area, Professors Michael Jarett and Quy Huy, co-directors of our innovative new Executive Education program on Strategy Execution have just designed a new six-step “strategy stress test” to facilitate the strategy making process. In the following interview, they present their views (also available in video).
Why does the strategy making process matter so much?
Michael Jarrett: What we know is about 60% of strategy execution fails.
Quy Huy: I’ve done research on strategic execution for the last fifteen years. I’ve interviewed a lot of executives and followed them as they develop a strategy and execute it over three or four years. Usually the process involves hiring consultants, top executives going to retreats, discussing, re-discussing, and – after six months to a year – coming up with the strategy. But the best managers know that strategy is 5% thinking, while the 95% that remains is about strategy execution. That’s where most of strategies fail.
Tell us about the first step in your stress test?
MJ: It’s really about identifying. Do you actually have the right strategy? Is it going to create value? Have you got the right customer base? And we draw on a variety of strategy models to help people explore these questions.
What is the second step?
MJ: The second step is really asking: do you actually have a comprehensive and workable plan? We try to help people identify what their goals and milestones are for making strategy happen and whether they have the right resources. Most people think they do this really well and that having a project management system will make this strategy work. But it can be false security… hence the third step.
What are the activities that constitute step three?
MJ: This is about trying to identify what we call the hidden barriers to strategy execution. There are three or four things that we’ve identified from our research that tells us what goes awry – for example, the cultural factors in an organization.
QH: To elaborate, in my research I see that work life is very political and emotional. But those are two really bad words! Try to be less emotional – that’s the kind of advice that people give. But that often ends up in using apparently logical arguments to cover up less-discussable disagreement.
Can you explain step number four?
MJ: We provide executives with a number of research-based tools that we have developed over the last few years in order to focus them on overcoming the issues they identified in step three.
What about step five?
MJ: Step five is really having identified these barriers – and how to overcome them – asking whether you have the skills to implement. This is where we do a kind of audit around the key competencies that make change work and stick. Many managers did not get much formal and experiential training to implement strategy or major change in organizations. They often do it based on their narrow experience or gut feel, which can produce erratic results. We aim to increase their skill set.
Presumably the sixth and last step is the most important – execution itself?
MJ: More than that, it’s about, having got the skills, can you replicate and implement them into the system?
QH: It’s about building a learning organization… and, having learned from your mistakes, going back to step one and refining the original strategy.
To apply Michael Jarrett and Quy Huy’s expertise directly to your own strategy making process, consider enrolling on the Executive Education program on Strategy Execution that they co-direct at INSEAD: the brand new and highly innovative INSEAD Strategy Execution Programme. In the meantime, click here to watch a longer version of this interview.