Strategy

Closing the Gap Between Strategy and Execution

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Many markets are affected by the complex interactions of multiple variables: geopolitics, technical innovation, capital market swings, competitive dynamics, shifting consumer preferences and so on. These volatile markets throw out a steady stream of opportunities and threats, and managers can neither predict nor control the form, magnitude or timing of future events with accuracy. In such environments, the traditional linear view of strategy — plan then execute — is woefully inadequate because it hinders people from incorporating new information into action.

But instead of thinking of strategy as a linear process, why not consider it as inherently iterative — a loop instead of a line? According to this view, every strategy is a work in progress that is subject to revision in light of ongoing interactions between the organization and its shifting environment. To accommodate those interactions, the strategy loop consists of four major steps: making sense of a situation, making choices on what to do (and what not to do), making those things happen and making revisions based on new information.

Reconceptualizing strategy as an iterative loop is simple enough, but putting that new mindset into practice is not. Here, the crucial thing to remember is that discussions — formal and informal, short and long, one-on-one and in groups — are the key mechanism for coordinating activity inside a company. Thus, to put the strategy loop into practice, managers at every level in the organization must be proficient at leading discussions that reflect the four major steps (making sense, making choices, making things happen and making revisions). Companies such as Diageo Ireland, All America Latina Logistica and Onset Venture Services demonstrate that each of the four types of discussions has a different objective that requires a specific tone, supporting information, leadership traits and accompanying tactics.

Donald N. Sull is an associate professor of management practice at the London Business School. Comment on this article or contact the author through smrfeedback@mit.edu.

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