Agility

Agility, or organizational agility, is the ability to continually adapt without changing, according to Lee Dyer and Richard A. Shafer of Cornell University. Agile organizations have an innate “capacity to shift, flex and adjust as circumstances change.”²²¹

Alignment

Alignment, or strategic alignment, is the process of attuning an organization’s actions, divisions and employees to the organization’s goals. This strategic alignment ensures that divisions and employees collaborate well and thereby contribute to the organization’s results.

Architecture, Open Architecture

The term (Open) Architecture is derived from the field of software programming, where it is used to describe the structure of a product. Open architecture refers to products whose specifications are public, making it easy for other software developers to add components to it. Like other terms (such as agile and scrum), this notion has found its way into the non-technical arena and is no longer exclusively used in software development. It also refers to the structure of products, prices, processes, organizations and knowledge. In this book, we use the term architecture in the wider sense. In the financial services industry, open architecture has yet another meaning; investment companies with an open architecture give their customers the opportunity to invest in other financial institutions’ products as well.

Benefit Realization Management

In strategy execution, Benefit Realization Management refers to the setting up, operationalizing and use of a benefit measurement system. Synonyms for this term are: business case management, performance management and target monitoring. Benefits are measurable, planned changes that result from a strategic initiative and are regarded by stakeholders as beneficial.

Breakthrough

The sixth building block from the model presented in this book, known as BREAKTHROUGH, is about developing a Minimum Viable Product (MVP) with at least one innovative breakthrough. We see this as an important change that truly influences the existing business model or leads to a new one. The word breakthrough suggests two things: (1) an innovation of a rare caliber that (2) leads to a sharply enhanced performance.

Building Block

The Strategy = Execution Model consists of four accelerators. Each accelerator consists of four Building Blocks, two for the hard capabilities and two for the soft capabilities. Hence, the model consists of 16 building blocks in total. A building block is a brief description of an important issue in strategy execution and of what it takes (which actions in a concerted effort are required) to attain the building block’s objective. The first building block of an accelerator is hard and deals with the Why : the goals and benefits. The second building block of an accelerator is also hard and deals with the What: the content of the strategy and the initiatives in the portfolio. The third is one of the two soft building blocks and deals with the How: the execution and change strategy. And the fourth is also soft and describes the Who: ownership of the initiatives and their envisioned benefits.

Business Model

A Business Model describes the way in which an organization creates and appropriates value (i.e. makes money). A business model answers the following main questions: what proposition does the organization offer its customers; how does it serve its customers; what target group does it aim at; how does it create value and how is the value chain set up; what is the cost structure; how does the business position itself and how does it want to compete? A business model’s internal organization consists of capabilities: processes, governance and structure, people and culture, technology and resources, data and knowledge.

Business Process Redesign

Business Process Redesign or Business Process Re-engineering (BPR) is a management strategy defined by Michael Hammer and James Champy in the early 1990s. BPR analyzes organizations’ internal processes in order to fundamentally redesign them to make radical improvements in cost structure and customer service, for instance.

Capabilities

We define Capabilities as the ability to perform certain actions or achieve results pertaining to an organization’s goals. Each component of the business model is a capability. We deliberately distinguish between capabilities and personal competencies, such as knowledge, skills, motivation and ambition, personal qualities and intelligence.

Change Leadership

Change Leadership is a means of spearheading various types of transformation. Change leaders uphold the vision, build a leading coalition, and create the space, direction and preconditions necessary for institutionalizing changes.

Change Management

In the context of strategy execution, we define Change Management as the organization of instrumental and operational actions aimed at implementing and monitoring strategy execution initiatives.

Changing the Business (Execution Excellence)

Changing the Business is the term we use to describe transformation or change management. Changing the business is not the same as ‘Running the Business’, which refers to daily executive management of the existing organization. Changing the Business is about fundamentally altering the organization. We subdivide this category into three types of change: 1. Improvement, 2. Renewal, and 3. Innovation. Types 1 and 2 refer to modification within the limits of existing business and revenue models. Type 3 refers to radical innovation of a business or revenue model.

Continuous Development

In this book, Continuous Development is defined as the cyclical redesign and improvement of the Minimum Viable Product (MVP).

Core Competency

A Core Competency is a field or task that a business does best and that gives the business its competitive edge. The term was coined in 1990 by Gary Hamel and C.K. Prahalad in an article in the Harvard Business Review.

