Want to follow a Product or Service-based innovation strategy? Line-of-Sight survey highlights the execution ingredients of success

EmFluent helps companies execute better using Line-of-Sight to measure and manage five critical capabilities necessary for successful execution (or KSEs): strategic understanding, leadership, balanced metrics, activities & structure, and human capital; it also assesses market discipline – the ability to execute in a way that remains true to the strategic intent. These factors are aggregated to form an overall Organizational Health index measured on a scale from 0 to 100.

Line-of-Sight led a survey of more than 100 CEOs to measure how they evaluated the execution capabilities of their organization. This survey took place in Q1 2021, when most businesses were transitioning to a post-pandemic world.

The pandemic compelled many companies to rapidly pivot and develop new delivery models, products, or services to meet massive changes in customer behavior. So, we would expect many CEOs to continue to follow product innovation strategies in 2021; in fact, only about a quarter of them (24%) do; as we discuss in another article on market positioning, the majority of CEOs (50%) decided to pursue strategies based on customer intimacy. This makes a lot of sense: companies should be as attuned to demand shifts as possible in periods of high uncertainty, and this may inform the decision to innovate or not.

In some segments, however, customer behavior shifts did demand new offerings. And as the economy settles into more predictable patterns in the post-pandemic, we believe that more and more companies will shift to product innovation strategies – because there is greater certainty about demand patterns.

For any CEO pursuing a product innovation strategy or planning to invest in innovation again this year, the Line-Of-Sight CEO survey highlights what it takes to be a successful innovator when it comes to execution:

●       CEOs pursuing innovation have higher execution scores on leadership: 78 points vs 74 for the average

●       They are more focused on their human capital: 70 points vs. 67

●       They do not perform as well as their peers when it comes to using balanced metrics to manage their operations.

For background, Line-Of-Sight assesses Leadership from an execution standpoint by evaluating the perceived credibility of the CxO team, their ability to lead and manage change, and their ability to consistently, clearly, and actionably communicate the strategy. These are indeed necessary ingredients to provide the impetus and direction that fosters creativity.

As for human capital, innovation is an inherently human-driven process: it relies on creativity, problem-solving, and teamwork. So, it also makes sense that innovative companies manage their human capital better. Line-Of-Sight assesses human capital performance by measuring knowledge exchange (which is paramount in the creative process), training and development (which keeps employees motivated and high-performing) and ability to attract and retain top talent (since innovation requires the right combination of skills, behavior, and cognitive capabilities).

The lower performance of innovative companies when it comes to balanced metrics is deliberate and can also be explained by the inherently chaotic nature of innovation: metrics are normally used to keep employees focused on the right activities; the survey suggests on the contrary that some measure of freedom from tight metrics enhances innovation. Innovation also requires speed, and it can be challenging to constantly adapt reporting systems to a changing set of data. As a result, innovators use metrics to manage overall risks whereas companies pursuing operational excellence use metrics to manage day to day operations.

These insights are critical for companies who postponed product or service development during the pandemic and reactivate it now. Yet any organization must evolve to adapt to their operating environment, and the best practices of innovative companies, including good leadership, thoughtful management of their human capital, and deliberate use of metrics to balance focus with flexibility, are also lessons in adaptation for all organizations.

Upcoming blogs will mine Line-of-Sight^SM execution data to provide actionable advice for leaders seeking to maximize their organization’s execution capabilities.

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Do you want to follow a competitive strategy based on Operational Excellence? Here is how you need to execute.

Line-of-Sight led a survey of more than 100 CEOs to measure how they evaluated the execution capabilities of their organization. This survey took place in Q1 2021, when most businesses were transitioning to a post-pandemic world.

EmFluent helps companies execute better with Line-of-Sight^SM  by measuring and managing five critical capabilities necessary for successful execution (or KSEs): strategic understanding, leadership, balanced metrics, activities & structure, and human capital; it also assesses market discipline – the ability to execute in a way that remains true to the strategic intent. These factors are aggregated to form an overall Organizational Health index measured on a scale from 0 to 100.

Line-Of-Sight was curious about the strategies CEOs are following as they navigate their way out of the pandemic.  It turns out that only 21% of CEOs surveyed are following an operational excellence strategy. Operation excellence is a strategy aimed at delivering a combination of low price, ease, speed, hassle-free use, and convenience.)

