Sunday, September 9, 2007

It's the Tactics

One time I was invited to be a part of a roundtable of retail strategists, sponsored by the Corporate Executive Board. There were about 18 retailers represented at the roundtable. Included in this mix was a broad spectrum of retail types, from high-end fashion to low-end commodities, from big box stores to little stores.

Some of these retail strategists came from what I call “tier 1” retailers, retailers who are respected for being among the best in the business. Others represented “tier 2” retailers—good firms, but with a few weaknesses.

At one point the question was asked, “What is your greatest strategic challenge.” We went around the table so that everyone could respond. The tier one retailers gave a variety of different answers to the question. The tier two retailers, however, mostly gave the same answer. They responded that their greatest strategic challenge was in trying to get the people out in the field to execute the strategy designed at headquarters. This problem was not mentioned by the tier one retailers. Gee, do you think there is a connection here?

The fun and sexy part of strategic planning is the creation of the grand and glorious vision. This is where we create the story about how our company is going to achieve great success in the marketplace. The dull and more mundane part of the process can be making sure that the vision comes to life in the tactics out in the field.

Although this may not be as sexy, the story above seems to imply that the great companies seem to find a way to excel at getting tactical execution in the field. By contrast, the second tier companies struggle more with tactical execution. It would appear that unless one can master the art of the tactics, it is extremely difficult to achieve tier one status.

Although there can be many reasons why a firm has difficulties in getting its field to execute the tactics, they tend to revolve around three principles:

1) Great Tactical Execution Requires Great Strategic Direction
2) Great Tactical Execution Requires Proper Motivation
3) Great Tactical Execution Requires Focus

These three principles are discussed below.

1) Great Tactical Execution Requires Great Strategic Direction
It is a lot easier to execute tactics if they are rooted in a great strategy. If your company’s strategy is based on a well crafted and well articulated position in the marketplace, then it is easier to make that position a reality.

Great strategic positions have the following characteristics:

a) Desirable: You are providing a solution which a significant number of people want.
b) Believable: There is ample evidence to convince people you are capable of delivering on that promised solution better than any one else.
c) Ownable: You are uniquely positioned to own this solution in the minds of the marketplace. Nobody else holds that position anywhere near as well as your company. It is your distinct point of market differentiation.
d) Achievable: You have built an infrastructure and competency so that you can truly deliver this solution better than anyone else. Given the constraints of who you are, this is a winnable position for the firm.

If you have a strong position like this and clearly communicate it to your employees and customers, then tactics are easier to achieve. Everyone can see what is important to your success, and the chosen success is based on owning something your firm can achieve.

To paraphrase my father, “Most great companies succeed because their selling proposition is so great that their employees cannot screw up enough to stop the success.”

If you have a vision which is not based on providing a unique and desirable solution in the marketplace, then consumers have a more difficult time finding a reason to patronize you. If the customer doesn’t have a compelling reason to choose you, then it is much harder for the field employees to get them to choose you.

If your vision is just to become better and become more like the market leader, you are facing a difficult execution battle. Why should a consumer switch from the market leader to patronize you if you are not as good as the leader (even if you are closer to being like the leader than before)? Even if you become good enough to be equal to the leader, why should a customer switch? To give your employees a shot at executing something great, you need to supply them with a plan that allows them to provide a point of superiority.

Without first developing a compelling position, expectations for field performance are often little more than “hopes.” You hope the field can pull it off these unrealistically high levels of performance, but you haven’t put anything in place that would make that hope very likely.

2) Great Tactical Execution Requires Proper Motivation
There’s an old saying that people perform best on that for which they are rewarded. Therefore, if you want great tactical execution of strategies out in the field, you need to reward that type of behavior.

I have seen instances where top executives will give “lip service” to the strategy when talking to the field, but reward them for something else. Whether it is intentional or not, when the employee out in the field hears this, their takeaway is something like this:

“If you have any spare time, it would be nice if you could put some effort behind the strategy, but your ‘day job’ comes first. If you do your day job right, you will get a big financial reward. If you do your day job wrong, you will get severely punished. If you do the strategic strategy right, I might give you a pat on the back, but still yell at you if the day job requirements suffered as a result.”

In such a situation, it is no wonder why it is difficult to get the strategy executed out in the field. The people out in the field are pragmatic and do what gets rewarded. If strategic tactics are not rewarded, then good luck in trying to get people to do them. You have to make these key tactics an important part of their “day job” definition.

Another problem occurs when rewards are given out even when performance has been poor. In his new book “Doing What Matters,” author James Kilts talks about his philosophy which allowed him to be so successful at Kraft, Nabisco and Gillette. When Kilts came to Gillette, the company was in trouble and was not executing well. What Kilts noticed was that people were rewarded for effort rather than performance. Kilts quickly changed that so that you were rewarded for succeeding rather than just trying. Suddenly, he started seeing a lot more successes.

3) Great Tactical Execution Requires Focus
Based on my observations, people in the field are far more likely to succeed if the company is focused. There are two aspects of focus which need emphasis—focus in scope and focus in time.

If you give people a list of 100 things to excel in, it is highly unlikely that they can achieve perfection at all 100. In fact, with that large of a load, it is likely that nothing will be done perfectly. However, if you narrow the list to about 4 to 6 items, it is likely that one can do well at all of them. This is the principle of focus in scope. Narrow the scope of areas of excellence so that it is manageable.

Focus on only 4 to 6 areas where execution is critical. Later, as these areas are mastered, one can change the focus to a short list of other tactical areas. Thus, instead of trying to get it all done at once, do it sequentially in small bites. Find a simple metric to measure each of the handful of executional behaviors you desire and tie this to rewards.

Next comes the focus in time. When you spend time with the people in the field, what topics dominate the discussion? When the people in the field are working, how much time do they spend on these handfuls of expectations? The goal should be to get so focused on these handfuls of behavior that they become a meaningful part of every day. A large part of every day should focus on these important tasks.

For example, the key metrics should be updated as frequently as possible—daily, if it makes sense. Every day, when the field gets to work, they should be aware of the most recent performance on these metrics, not only for the entire company, but for their particular area. Not only does this provide great feedback on performance, but it also shows that you are serious about these issues. Whenever you talk to the people in the field, bring up the key areas and the most recent metrics. The more time spent on the key areas, the more likely they will get executed well.

Great strategies are more than just great ideas. They are great ideas executed greatly out in the field. The strategic planning process does not end when the idea forming is completed. The process must include making sure the hand-off to the field is done properly. To ensure good field execution, it pays to have a strategy built upon a viable position, with proper rewards, and proper focus.

I’ve seen compensation systems that were so complex that nobody could figure out which behavior would optimize their reward. Hence, reward systems need to be focused as well.

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