Cultural Change Program

A Cultural Change Program is a change program aimed solely at changing employee norms, values and conduct. Cultural change programs that are not linked to goals and content never pay off, because corporate culture is the result of the work people do to achieve hard goals and make content-related changes and is therefore not a separate matter.

Customer Intimacy

We use Customer Intimacy to describe a marketing strategy that enables an organization to get close to its customers. Customer intimacy leads to greater problem-solving abilities in customer contact, an improved ability to align products with customers’ conscious and unconscious needs, and deeper customer loyalty.

Customer Journey

The Customer Journey describes the phases customers go through while purchasing a product or service, as seen from their perspective. See also Customer Journey Mapping.

Customer Journey Mapping

Customer Journey Mapping is a method used to visualize the phases customers go through while purchasing a product or service, from their own perspective. Organizations often need several visualizations to map out the various scenarios and channels.

Digital Innovation

See Innovation.

Disruption

A Disruption literally interrupts or thwarts a process. Disruptions are almost always the result of innovations, but innovations are not necessarily disruptive.

Employability

Employability is people’s ability to carry out their duties in the best possible way. Everyone is responsible for continually developing their employability and enabling others to do the same.

Execution Capacity

We use the term Execution Capacity to describe an organization’s maturity and its ability to change. Execution capacity is comprised of both hard and soft change capabilities. This capacity is also known as ability to change.

Execution Coalition

The Execution Coalition is a concept coined in this book. It consists of five key roles that are indispensable to each accelerator: the Chief Execution Sponsor, the Co-Sponsor, the Execution Lead (Program or Project Manager), the Execution Team Member(s) and the Benefit Realization Manager(s). These roles are essential, interdependent and indispensable to execution and benefit ownership. They encompass every key role in the organization, from management level to work floor, in both primary and secondary processes. An execution coalition does far more to increase the chances of achieving the necessary alignment than separately operating entities (like steering groups, core teams and working and monitoring groups) ever could.

Execution Excellence

In our definition, Execution Excellence describes how well an organization is able to attain its goals using three types of strategy execution: (1) improvement, (2) renewal and (3) (digital) innovation that turns the existing organization into a new one. Excellence is essential to achieve the best possible results.

Execution Resources

Execution Resources are the means necessary to carry out an initiative. Examples include an easy-to-use digital checklist for a new process; a simplified version of processes in the shape of a mini-protocol; a letter of credence in video format; a personal manifesto format; and a Q&A database.

Execution Tool Kit

The Execution Tool Kit is used to transfer the total design and MVP to the various new stakeholders so they can take it from there. The tool kit always contains a crystal clear ten-pager outlining the why, how, what and where of the initiative, the sponsor’s letter of credence and an ingenious selection of design content and the analyses underlying it. In short, it is a mix of hard, content-related, elements and soft, change-related, elements.

Fact Sheet

A Fact Sheet is our name for all sorts of practical planning templates. These are overviews of data that are pertinent to a particular component of the model. The Appendices include several fact sheets about the four accelerators, the portfolio, the MVP and project and program management.

Failure Costs

Failure Costs are the costs incurred because of a failed strategy execution. We distinguish between direct and indirect failure costs. These are often not made explicit, even though it is possible to do so, even in the case of frustration among employees and perceived unused potential.

Failure Factors

Failure Factors are reasons why an initiative ultimately cannot be, or has not been, executed. We differentiate between familiar failure factors and less familiar failure factors. These are discussed in Chapter 9, which outlines the reasons why strategy execution sometimes fails.

Goals

See Objectives.

Habit

Habit, or ‘automatic pilot’, is a term borrowed from sociology and psychology. Behavior, or habit, is influenced by the environment and goals. Behavioral change is most likely to occur when the context and the goals change too. Attempts to change habits without addressing the environment or the objectives are doomed to fail.

Hard Capabilities

Hard Capabilities include business processes, structure and technology (IT). The SECA.NU online research tool, developed to assess an organization’s execution capacity, can be used to systematically evaluate an organization’s hard and soft capabilities.

Improvement

Improvement is our term for Type 1 changes: a continuous improvement and iteration of the existing revenue and business models, operational excellence, in the existing business processes.

Innovation

Innovation literally means renewal. However, in this book we use it to denote a radical change, usually a digital shift, that necessitates new business and revenue models.

