Coming up with a plan for the future is one thing, but delivering on it is something else entirely. In research conducted by Criticaleye earlier this year at the CEO Retreat, only 23 percent of respondents said they had full confidence in their executive team to deliver on the medium to long-term strategy.
Romana Abdin, CEO of Simplyhealth, says she doesn’t find that figure too surprising given approximately three-quarters of business strategies fail to be executed because people don’t have the needed capabilities. She explains: “The likelihood is, you’re going to need to look at the team you’ve got – and it’s not just the executive team, it’s the whole senior team – and continually ask yourself at each stage: what kind of skills do I need and what expertise is most important?”
At Simplyhealth, she says that the executive team she started out with 5 years ago is different to what she has in place today, largely because she has “constantly assessed what we need as we’ve been delivering on the strategy and as things change”.
Claudio Righetti, CEO of Analyx, notes that, in his experience, there is a lack of quality debate about how markets are changing and what steps need to be taken to build for future success. “Only a limited number of leadership teams sufficiently discuss the likelihood of being disrupted from within and outside of their industry…
“To me, the structure of a UK Board is often driven more by governance rather than the skills you may need in the future. Therefore, it is critical that the executive team has the right structure and ‘think-tank’ element within it to consider the future as much as delivering quarter-by-quarter results.”
According to the research, 38 percent of CEOs go six months or more without discussing business strategy with their team. Matthew Blagg, CEO of Criticaleye, says: “There is a tendency for leadership teams to duck the issue of strategy. In some ways, it’s simpler for them to concentrate on delivering the numbers and fixing operational problems.
“However, you do see senior executives hiding behind this to an extent. There just isn’t the healthy debate that you would expect in companies about strategy, let alone going to the next stage and reflecting on whether or not you have the team in place to execute it.”
Strategy with Bite
It seems like the mark of a good strategy in today’s environment is for everyone in the leadership team to both agree it and simultaneously acknowledge it is, in all likelihood, going to need changing.
Dominic Emery, VP of Group Strategic Planning at BP, comments: “A strategy needs to endure over multiple years, but it’s also appropriate at times to recognise changes in the external environment – the ‘mega-trends’, the competitive environment – and adjust accordingly.
“For us, as an energy company, we need to participate in the global, dual challenge of growing energy demand, by between 20 and 30 percent to 2040, but at the same time, reducing emissions by about 50 percent to combat climate change. So, we’re developing a long-term strategy that tries to balance those imperatives.”
Within that strategy, there must be an in-built flexibility. “It must work well in a range of different futures you can’t necessarily see. I think pretending one can crystal ball gaze and have a completely clear view of the future is a fool’s errand,” adds Dominic.
Paul Miller, Group Strategy and M&A Director at Legal & General, states that you need to create an environment where people are encouraged to think expansively. “If you’re a command and control company, where the CEO sets a strategy with tasks and then asks their leadership team to execute them with no autonomy, then the execs won’t be able to focus on the medium to long-term. They’ll just be focused on one task, and then they’ll come back and ask for the next one.”
At Legal & General, he says he tries to “make the strategy ‘crunchy’” as too often it can drift into abstractions, such as “'let’s talk about all the technology companies and the rise of China’”, before returning to discussions about business as usual. He explains: “It’s important to work out where you want to get to and set your 5-year strategy, but then break that down into crunchy actions and ambitions which business leaders are tasked with.
“At L&G we’ve got 6 business divisions, but we’ve got 15 group ambitions, and we’ve got many more identified initiatives which help achieve those group ambitions. We try to move away from the very high level, but equally not just focus on this year’s budget. It’s about making sure that bit in the middle is also fleshed out.”
The most important thing for Romana at Simplyhealth was to set out the organisation’s purpose – improving access to healthcare for their customers, colleagues and communities – and then to figure out how to execute accordingly. “That meant the focus needed to be on routine health and not the acute element, which our private medical insurance offering was part of,” she says.
“Having made that decision, we had to turn strategy into action. We had to explore how we could sell our medical insurance business; making the right choices for our customers; looking after our people; and delivering a financial return. Coming out of that market wasn’t the easiest choice, but it was the right one, because we were clear on where we wanted to focus.”
The fundamental point, for Romana, is that the ability to reflect on the forward agenda is not a skill that people in business necessarily prioritise. “Many businesses are driven to the short-term and how to deliver the numbers every quarter…
“I think Boards and executive teams have to be really conscious of not falling into that trap.”
Marc Barber, Managing Editor, Criticaleye
Marc Barber, Managing Editor, Criticaleye
To listen to Matthew Blagg, CEO of Criticaleye and Neil Griffiths, NED at City Pub Company, StarStock and a Board Mentor at Criticaleye, discuss findings from the CEO Retreat 2019 Research, click here.
To look at the full research report, click here.