Carolyn Dewar, Martin Hirt, Scott Keller

Excellent CEOs form a small group of trusted colleagues to provide discreet, unfiltered advice—including the kind that hasn’t been asked for but is important to hear. They also stay in touch with how the work really gets done in the organization by getting out of boardrooms, conference centers, and corporate jets to spend time with rank-and-file employees. This is not only grounding for the CEO, … [ Read more ]

Carolyn Dewar, Martin Hirt, Scott Keller

Exemplary CEOs combine the reality of what they ought to do in the role with who they are as human beings. They deliberately choose how to behave in the role, based on such questions as: What legacy do I want to leave? What do I want others to say about me as a leader? What do I stand for? What won’t I tolerate? CEOs answer … [ Read more ]

Carolyn Dewar, Martin Hirt, Scott Keller

Excellent CEOs increase their companies’ agility by determining which features of their organizational design will be stable and unchanging (such features might include a primary axis of organization, a few signature processes, and shared values) and by creating dynamic elements that adapt quickly to new challenges and opportunities (such elements might include temporary performance cells, flow-to-work staffing models, and minimum-viable-product iterations).

Carolyn Dewar, Martin Hirt, Scott Keller

Vendors of workforce surveys like to say that employee engagement is the best measure of “soft stuff.” It’s not. While employee engagement indeed correlates with financial performance, a typical engagement survey covers less than 20 percent of the organizational-health elements that are proven to correlate with value creation. A proper assessment of organizational health takes in everything from alignment on direction and quality of execution … [ Read more ]

Carolyn Dewar, Martin Hirt, Scott Keller

Of the 50 most value-creating roles in any given organization, only 10 percent normally report to the CEO directly. Sixty percent are two levels below, and 10 percent sit farther down. Most surprising of all is that the remaining 10 percent are roles that don’t even exist. Once these roles are identified, the CEO can work with other executives to see that these roles are … [ Read more ]

Carolyn Dewar, Martin Hirt, Scott Keller

Resource reallocation isn’t just a bold strategic move on its own; it’s also an essential enabler of the other strategic moves. Companies that reallocate more than 50 percent of their capital expenditures among business units over ten years create 50 percent more value than companies that reallocate more slowly.

How to Make the Bold Strategy Moves that Matter

What does it take to make a true performance leap? The authors of Strategy Beyond the Hockey Stick explain the key strategic levers their analysis has revealed, and how strongly you have to pull them.

The Mindsets and Practices of Excellent CEOs

The CEO’s job is as difficult as it is important. Here is a guide to how the best CEOs think and act.

Chris Bradley, Martin Hirt, and Sven Smit

To deliver the message that people will not be punished simply because a high-risk plan did not pan out, we suggest developing an “unbalanced scorecard” for incentive plans that has two distinct halves. On the left is a common set of rolling financials with a focus on two or three (such as growth and return on investment) that connect to the economic-profit goals of the … [ Read more ]

Chris Bradley, Martin Hirt, and Sven Smit

The best way to create [a rolling strategic plan] is to hold regular strategy conversations with your top team, perhaps as a fixed part of your monthly management meeting. To make those check-ins productive, you should maintain a “live” list of the most important strategic issues, a roster of planned big moves, and a pipeline of initiatives for executing them. At each meeting, executives can … [ Read more ]

Chris Bradley, Martin Hirt, and Sven Smit

It is nearly impossible to make the big moves that successful strategies require if resources are thinly spread across all businesses and operations. Our data show that you are far more likely to achieve a major performance improvement when one or two businesses break out than when every business improves in lockstep. You have to identify those breakout opportunities as early as possible and feed … [ Read more ]

Chris Bradley, Martin Hirt, and Sven Smit

Messy, fast-changing strategic uncertainties abound in today’s business environment. The yearly planning cycle and the linear world of three- to five-year plans are a poor fit with these dynamic realities. Instead, you need a rolling plan that you can update as needed.

In our experience, the best way to create such a plan is to hold regular strategy conversations with your top team, perhaps as a … [ Read more ]

Chris Bradley, Martin Hirt, Sven Smit

It’s essential to track assumptions over time. A few short weeks after the plan is developed, the detailed assumptions go into a fog of memory. The variance to budget gets tracked very carefully, but the underlying assumptions—such as uptake rates, market growth, or inflation rates—are not assessed as carefully. Rather, decide what you can today, with the information you have, and build explicit trigger points … [ Read more ]

Chris Bradley, Martin Hirt, Sven Smit

We found that your industry’s performance is responsible for almost half of your position on the [economic profit] power curve. Industry impact is so substantial, in fact, that you would be better off as an average company in a great industry than a great company in an average industry. But here is the kicker: mobility on the curve is possible—but rare. The odds of a … [ Read more ]

Chris Bradley, Martin Hirt, Sven Smit

At some level, it is easy for the CEO to deal with uncertainty by playing the portfolio game of spreading investment like peanut butter around numerous businesses, knowing that not every bet has to pay off for the total plan to work. The problem is that a portfolio game on the corporate level becomes a matter of all-in commitment for an individual-business-unit leader. We have … [ Read more ]

Chris Bradley, Martin Hirt, Sven Smit

Uncertainty is not only everywhere in and around strategy—it is the very reason we need strategy. Without uncertainty, we would just need a plan to go from A to B.

Chris Bradley, Martin Hirt, Sven Smit

Business strategy, at its heart, is about beating the market; that is, defying the power of “perfect” markets to push economic surplus to zero. Economic profit—the total profit after the cost of capital is subtracted—measures the success of that defiance by showing what is left after the forces of competition have played out.

How to Confront Uncertainty in Your Strategy

Lack of certainty about the future is the very reason you need a strategy. Instead, embrace probability.