Intervention

A well-directed Intervention is the best way to change people’s behavior. An intervention may pertain to means of collaboration, management, ownership, the division of responsibilities, communication and calling each other out on undesirable behavior.

Key Processes

Key Processes are processes that leverage the goals. They are crucial for achieving results. Building Block 6, BREAKTHROUGH, identifies these key processes so they can be leveraged (used) to reach the goals.

KPI

A KPI is a Key Performance Indicator, a metric used to analyze how well a business performs.

Lean

Lean Manufacturing, or simply Lean, is a management philosophy from the field of operations management aimed at realizing maximum value for the customer by eliminating waste and enhancing business process flow. This improves performance (e.g. efficiency) and decreases operational cost. Toyota in Japan contributed greatly to the development of lean manufacturing in the 20^th century.

Lean Six Sigma

Lean Six Sigma is a method in the field of operations management for organizing quality and efficiency improvements. It systematically optimizes business processes to improve customer value through a program aimed at continuous improvement of results. The method combines Lean Manufacturing and Six Sigma principles.

Leap-of-Faith Assumptions

In the context of this book, we use the term Leap-of-Faith Assumptions to describe the assumptions that steer innovations. According to Eric Ries, inventor of the Lean Startup Method, such assumptions are the best way to kickstart an innovation.

Managerial Excellence

Managerial Excellence describes executive management and the extent to which an organization is able to use the existing business model to achieve the goals of the current business. We call this ‘Running the Business’. Again, excellence is indispensable to achieving the best possible results.

Minimum Viable Product (MVP)

A Minimum Viable Product, or a prototype, is the first marketable version of a product in the early stages of development. Note that ‘minimum’ does not mean sub-par. Instead, it means narrowly defined and manageable. It is meant to bring about the minimum necessary customer experience, goals and functionalities. An MVP enables a business to assess whether the product is economically viable. It is a very basic version of the ultimate product aimed at learning as much as possible from early adopters.

Multidisciplinary

Multidisciplinary refers to activities that involve various disciplines. Most strategy execution initiatives are about complex, multidisciplinary changes, which means that they must involve various disciplines within the organization too.

Must Haves

MUST HAVES is the name of the fifth building block. In the Strategy = Execution Model, it stands for the foundations that each initiative needs to be built on: a clear assignment, willingness and a sense of necessity, an answer to the ‘small why’ behind the initiative, a business case and a hypothesis-oriented analysis. This term makes clear that if there is no need for an initiative, it will not succeed.

The New Normal

The New Normal is our name for the times we live in. Digital and other technological and social developments are putting the business and revenue models of many organizations under pressure. These organizations can do one of two things: adapt or eventually fail. The New Normal is also the title of Jacques Pijl’s book (Het Nieuwe Normaal, 2014), which describes 21 rules for survival in modern times.

Objectives

Objectives are the aims, goals and targets in a business model that stem from an organization’s vision, mission and strategy. Objectives are best defined according to SMART criteria: Specific, Measurable, Attainable, Realistic and Time-bound.

Ownership

Ownership is a form of direct employee involvement in an organization or initiative. The term denotes a deep-rooted sense of responsibility and engagement. New initiatives can only succeed if the people in the execution coalition take ownership of them. There are two types of ownership: Execution Ownership and Benefit Ownership. Execution Ownership refers to the responsibility a person feels for completing the execution of an initiative, while Benefit Ownership refers to the felt responsibility to use what has been implemented to generate the envisioned benefits. Employees may assume either or both types of ownership.

Portfolio

In this book, the term portfolio describes all the strategic change initiatives in one organization, of all three types. Building Block 2, SELECTION, is used to create a balanced portfolio. A portfolio needs to be balanced in terms of the various types of change initiatives, but also in other respects, such as total number of initiatives, types of objective and horizon (see Figure 14). In the corporate and financial world, portfolio also denotes a range of products or services. Originally, a portfolio was a selection of representative work that artists, graphic designers and advertising agencies used to convince potential clients of their qualities.

Product Leadership

Product Leadership is a term coined by Michael Treacy and Fred Wiersema. They argued that product leadership is one of the three disciplines a business needs to master in order to lead the market. The other two are customer intimacy and operational excellence. According to the management thinkers, an organization needs to excel in at least one of these to actually become market leader. In the New Normal, organizations need to score high on all three.

