Great Strategy. Now Execute It.
You have two strategies. Both look sound. How do you know which is best?
The one you can execute.
A brilliant and visionary strategy is worthless if it can’t be executed or if it can’t be within an affordable budget and time frame.
Compare Ron Johnson’s strategy to save JCPenney and Lou Gerstner’s strategy that saved IBM two decades ago.
After retail success at Target and Apple, Johnson was lured last year to save JCPenney. Gerstner was lured from RJR Nabisco, Inc., to save IBM.
Johnson’s strategy is to re-make JCPenney from a constant discounter into a fresh, boutique-style, everyday low-price department store. Overnight, he changed the brand from JCPenney to JCP with a new logo. Instead of couponing he substituted a three-tiered pricing system. He’s changing the store concept and layout. He changed advertising but curiously didn’t use the advertising to explain the other changes.
The result was a first quarter loss of $163 million followed by a second quarter loss of $147 million. Johnson and shareholders are paying for his mistakes in execution. He already canned his own, handpicked president after only eight months.
Some among the business press, even some Wall Streeters still believe in his strategy. Others think his vision for JCP is a pipe dream.
At this writing, Johnson announced he’s discontinuing his three-tiered pricing and re-making the advertising to focus on promotional newspaper inserts for the rest of the year. More signs of flawed execution.
Strategy is at fault if you can’t execute it. And how do you decide if a strategy is good enough to spend the time and money for Execution Plan B?
When Lou Gerstner got to IBM he admitted he knew little about IBM’s business. His background was McKinsey & Co. consulting, American Express, and RJR Nabisco.
Before issuing a single decree, much less defining a strategy, Gerstner went on a learning binge. IBM doomsayers abounded. Many called for the company to be broken into smaller pieces.
“I had no preconceived notions of what needed to be done,” Gerstner said.
The former consultant traveled, listened, and learned the IBM culture. “I came to see that culture isn’t just one aspect of the game. It is the game. In the end, an organization is nothing more than the collective capacity of its people to create value.”
Gerstner’s strategy was to change IBM from a technological product-oriented company to a customer-oriented service company. He knew the strategy could be executed because, he said, “All of the assets the company needed to succeed were in place."
Johnson arrived at JCPenney with strategy in hand. On paper it still looks like a home run. It remains to be seen if it’s executable under any circumstances.
Gerstner said, “Good strategies start with massive amounts of quantitative analysis. Truly great companies lay out strategies that are believable and executable. Good strategies are long on detail and short on vision.”
Johnson’s strategy is long on vision, but faulty on detail, so far.