At first glance, it makes sense that the two other paths to competitiveness be more popular in 2021: indeed, In the post-pandemic, the most popular strategy appears to be customer intimacy (50% of CEOs), followed by product innovation (24%).

As we highlighted in this article on customer intimacy, the pandemic caused massive shifts in demand, and organizations benefited from being intimately attuned to changing customer needs. Similarly, economic disruption in 2020 compelled companies to creatively adapt their business models, services, or delivery – so innovation was at a premium.

In many sectors however, competing based on price or service was also a matter of survival; companies which experienced extreme growth in the pandemic (defined as growth higher than 50% year over year) had to be extremely disciplined about their operations and margins to deliver their products and services consistently and profitably.

It turns out that CEOs competing based on operational excellence have a unique execution model compared to their peers:

●       They rate their performance on activities and structure higher: 80 points vs. 73% average of all companies

●       They rate their leadership performance slightly lower: 72 points vs. 74 on average

●       They rate their performance on human capital significantly lower: 58 points vs. 67 on average

Taken together, these data points paint the picture of how these companies compete:

●       They run organizations in which priorities are clearly spelled out, ensuring that employees are not wasting time on secondary tasks

●       They communicate a clear strategy that determines resource allocation up and down the organization

●       Their organization structure is simple and closely mirrors the value chain steps

●       They put knowledge in processes rather than employees.

All this is aligned with the way the Institute for Operational Excellence defines it as “the point at which each and every employee can see the flow of value to the customer and can fix that flow before it breaks down.”

The Line-Of-Sight survey also sounds a warning for CEOs pursuing operational excellence strategies.

First, employees in the post-pandemic have higher expectations when it comes to the purpose of their organizations. It is therefore concerning that CEOs give themselves low marks on their own leadership, since this is the leaders’ job to articulate that purpose.

Second, there is pent-up demand for job changes this year,  since many employees postponed transitions due to the adverse environment. If companies do not invest enough in their employees training and development, promote knowledge sharing, or make their company attractive for hiring and retention, they will experience a much greater turnover than pre-pandemic – and high turnover is disruptive to businesses built on stability.

Finally, the economic environment will remain chaotic for the foreseeable future, and it is indispensable to build flexibility and resilience in operations, especially if they are built on scale and efficiency to deliver stable, mature products. If CEOs are reluctant to disrupt their stable core business, they should consider setting up separate teams or units tasked with creative adaptation to shifting demand – as Harley Davidson just did by setting up a separate division for its electric motorcycles.

Upcoming posts will continue to mine Line-of-Sight data to shed light on the most successful execution strategies in the post-pandemic.

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Want to follow a Customer Intimacy-based strategy? Here is how you need to execute 

EmFluent uses  Line-of-Sight^SM to help companies execute better by measuring and managing five critical capabilities necessary for successful execution (or KSEs): strategic understanding, leadership, balanced metrics, activities & structure, and human capital; it also assesses market discipline – the ability to execute in a way that remains true to the strategic intent. These factors are aggregated to form an overall Organizational Health index measured on a scale from 0 to 100.

Line-of-Sight led a survey of more than 100 CEOs to measure how they evaluated the execution capabilities of their organization. This survey took place in Q1 2021, when most businesses were transitioning to a post-pandemic world.

The 2020 crisis forced many businesses to rapidly adapt their strategy to a radically shifting market demand, both from consumers and from business buyers. Therefore, it was to be expected that the strategies they pivoted towards would be in majority customer-centric.

Line-of-Sight data confirms this shift: 40% of CEOs surveyed are now pursuing a customer intimacy-based strategy (the survey did not baseline pre-pandemic strategies; it can be assumed that this percentage was substantially lower then). Indeed, companies have had to be attuned to rapidly changing demand patterns to adapt all aspects of their execution: sales, customer support, marketing, product development, supply chain, and fulfilment – in addition to moving to a fully or partially remote work environment.