Psychological Check-In

This book distinguishes between psychological ownership and formal ownership. The latter entails formal employee responsibility for an initiative or process. The former refers to the ostensibly soft counterpart of formal responsibility, namely the owner’s intention. The main point is whether an employee wants to take responsibility rather than has to take responsibility. The check-in is the moment the employee takes on responsibility and claims ownership.

Revenue Model

An organization’s Revenue Model describes the way in which the business generates money and appropriates value. The difference between value creation and appropriation is important. A business can make money in many different ways, and therefore there are many different revenue models that can be used to do so. A revenue model is part of a business model.

Renewal

Renewal is the term we use to denote Type 2 changes: innovations of the existing revenue and business models aimed at continued healthy operation. Renewal can sometimes be subsumed in the regular business processes, but sometimes its execution needs to be assigned to a separate project or program.

Running the Business (Organizational Excellence)

Running the Business is the term we use for regular executive management in the organization. This refers to activities that are consistent with the existing business model.

Scaling

Building Block 11 is called SCALING and refers to the phase in which the right scaling and rollout methods have to be selected, developed and operationalized. Scaling entails involving more people in the organization in the initiative and making the product available to larger groups of customers.

Scrum

Scrum is a term borrowed from software development. It is an iterative method to develop products. It is a flexible and holistic strategy in which the members of a development team work together to achieve a common goal.

SECA.NU

Turner Consultancy has developed an online Strategy Execution & Change Accelerator (SECA.NU). This research tool provides participants with online and real-time information about their organization’s present execution capacity compared to benchmarks. This enhances and accelerates strategy execution. SECA.NU consists of 25 questions that give a very accurate analysis of an organization’s maturity in strategy execution.

Secure

To Secure means to embed, integrate and institutionalize: to ensure and protect against dilution.

Six Sigma

Six Sigma is a management strategy aimed at improving the output of business processes by removing the causes of defects and thereby reducing the variability in the processes. Six Sigma consists of a collection of quality management methods, including statistical methods. Typical elements include creating an infrastructure of experts in the organization who continue to build up their capabilities (Green Belts, Black Belts, etc.); a predefined sequence of steps that each Six Sigma project follows; and quantifiable goals (e.g. quality improvement and/ or cost reduction). Six Sigma was developed by Motorola in 1986 and became central to General Electric’s strategy from 1995 onwards.

Soft Capabilities

The Soft Capabilities in strategy execution are people-centered capabilities. They include corporate culture, behavior, and leadership and collaboration styles. In contrast to what many people think, soft capabilities are quantifiable too. The SECA.NU online research tool, developed to assess an organization’s execution capacity, can be used to systematically evaluate an organization’s hard and soft capabilities.

Storytelling

Storytelling is the internal and external communication strategy used to convey the background story to any type of change in the organization to other stakeholders. Storytelling is more than just communication. Effective storytelling creates a desire for change and is a cue for people to claim ownership.

Strategy Execution

Strategy Execution is the full range of activities that an organization deploys to manage, improve and renew its existing business model (Types 1 and 2), and to innovate by creating new business models (Type 3). Management of the current day-to-day business is what we call running the business (a.k.a. a going concern). Improving, renewing and innovating is known as Changing the Business. Strategy execution enables an organization to simultaneously leverage its existing business model while also innovating with new business models in order to secure future continuity.

Targets

See Objectives.

Time Best Spent

One of the greatest ambitions of the model presented in this book is to radically rebalance the time and resources spent on strategy execution. Rather than spending 80% of the time on formulating strategy, we advocate spending this 80% on the actual execution. We are turning the use of time into a new KPI.

Two-Track Approach

We use the term Two-Track Approach in this book to make clear that radical (Type 3) innovations need to be organized separately and cannot be incorporated into the existing organizational structure. True innovations are developed at a different speed and are so crucial that they need to be managed in a dedicated program or project.

VUCA

VUCA is an acronym of Volatility, Uncertainty, Complexity and Ambiguity. The term is derived from the military and describes the four characteristics that are part and parcel of the New Normal.

Why, the Big Why

Answering the Big Why is the starting point of any strategic analysis and course plotting. Why does this organization exist? What do we want to achieve? Simon Sinek, author of Start With Why, has put this question at the top of the agenda again.

Why, the Small Why

The Small Why is derived from the Big Why and describes the underlying reason for every strategy execution initiative. Why do we want to execute this strategy? How does this initiative help to answer the big why?