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Wednesday, October 23, 2019

C-Suite Advisory

Hey CEOs: Here’s Why Your Strategic Decisions Are Falling Short

The world has always praised leaders for their vision, innovation, and disruption. But, today, our greatest leaders are differentiated by their ability to execute. If you are a leader looking to set yourself apart by your success in execution, you first need to understand why so many strategic decisions fall short.

Where Leaders Go Wrong

Leaders create a strategy, identify its potential, and largely justify their ability to realize it with biased beliefs that support their vision. Imagine a bank making a loan based solely on your loan application and financials without bothering to check your credit score. Imagine a university that looked at your high school transcripts but didn’t bother to check your SAT score. Imagine buying bonds based solely on the reputation of a municipality without ever looking at the bond rating.

When executives don’t measure their company’s ability to execute on strategies, they lack the necessary data in decision-making to avoid the debacles that slow the growth of their business and erode their return-on-invested-capital (ROIC) ratio, investor and customer confidence.

To thrive in today’s “one shot to get it right” market, companies must integrate a readiness score (or execution capability score) as a core decision-making metric, articulating their ability to implement a strategy—no longer relying on opinion or feeling.

All too often, leaders put out a vision and strategy and then start producing products, buying companies, or moving into new markets with no clear sense of whether or not they actually have the ability to execute on that vision. They tell themselves, “This will take us three, six, or nine months to achieve.”

But eighteen months, twenty-four months, or thirty-six months pass, and they haven’t achieved their goal. The product misses the window of opportunity. The acquisition falls short in its performance because it failed to integrate into the culture. The company struggles to find footing in the new market. The initiative ends up costing two, three, or four times what they budgeted, and leaders have no idea why.

Suddenly, they are forced to rob Peter to pay Paul in order to bolster earnings because the strategy isn’t performing at the level they anticipated. Consequently, they end up piling even more new things on top of the previous strategy in order to create additional growth to meet expectations.

Set Yourself Up to Win From the Start

What if, instead, an executive could decide on an initiative with complete confidence because they knew their company had the capacity to deliver? What if leaders, as part of the decision process, measured their ability to execute on each of the initiatives necessary to realize a vision and knew exactly where the gaps were and exactly where the company was vulnerable? What if leaders could approach an analyst call or media event and show that they’d fully measured everything they invested or plan to invest in?

Is such confidence possible? Absolutely, but it requires a shift in thinking. Leaders aren’t struggling from a lack of great business ideas. The struggle comes from a gross misunderstanding about their own companies’ execution capability of those ideas.

For more advice on executing your initiatives, you can find Measure, Execute, Win: Avoiding Strategic Initiative Debacles and Knowing What Your Business Can and Can’t Do Well on Amazon.


Written by Alex Castro.

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Alex Castro
Alex Castro is the CEO of M Corp and has helped clients deliver complex corporate strategies for the last twenty years. He finds new approaches to serving and building companies by identifying their operational vulnerabilities and correcting them, and the ReM Score has evolved from hundreds of engagements into a digital platform tool. Alex is a graduate of Northeastern University, where he was a collegiate rower, and he later went on to coach the University of California-Davis rowing team. He is also an avid mountain biker and has two wonderful daughters who are a constant source of inspiration and joy. Alex is an opinion columnist for the CEOWORLD magazine.
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