Now that post-pandemic economic growth is here again, should companies shift back to other types of strategies, i.e. based on operational excellence or on product innovation? The answer is no: deep customer intimacy will continue to be a key factor of resilience as the business environment remains unpredictable. McKinsey recently outlined that B2C and B2B companies should continue to maintain a deep understanding of their customer behavior because “both business-to-consumer (B2C) and business-to-business (B2B) companies expect to see meaningful shifts in the shape of future demand.” For example, online grocery shopping is likely to stay, but leisure travel (and possibly business travel) as well as education are likely to go back to pre-pandemic level. There is even anecdotal evidence that in-office work may return to levels close to pre-COVID.

If you are the CEO of a company whose strategy is based on customer intimacy, execution will continue to be key. In particular, McKinsey stresses the need for speed: “Over the past year, adrenaline unlocked speed. In the near future, speed will need to arrive by design”.

Line-of-Sight data shows that speed, and overall customer-centric strategies, require rigorous execution discipline: indeed, CEOs pursuing customer-centric models rate all aspects of their execution consistently high: from strategic understanding, leadership and balanced metrics, to activities & structure and human capital. CEOs pursuing alternative strategies tend to acknowledge and tolerate gaps in their execution (for example, companies pursuing operational efficiencies tend to rate the human capital part of their execution significantly lower than any other dimension).

Below are 4 best practices that CEOs should consider implement to be better attuned to customer demand and effectively adapt to it:

1. Make your strategy clear across your organization

If goes without saying, but your employees need to all be aligned on your strategic intent. As CEO, your top role is to make it clear to all. Line-of-Sight data in unequivocal: CEOs who are unsure about their go-to-market approach rate their execution performance at mediocre to abysmal levels, 15 to 30 points lower than CEOs whose strategy is explicit.

2. Let your customers know they are valued

Walk the walk on telling your customers that their feedback and input are valued and appreciated. You can do this by appointing customer advisory boards, creating a forum for your customers to communicate, or reaching out to high-value customers and partners before product launches to get their input and ideas; selectively reach out to customers providing NPS scores to understand in depth what drove their ratings.

3. Host events with your customers centered around their needs

Since so much business is done in a virtual or touchless environment these days, with minimal in-person and phone interactions with customers on a regular basis, digital and hybrid events can go a long way towards building customer intimacy and trust, and create emotionally-driven relationships that are better predictors of loyalty than customer satisfaction alone.

4. Over-invest in your human capital

There is a reason why CEOs pursuing customer intimacy-based strategies rate their execution in the area of human capital 5 points higher than their peers, with a score of 69 vs. an average of 64: employee satisfaction drives customer satisfaction and builds the long-lasting relationships that enable intimacy. It was true before the pandemic and it is even truer now, because employees need extra support to heal the mental toll from the crisis, and better economic prospects will unleash massive job-hopping in 2021 unless companies invest in employee development to prevent turnover.

In upcoming blogs, we will continue to share insights from the Line-of-Sight^SM CEO surveys and best practices to maintain or regain execution excellence in the post-pandemic.

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CEOs rate the most important element of execution capabilities, the lowest

• EmFluent uses Line-of-Sight^SM to help companies execute better by measuring and managing five critical capabilities necessary for successful execution (or KSEs): strategic understanding, leadership, balanced metrics, activities & structure, and human capital; it also assesses market discipline – the ability to execute in a way that remains true to the strategic intent. These factors are aggregated to form an overall Organizational Health index measured on a scale from 0 to 100.Line-of-Sight led a survey of more than 100 CEOs to measure how they evaluated the execution capabilities of their organization. This survey took place in Q1 2021, when most businesses were pivoting to take advantage of post-pandemic economic growth.

  The results indicate that among all five key execution success metrics, CEOs rate their capabilities related to human capital the lowest at 64, 7 points lower than the average organization health index at 71.

  The survey asked CEOs to evaluate 3 dimensions related to Human Capital:

  • How well training & development are aligned with the company strategy
  • How well knowledge is shared across the organization to create unique customer value
  • Perception of how well the company is able to attract and retain the right talent to sustain its competitive advantage

  The data is certainly counter-intuitive: during the pandemic, companies had to double down on their employees, both to address the impact of the crisis on work organization and processes, and to fight the mental toll of the pandemic on employees’ well-being and engagement (the Economist, in its April 10 edition, quotes Monica Kang, a workplace culture expert: “Before the pandemic, we forgot that people are people first”.)

