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7 Principles of Strategy

1. Aim High

Don’t compromise your strategy or your execution. Set a lofty ambition for your strategy: not just financial success but sustained value creation, making a better world through your products, services, and presence. Apple’s early goal of making “a computer for the rest of us,” which effectively shaped the personal computer industry, is a classic example.

Next, aim just as high on the execution side, with a dedication to excellence that seems almost obsessive to outsiders. Apple, for instance, has long been known for its intensive interest in every aspect of product design and marketing, iterating endlessly until its notoriously demanding leaders are satisfied. The company’s leaders do not consider execution beneath them; it is part of what makes Apple special.

2. Build on Your Strengths

Your company has capabilities that set it apart, things you do better than anyone else. You can use them as a starting point to create greater success. Yet more likely than not, your strongest capabilities have been obscured over the years. If, like most companies, you pursue opportunities that crop up without thinking much about whether you have the prowess needed to capture them, you can gradually lose sight of what you do best, or why customers respond to it.

Take an inventory of your most distinctive capabilities. Look for examples where you have excelled as a company, achieving greatly desired outcomes without heroic efforts. Articulate all the different things that had to happen to make these capabilities work, and figure out what it will take to build on your strengths, so that you can succeed the same way more consistently in the future.

3. Be Ambidextrous

In the physical world, ambidexterity is the ability to use both hands with equal skill and versatility. In business, it’s the ability to manage strategy and execution with equal competence. In some companies, this is known as being “bilingual”: able to speak the language of the boardroom and the shop floor or software center with equal facility. Ambidextrous managers can think about the technical and operational details of a project in depth and then, without missing a beat, can consider its broader ramifications for the industry. If strategy through execution is to become a reality, people across the enterprise need to master ambidexterity.

Lack of ambidexterity can be a key factor in chronic problems. For instance, if IT professionals focus only on execution when they manage ERP upgrades or the adoption of new applications, they may be drawn to vendors for their low rates or expertise on specific platforms instead of their ability to design solutions that support the company’s business strategy. When the installation fails to deliver the capabilities that the company needs, there will be an unplanned revision; the costs will balloon accordingly, and the purchase won’t fulfill its promise.

4. Clarify Everyone’s Strategic Role

When the leaders of the General Authority of Civil Aviation (GACA) of Saudi Arabia decided to improve the way they ran the country’s 25 airports, they started with the hub in Riyadh, one of the largest airports in the country. They had already outsourced much of their activity, redesigning airport practices and enhancing operations. But not much had changed. Convening the directors and some department leaders, the head of the airport explained that some seemingly minor operational issues — long customs lines, slow boarding processes, and inadequate basic amenities — were not just problems in execution. They stood in the way of the country’s goal of becoming a commercial and logistics hub for Africa, Asia, and Europe. Individual airport employees, he added, could make a difference.

5. Align Structures to Strategy

Set up all your organizational structures, including your hierarchical design, decision rights, incentives, and metrics, so they reinforce your company’s identity: your value proposition and critical capabilities. If the structures of your company don’t support your strategy, consider removing them or changing them wholesale. Otherwise, they will just get in your way.

Consider, for example, the metrics used to track the results delivered by call center employees. In many companies, these individuals must follow a script and check off that they’ve said everything on the list — even at the risk of irritating potential customers. Better instead to get employees to fully internalize the company’s strategy and grade them on their prowess at solving customer problems.

6. Transcend Functional Barriers

Great capabilities always transcend functional barriers. Consider Starbucks’ understanding of how to create the right ambience, Haier’s ability to rapidly manufacture home appliances to order, and Amazon’s aptitude for launching products and services enabled by new technologies. These companies all bring people from different functions to work together informally and creatively. Most companies have some experience with this. For example, any effective TPE capability brings together marketing, sales, design, finance, and analytics professionals, all working closely together and learning from one another. The stronger the cross-functional interplay and the more it is supported by the company’s culture, the more effective the promotion.

7. Become a Fully Digital Enterprise

The seventh principle should affect every technological investment you make — and with luck, it will prevent you from making some outdated ones. Embrace digital technology’s potential to transform your company: to create fundamentally new experiences and interactions for your customers, your employees, and every other constituent. Until you use technology this way, many of your IT investments will be wasted; you won’t realize their potential in forming powerful new capabilities.