Is it getting harder for your company to deliver profitable growth? Have you succeeded in improving operational delivery yet are unable to turn this into better financial performance? Have you struggled to identify new, breakthrough profit growth solutions? And where new initiatives are launched, are you disappointed and frustrated by their results?
If so, you are not alone. What was once a strategy for superior performance can be quickly eroded by today’s competitive environment. In this article, using M&S, the leading British retailer as an example, I will share with you six steps to developing and delivering a winning business strategy.
The fall and rise at M&S presents a good example of how to create a winning strategy. In the summer of 2004, facing a hostile bid from Philip Green of £4 per share, the M&S Board replaced CEO Roger Holmes with Stuart Rose. The share price had fallen from £x to £x in little over x years despite Holmes’ attempt to modernise the famous high street retailer.
So what are the six steps to winning strategies and how did Rose go about?
Step 1 – Identify The Big Issues
What is it that is holding you back from delivering the results you want? This is the question you need to answer to get to grips with your issues. To achieve this you will need to create a strong fact base that covers financial performance, market and competitor dynamics, customer needs and organisational assessments.
According to Stuart Rose his first task following his appointment was to conduct a “full business review”. This gave him and his team a handle on the big issues which were holding the company back:
- Excessive costs – both in capital and revenue terms
- Bureaucracy and complexity – in the speed and flexibility of key processes, particularly in buying and stock management
- Ineffective listening to customers – creating ongoing customer frustration
- Poor value projection – particularly around opening price points
- Inadequate store environment – creating a poorly-received shopping experience
- Unclear product offer – with excessive range proliferation and low levels of true innovation
This is some list, and perhaps was easier for a new team to confront! However, if you fail to identify and face into the big issues through a fact-based review, you are likely to go round in circles with your management team sharing your different opinions about what the problems are, rather than focusing on what you are going to do about them.
Step 2 – Be Distinctive
At the heart of any successful company, and any winning strategy, is a distinctive position in the market. If you are the same as everyone else then you will compete on one thing – price!
So what makes you unique to your target customers? What solutions can you provide them that they can’t get elsewhere, and how do you persuade them of this? And how do you focus the organisation and your activities around this proposition?
Stuart Rose and the M&S leadership chose to reassert the retailer’s traditional values – Quality, Value, Service, Innovation and Trust. Their belief is that this mix provides a distinctive position in the market, and they have clearly brought this to life through their “Your M&S” marketing campaigns.
Step 3 – Create A Compelling Vision
Understanding your big issues is essential, but successful organisations need to have a shared view of where they are heading. Identifying how you are distinctive is a start, but, for most organisations a clear sense of direction is required before your people are willing to really commit to a new and better approach.
Again, Stuart Rose’s response was to go back to the M&S tradition, quoting Marcus Sieff’s stated aims from the 1950’s:“Offering customers, under the Company’s brand name a selected range of high quality, well-designed and attractive merchandise at reasonable prices which represent outstanding value, simplifying operational procedures so that the business runs efficiently and fostering good human relations with staff, customers and suppliers.”
Step 4 – A Focused Agenda For Action
An early action by Stuart Rose was to cut 31 strategic projects to the 10 that added the most value!A programme of 31 projects is likely to consume excessive expenditure, and, even in an organisation the size of M&S, is unlikely to be delivered successfully.
A focused agenda for action should give your organisation a greater sense of direction. It should be hardwired into your vision, but also recognise the big issues and current realities. Above all, it should be easily understood by your people who, ultimately, need to deliver it.
The M&S executive team broke down their agenda into three phases,and within each phase set clear themes and initiatives. The three phases of the agenda for recovery are:
- Refocus the business in 2004/05
- Drive the business in 2005/06 to 2007/08
- Broaden its horizons in future years
Step 5 – Initiatives that Deliver
Hand in hand with a focused agenda is the need to have initiatives that deliver tangible results. Clear goals need to be set, and accountabilities understood. Again, linking initiatives into broader themes provides a greater sense of understanding for your people, and helps them engage with and deliver against the strategy.
In their first year, the M&S Executive translated their theme of “refocusing the business” into the following goals and associated initiatives
- Optimising financial returnsincluding new supplier
terms, tighter spending controls, and stock reduction
- Reducing bureaucracy – including a smaller, slimmer
executive team, simpler processes, and the reduction in strategic projects
from 31 to 10
- Focusing on the core business – including selling M&S
Money to HSBC, closing the Lifestore, and buying the Per Una brand
This is a lot of activity, and I’m sure that it felt like that in the business! It is also, however, activity that is grounded in the company’s current realities and which clearly helps it achieve its ambitions. It is not activity for activity’s sake.
Step 6 – An Effective Organisation
An effective organisation is one that is focused, flexible and fast. One of the first actions of Stuart Rose was to remove a number of senior executives in order to “enable faster decision-making and clearer accountabilities”. In his first year, Rose eliminated another 650 roles from Head Office.
There is more to an organisation than its size and structure. Critical to its success are appropriate processes, systems, and, perhaps even more importantly a culture of delivery. To create this culture requires the leadership to engage their people so that they are willing to go the extra mile.
There is also a strategic element to organisation. Increasingly companies are focusing on those things that are critical to delivering their distinctive position, and outsourcing non-core activities. For example, M&S are working with suppliers to better manage stock levels and deliver “fast fashion”.
Making it happen
So how do you start to create a winning strategy? Stuart Rose was, from the very beginning, working on all six elements simultaneously. Whilst the business review was going on (Big Issues), he was reducing his executive team (Effective Organisation), reaffirming the M&S values (Distinctive Position), rediscovering a general direction (Compelling Vision), and culling the number of strategic projects (Agenda For Action).
The successful companies are those that continually review, test and develop their strategy, ensuring their activities are aligned with what customers really value. For management teams unwilling or unable to do this, the result is often replacement with new management teams!
Is there a Stuart Rose waiting in the wings to develop your company’s winning strategy?
To find out more contact Stuart by clicking here or call +44-(0)1636-526111.