  So, we would expect that CEOs, coming out of a year of unprecedented change, would give themselves high marks on their ability to execute through their human capital. Yet, this is clearly not the case. Why? The answer lies in the impact growth and size have on CEOs’ ability to manage human capital.

  CEOs who lead growing companies rate their human capital performance the lowest, with a 59 index for companies growing at a moderate pace (5 to 50%) and 60 for companies growing at a high pace (more than 50% year-over-year). Both ratings are well below the average, and are strikingly lower than those CEOs of stagnant organizations give themselves: 63 for companies experiencing a contraction, and 73 for companies whose performance stayed the same.

  Similarly, company size influences how well CEOs manage their human capital asset: CEOs of larger companies (more than 500 employees) rate their execution performance the lowest among their peers with  54 points, a whopping 13 points lower than CEOs of small companies (less than 150 employees). CEOs of midsize companies are in the middle, with 62 points.

  In 2020 business leaders were reminded that human capital was their company’s most valuable asset, so we would expect significantly higher ratings. However, growing companies, and especially those that experienced surges in demand in the pandemic, faced very unique challenges that explain why CEOs rated their human capital performance so low:

  • Remote work moved from being a fringe setup to being the reference model for all employees, a move that was made without pre-planning and with initially the possibility of it lasting for an indefinite period. Growing companies felt the strain more acutely because demand surges taxed communication and collaboration when employees are scattered
  • Jobs changed during the pandemic across all functions, from sales to supply chain to marketing to HR, making the job-employee fit and therefore productivity more challenging to maintain
  • Growing companies trying to meet surging demand had to accelerate their operations, a shift which creates tension in organizations but is also a factor of long-term resilience, as McKinsey has shown in the 2008 recession and again in the 2020 pandemic
  • Large organizations experienced all of the above with even more acute pain, as their size brought greater complexity that in turn required even greater resources.

For CEOs, the take-aways of the Line-of-Sight survey are clear:

• Human Capital is the company’s most precious asset and it must be treated as such as a CxO-level priority. To bring it to the fore, the HR function can manage the transactional aspects of performance management and regulatory compliance, but only the C-suite is accountable for aligning human capital with the strategy execution
• Leaders who want to shore up their human capital practices can take action: develop a thoughtful back-to-work plan that takes into consideration employees preferences; acknowledge the burnout employees experienced by training managers to be empathetic and by making it acceptable to talk about mental health at work; keep the high-productivity practices (such as shorter, 15-min standup meetings) that proved effective in the crisis; re-invest into employee training and development; and redefine jobs to ensure a good fit with employees’ skills and behaviors
• If you are the leader of a growing organization or one that passed the 500-employee threshold, you should make human capital even more of a priority. Indeed, data shows that your peers are struggling to maximize the value of their human capital, and it is the one area that weighs down their ability to execute the strategy.

In many ways, the data Line-of-Sight collected is a wake-up call for all leaders: as the post-pandemic economy picks up, most CEOs will soon be faced with growing demand and a return to some form of normalcy in their organization, and face the same strain on human capital that their peers growing through the pandemic experienced first.

Upcoming blogs will continue to mine Line-of-Sight execution data to provide actionable advice for leaders seeking to maximize their organization’s execution capabilities.

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The economic recovery in 2021 will put a premium on execution. Why? Because the operating environment will be more stable and predictable. 2020 was the year of big strategic changes; in 2021, you just need to execute well.

How can we even know how well our organizations are currently executing? Financials cannot give the full picture since they don’t tell us how much better we still could perform.

EmFluent is a Certified Partner with Line-of-Sight where we look beyond talent to help you assess the five Key Success factors for Execution (let’s call them KSEs): Strategic Understanding, Leadership, Balanced Metrics, Activities & Structure, and yes, Human Capital. Simply put, we help our clients execute better.

Every week we will discuss how you can improve each of these five KSEs.

Is Your Leadership Enabling Execution?

