Robert Simons - Seven Strategy Questions: A Simple Approach for Better Execution

ALSO BY ROBERT SIMONS

Levers of Control:
How Managers Use Control Systems to
Drive Strategic Renewal

Levers of Organization Design:
How Managers Use Accountability Systems
for Greater Performance

Copyright 2010 Robert Simons

All rights reserved

No part of this publication may be reproduced, stored in or introduced into a retrieval system, or transmitted, in any form, or by any means (electronic, mechanical, photocopying, recording, or otherwise), without the prior permission of the publisher. Requests for permission should be directed to , or mailed to Permissions, Harvard Business School Publishing, 60 Harvard Way, Boston, Massachusetts 02163.

First eBook Edition: November 2010

ISBN: 978-1-4221-3332-3

Contents

Many executives are skeptical of new management techniques. And for good reason. Consultants and the business press are constantly trumpeting new approaches that promise breakthrough performance. But these ideas are often poorly suited to different business situations or not worth the trouble.

I have always worried about the hubris of promoting one-size-fits-all solutions to complex business problems. As a professor at Harvard Business School, I have seen management fads come and go, and Ive become leery of prepackaged prescriptions based on the latest theories and techniques.

Writing books and offering high-level consulting advice is easy. Running a business is not. You cannot be aloof and above it all. You must roll up your sleeves and get involved in the details.

There are no easy answers to the issues you face. They are different for every business. But after teaching executives for twenty-five yearsfacilitating discussions and sharing case studies on successes and failuresIve learned that there is one approach that will add value to every business, including yours: asking the right questions.

The approach of this short bookcoaching you to ask yourself and others the right questions to ensure the best implementation of your strategyis based on three propositions.

First, I believe that executing strategy successfully requires tough, often uncomfortable, choices based on simple logic and clear principles. We often lose sight of these fundamentals in the complexity of techniques and frameworks that consultants and the business press promote in a quixotic attempt to find the magic solution. Simple questions can strip away the confusion that obfuscates clear thinking, allowing us to focus on the key issues that underpin important decisions.

We too often fall into the comfortable habit of avoiding choice in the mistaken belief that we can have it all. Instead of focusing on one primary customer, we have multiple types of customers. Instead of instilling core values, we develop lists of desired behaviors. Instead of focusing on a few critical measures, we build scorecards with an overload of measures. We work hard to avoid making choices.

The questions in this book use counterintuitive arguments to challenge assumptions and force uncomfortable decisions. But they also provide the focus and direction that will assure the successful execution of your strategy.

Second, because every business and industry is unique, its pointless for me to propose one-size-fits-all solutions to the issues you confront. You know much more about your business than I can ever know.

Finally, to implement strategy successfully, I believe that you must have active discussions with the people in your organization. There is no magic bullet, no metric or scorecard that will tell you where the pitfalls of your business strategy are. There is only one path to success: you must engage in ongoing, face-to-face debate with the people around you about emerging data, unspoken assumptions, difficult choices, and, ultimately, action plans.

The questions in this book should be your constant companion. Carry them as a back-pocket checklist to stimulate strategic thinking. Use them to guide your discussions at strategy retreats and board meetings, where I have seen them used to great success. In day-to-day meetings, you can ask the questions to guide and test subordinates, or to prod superiors to action. Since they demand honest dialogue about business fundamentals and prospects, you should use them as a catalyst for engaging people in the decisions that your company makes.

Youand the people around youshould be able to give consistent, clear answers to these questions. Then, and only then, can you be confident that youre on track for successful implementation of your companys strategy.

I have purposely kept this book concise. If I could, I would prefer to simply hand you a laminated page with the seven key questions.

I should emphasize two points about these questions. First, they focus on how to execute your business strategy, not how to formulate it. The path you have chosen to create value for your customer and differentiate your products and services is the starting pointa given. But, if your strategy is poorly conceived, the questions will expose those deficiencies and force you to sharpen your thinking.

Second, these questions are not a random list, either in how they are presented or in how they were developed. I present the questionswhich you can recall easily if you remember seven Csin the following sequence: The first two questions (customer, core values) test whether youve built a strong foundation for strategy execution. The next two (critical performance variables, constraints) address your ability to focus everyones attention on your strategic agenda. Questions five and six (creative tension, commitment) ask whether you have done enough to facilitate the behaviors needed for success. The final question (contingencies) focuses on the future and your companys ability to adapt to change.

Seven Strategy Questions

1. Who is your primary customer?

2. How do your core values prioritize shareholders, employees, and customers?

3. What critical performance variables are you tracking?

4. What strategic boundaries have you set?

5. How are you generating creative tension?

6. How committed are your employees to helping each other?

7. What strategic uncertainties keep you awake at night?

The development of these questions began twenty-five years ago with an intensive study of performance management systems. Over a ten-year period, I interviewed scores of executives, wrote case studies describing successes and failures, and published papers outlining the techniques senior executives use to balance innovation and control. I summarized this work in my book Levers of Control.

Next, I turned my attention to the second big topic of strategy implementation: organization design. After more than five years studying prominent executives and how they created structures and accountability systems to deploy resources efficiently in their organizations, I published the results of this work in a second book, Levers of Organization Design.

Together, these two booksthe first focusing on systems and the second on structurehighlight seven variables that, in my opinion, are the keys to successful strategy implementation in any business.

Turning these variables into the right questions was the final, and most critical, step. Over several years, I worked with executive teams, such as those at Daiichi-Sankyo, Henkel, Honeywell, Lockheed Martin, Marriott, A.P. Moller-Maersk, and Standard Chartered to test and refine the questions. Most recently, these seven questions have formed the backbone of the strategy implementation curriculum in Harvards Advanced Management Program: this book will allow you to engage the same approach and materials that I use with executive participants in this program.