Strategic Planning: Implementation Is Not for the Meek

Have a hard time executing their business strategies because they just aren’t tough enough, says strategic planning expert C. Davis Fogg. A Wakefield, R.I.-based consultant to blue-chip companies and the author of Implementing Your Strategic Plan (Amacom, 1999), Fogg says strategic plans flop because executives don’t follow through. They fail to lead. They fail to hold their employees?or themselves?accountable for results.

And without that willingness to put it all on the line, says Fogg, the best-laid strategic plan will go astray.

Fogg, who between 1981 and 1982 was president of shoe and clothing manufacturer and retailer Johnston & Murphy, talked with CIO Senior Editor Elana Varon about how CIOs can do a better job of putting their plans into action, and a better job of making them work.

CIO: Is there any difference between implementing an IT strategy and implementing other kinds of strategies?

C. Davis Fogg: There are substantial differences. In IT, communication is far more important than it is, for example, in marketing. The marketing people generally have good communication skills. Compared with other groups in the company, a lot of IS people are the worst. If I were picking someone to run an IS team, I wouldn’t care if the person is a genius, but I would care if the person can communicate well. Businesspeople don’t want to be bothered with a lot of technical talk.

What gets in the way of implementing strategic plans?

If there is one thing that blows any [strategy] out of the water, it’s lack of leadership. And not just the leadership at the top. At key points, there have to be good leaders who can lead down the line and get people motivated. That doesn’t vary for any kind of strategy.

The second thing that’s extremely important is accountability. Accountability has to rest on someone who can fix a problem, and people have to meet their objectives.

Another problem that is even more important is not having information technology leadership that sees 15 years down the pipe with the strategic direction of the corporation. Part of the implementation piece is to make sure you know where the business is going technologically, so a new direction can be implemented fairly quickly.

Most technologists would say they’re lucky if they have a clue about the technologies that will be available in five years. How can they look ahead 15 years?

People say their long-term vision is three to five years. But I know a company with a massive IT backbone?it’s an insurance pension fund?that’s looking at advanced technologies 10 to 15 years down the road. They’re testing experimental capabilities in wireless data transmission. When the technology becomes usable, they’ll be on track. What has to happen first is you have to draw a very broad vision of where the organization is going. Once you know what kinds of markets you’re going to serve, the kinds of customers, you can look internally to see what kinds of systems you will need. Then you need to talk to people in the research labs, asking where the technology is heading. What’s going to be available 15 years from now is available right now in some prototype. One of the most difficult things is getting people off their duffs to go out and talk to people, especially people who aren’t in their industry. I’m an MIT grad. I go up there for weekends. Scientists love to talk.

Is there a point in implementing a strategy where companies tend to stumble?

Inevitably, there are people who aren’t up to the job or who don’t like the job and have to be moved out of the way. Companies don’t like to do that, but they have to do it up front; they can’t do it as they go along. The other stumbling block is to assume that people will rise to the competency you need. You have someone whose skills are out of date, and you say, We’ll teach him. That doesn’t work because you’ll have to wait for them to catch up.

Is that fair? Workers have done what was required of them, but now that you’re changing your strategy, you’re just going to throw them aside.

You don’t throw them aside. You leave them in the job with very tightly defined objectives?no more and no less than what anybody else is going to have to do?and you give them a chance to perform under the new standards. You give them education if they need it. I can almost guarantee that within 18 months the bulk of those people will leave on their own, particularly if you give them a good severance package. Guess what percentage of top management versus middle management will leave.

About 40, 50?

A survey I did shows that over a very short period of time, about two-thirds of senior management opts out when the standards are changed to a much higher performance level?and about one-third of the workforce.

So the problem in successfully executing a strategy is that companies don’t set standards?

They don’t set good standards.

Why don’t people know that? Isn’t it obvious that executives need to establish a system of accountability, get rid of resisters and develop a staff with the skills they’ll need to move ahead in their company?

These things are cultural in companies and, unfortunately, the culture you inherit is going to drive what’s going on until you change it. Older line companies in particular are not very good about accountability. Even if they have objectives, nobody gets punished for not meeting them. You have to have somebody at the helm who’s going to say that not meeting objectives is intolerable.

Do you need to bring in an outsider?

No. For example, Genesco, the parent of Johnston & Murphy, was once the largest manufacturer and marketer of men’s shoes in the U.S. It threw itself into chaos by a series of misbegotten acquisitions of high fashion and other retailers in the 1970s. Genesco changed key management over the next 15 years like socks every morning. New executives were inevitably hot shots from other industries and companies. The company never turned around.

Then in 1996, Ben Harris, a 28-year company employee, became president and COO. He and two other longtime officers replotted Genesco’s future. Genesco had never before set and reviewed meaningful objectives. Harris’s measure of success was a version of Economic Value Added, which measures capital employed, return on capital, profit margin, cost. Everyone in the company could be measured by one or more of its components. They turned Genesco around quickly.

That it was handled in an emotionally motivating way is illustrated by a touching incident. When corporate offices were being refurbished, a worker came to Ben and handed him $4,000. He told Ben that his job was measured by cost, and he knew that the company was going though tough times. He took old doors left from the remodeling, slated to be thrown away, threw them in his pick-up truck, sold them and gave Ben the money.

When bonuses came out that year, the man got a bonus.

In my study of 28 companies for my last book, Implementing Your Strategic Plan, the 26 that required drastic action to turn their performance around were turned around by long-tenured insiders. Insiders know how to get things done through the culture. They know where the skeletons and poor performers are hiding, and where the opportunities lie.

Does Wall Street’s focus on quarterly earnings prevent companies from doing a good job both planning strategically and implementing those plans?

It does. But some leaders I know don’t worry about the short haul. It drives the managers nuts. Roberto Goizueta [the late CEO of Coca-Cola], who was a class ahead of me in school, told Wall Street to stuff it. I know a number of companies that are run for the long haul. One of them uses a form of Economic Value Added. Others do it according to stockholder value, which is a very, very good measure as long as people don’t measure quarter to quarter. IT is such an underutilized power in the marketplace, I would expect right now is a very good time to be thinking about powerful investments to improve market position and efficiency. Particularly if you have cash and your competitors don’t. Of course there’s another issue. I have believed for decades that officers of the company should be measured by internal strategic objectives so that they have to meet their objectives before they get their options. When I was officer with Bausch & Lomb way back when, we were not allowed to sell stock unless you were doing something like building a house or going to school.

Do you think the downturn in the economy has changed the outlook for strategic planning success?

I think it’s increased it. People who didn’t have good plans are sitting around saying, Oh my gosh, I’d better get my act together. If we get hit with another [downturn] and we don’t know where to put our funds, we’re in trouble. Strategic planning is a process of allocating resources.