The Importance of Leadership

Execution excellence starts at the top. It is the leadership team’s responsibility to set the foundation of execution by formulating a clear market positioning, communicating it to all employees with credibility, deliberately and thoughtfully managing the changes required to maintain excellence in operations, and being self-aware enough to understand their own strengths and gaps to deliver against their strategic goals.

Is your leadership enabling execution?

Answer the questions below to find out. If you answer “no” at least once, you need to closely assess how well your executive team is leading efforts to both communicate and execute the company strategy:

● Does the leadership team have full credibility with employees to lead the execution of strategy?

● Is the leadership team managing change effectively?

● Is the leadership team clearly communicating the strategy across the company?

● Are the leadership team’s behaviors aligned with their strategic objectives?

The primary responsibility for a high-performing leadership team is to think and work strategically. Yet, the strategic intent should not be a secret known to only the C-suite. In fact, quite the opposite: it must be known and embraced by all employees, so they can own tasks and activities which support these goals. Aligning all tasks and activities to the single purpose of the organization is the secret to execution excellence.

That communication must be credible. Credibility comes from expertise, but also from consistency – consistency in intent (being persistent and resilient in the face of adversity), in messaging (repeating the strategic intent over and over), and in behavior (knowing themselves and being aware of how they communicate and take action). This is especially true for companies that are going through significant change where the employee base needs to be kept especially well-informed.

Most leaders stepped up during the crisis. But the return to growth and greater stability in the post-pandemic should not be an excuse to slacken the effort: more than ever, execution requires leadership to constantly repeat and articulate their vision and goals, and to ensure it is understood and accepted by all.

Walt Disney said, “Your frontline represents your bottom line.” He was known for wandering his parks and asking frontline employees to share Disney’s top strategic priorities with him. Disney knew execution excellence was impossible without the leadership clearly communicating the strategy to every single employee.

In our next blog, we will consider the importance of Balanced Metrics.

How well is your business executing? To find out, please reach out to us and we will initiate an assessment of your execution capabilities.

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The economic recovery in 2021 will put a premium on execution. Why? Because the operating environment will be more stable and predictable. 2020 was the year of big strategic changes; in 2021, you just need to execute well.

However, how do we even know how well our organizations are currently executing? Financials cannot give the full picture since they don’t tell us how much better we could perform.

EmFluent is a Certified Partner with Line-of-Sight where we look beyond talent to help you assess the five Key Success factors for Execution (let’s call them KSEs): Strategic Understanding, Leadership, Balanced Metrics, Activities & Structure, and yes, Human Capital. Simply put, we help our clients execute better.

This week, we are launching a series of short tips on execution. Every week we will discuss how you can improve each of these five KSEs.

Is True North South of the Equator?

The Importance of Strategic Understanding

“True North” is taken from the Lean Lexicon and describes the ideal state of perfection that businesses should be continually striving toward. For most businesses, the business strategy explains what their True North is.

What happens when True North is defined but not communicated? Execution will suffer as employees perform their jobs based on different assumptions and goals. It is not uncommon for teams to pursue conflicting goals; sometimes, managers and employees form cliques that each defend a different belief about what the strategy should be, a recipe for a toxic culture. No organization is immune to this confusion: BMW’s development of electric cars was famously stymied for several years by a very public disagreement between its former CEO and its Engineering Lead.

Is your organization understanding its strategy?

Answer the questions below. If you answer “yes” at least once, you need to clarify your intent to all employees:

● Does your leadership team sometimes disagree on what differentiates your business in the marketplace?

● Are your employees sometimes confused about the direction the business is heading?

● If we surveyed your employees, would we find some who are unable to explain your strategy?

● Are teams sometimes asked to optimize conflicting goals?

As leaders, we often believe that the job is done once we have formulated our strategic plan or updated our targets. This is not true at all. The real work starts when leaders transform into evangelists for their strategic intent and repeatedly and consistently explain it.

In fact, communication is not enough: what matters is UNDERSTANDING, i.e. making sure that all employees embrace the strategy. If they do not agree with it, the leadership should strive to have employees “disagree and commit”, an approach consistently applied by Jeff Bezos at Amazon.

“True North” must be communicated up and down the organization. Otherwise, watch out for goals, strategies, or current initiatives that operate south of the equator!

It is essential that any work your company does in this area involves first defining your actions by clarifying the long-term Mission, Vision and Strategic Intent of your business.

