Turning Strategy Into Results

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How can leaders translate the complexity of strategy into guidelines that are simple and flexible enough to execute? As Donald Sull, Stefano Turconi, Charles Sull, and James Yoder explain in the Spring 2018 MIT Sloan Management Review, “Rather than trying to boil the strategy down to a pithy statement, it’s better to develop a small set of priorities that everyone gets behind to produce results.”

Strategy, at its heart, is about choice. Few companies succeed by making a single big bet. Most winning strategies are based on a bundle of choices about, among other things, the customers to serve, the scope of the business, product offerings, and capabilities that interact with one another to help a company make money.

Consider Trader Joe’s Co., the U.S. grocery retailer based in Monrovia, California. It focuses on educated, health-conscious customers, which influences where it locates its stores, which products it stocks, and the type of employees it hires. The company’s choices reinforce one another to increase customers’ willingness to pay, reduce costs, and thereby drive profitability. The dense interdependencies among the choices prevent rivals from imitating Trader Joe’s winning strategy. Piecemeal imitation of a few elements — for example, the store format or the focus on private labels — wouldn’t work. Instead, a rival would need to replicate the full set of interconnected choices.

Strategy is inherently complex. We see this in the thick reports and complex frameworks that companies use to describe their strategic choices and how they connect with one another. Describing a strategy favors complexity, but executing it requires simplicity. To influence day-to-day activities, strategies need to be simple enough for leaders at every level of the organization to understand, communicate, and remember — a strategy that gathers dust on a shelf is nothing more than an expensive bookend. A strategy for execution must provide concrete guidance while leaving managers with enough flexibility to seize novel opportunities, mitigate unexpected risks, and adapt to local conditions. The act of codifying past choices into an explicit strategy, moreover, reinforces historical commitments and locks...

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