In our next blog, we will consider how critical leadership is to execution.

How well is your business executing? To find out, please reach out and we can initiate an assessment of your execution capabilities.

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PHOENIX — History is unfolding right now and there are a number of ways to join the fight for racial equality.

One way to make a difference is to support Black owned businesses.

Robin Reed is the President of the Black Chamber of Arizona and says supporting any locally owned businesses is important, but making the added effort to spend money at Black owned businesses helps the greater economy.

“There are a multitude of businesses with owners who come from a number of ethnic backgrounds but what we’re looking for is equity within the community. We should at least be supporting our businesses in line with the representation in the community.” said Reed, “When you support a Black owned business you are also supporting a family that contributes to the economy, a family that is supporting our tax base through the taxes that are paid.”

There are 2.6 million Black owned businesses in the U.S. Supporting them helps close the racial-wealth gap by creating more opportunities for African Americans to own property, gain credit allowing for business expansion and creates more jobs, according to financial experts.

Minority-owned firms are less likely to be approved for small business loans than white business owners and are more likely to receive lower amounts and higher interest rates if they are approved according the U.S. Department of Commerce Minority Business Development Agency.

Reed says those challenges are compounded by recent national events.

“Many of our Black owned businesses had challenges before Covid, before the racial unrest that we’re experiencing right now, they had trouble expanding and growing their business whether it was due to lack of capital or community support or just recognition their business existed.” he said, “What we don’t want is a situation where our Black owned businesses are struggling to such an extent that we become a drain on the economy instead of where we should be and where we can be which is a wonderful support of our economy.”

He adds that this is also an opportunity to learn more about the African American community and culture by taking time to learn the backstories of the business owners and the origins of their products.

The Arizona Asian Chamber of Commerce is partnering with the Black Chamber by expanding ‘Take-out Thursday’s,’ which was originally created for Asian owned restaurants, as a way to help support the Black community.

A post on the Asian Chamber’s Facebook reads, “When Black and Asian community thrive, all of society benefits from that prosperity.”

Connect with the Arizona Black Chamber by clicking here.

A list of Black owned businesses in various industries can be found at SupportBlackOwned.com.

Community groups have also contributed to a list of Valley restaurants:

Phoenix:
Stacy’s Off Da Hook
Ezekiel’s Restaurant
Sweet Magnolia Smokehouse
The Larder + the Delta
Honey Bear’s BBQ
Blue Seas Express & Catering
Papa Joe’s Fish n Que
Lolo’s Chicken & Waffles
Mrs. Whites Golden Rule Cafe
Cool Vybz Jamaican Restaurant
Valley Wings AZ
Mingo’s Louisiana Kitchen
Solo’s Cafe
Island Sensation Cuisine
Abyssinia Restaurant & Cafe
Trapp Haus BBQ
Oasis Coffee & Tea Shop
Monroe’s Hot Chicken
Caribbean Market Place
JJ’s Smokehouse
Paz Cantina
The Breadfruit & Rum Bar
ATL Wings

Tempe:
ATL Wings
Cafe Lalibela Ethiopian Cuisine
Caribbean Queen
Caribbean Palm Restaurant & Bar
Chicago’s Chicken Shack
Jolloff King
Feel Good Nutrition

Chandler:
West Alley BBQ
Ocean Blue Caribbean Restaurant & Bar
Hot Pot Caribbean Cuisine
ATL Wings

Gilbert:
Lolo’s Chicken & Waffles

Glendale:
ATL Wings
JJ’s Louisiana BBQ
Dorsey B’s Fish & Fixins
Caribbean Cuisine

Scottsdale:
Lolo’s Chicken & Waffles
Caribbean Palm Restaurant & Bar
The Original Pancake House
Super Jam Cookies & Restaurant
ATL Wings
The Root & Soul

Mesa:
The Cutting Board Bakery & Cafe
ATL Wings

Laveen:
Smoothie Run
Charlie Mae’s Soul Food

Avondale:
DiVine Cafe
Wings & Things

Peoria:
Jamburritos Express

Surprise:
The AZ Fry Guy
ATL Wings

Youngtown:
Rags Real Chicken & Waffles

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