Welcome to Lit in a Nutshell! Today, we're cracking open excerpts from Robert Simons' book, "Seven Strategy Questions: A Simple Approach for Better Execution". Forget management fads; Simons argues that successful strategy execution hinges on asking the right, tough questions. He believes that stripping away confusion with simple questions helps focus on the key issues underpinning important decisions.
Simons presents seven critical questions, each representing a vital "implementation imperative". The first is, "Who Is Your Primary Customer?". This seemingly simple question is make-or-break because it dictates how you allocate resources. You must be clear about who is and is not a customer, reserving the term for external constituents. Trying to please everyone dilutes focus.
Second, "How Do Your Core Values Prioritize Shareholders, Employees, and Customers?". True core values clarify whose interests come first during difficult trade-offs, going beyond aspirational lists. Companies also have a responsibility to other constituents, aiming to "do no harm".
Third, "What Critical Performance Variables Are You Tracking?". It's essential to articulate your "theory of value creation". However, people need help identifying what's truly critical. Simons suggests focusing on a few key measures, ideally around seven, plus or minus two, as people can easily remember this many, influencing their behavior. Too many measures can be overwhelming and limit creativity.
Fourth, "What Strategic Boundaries Have You Set?". These are concise "thou shall nots" that tell people what activities are off-limits. They are crucial for protecting your company's reputation from unacceptable behaviors or risks. Boundaries also help focus resources by saying "no" to initiatives outside the strategy.
Fifth, "How Are You Generating Creative Tension?". This involves uncomfortable, even hard-edged techniques to push people toward innovation and high performance. Techniques might include comparative performance data or stretch goals. Applying this pressure requires safeguards, like clear values and boundaries, to prevent negative outcomes like fear.
Sixth, "How Committed Are Your Employees to Helping Each Other?". Building shared commitment is a choice leadership must make. It's based on clarifying the theory of motivation, fostering pride in purpose, building a sense of exclusive group membership, establishing trust, and ensuring fairness in rewards.
Finally, "What Strategic Uncertainties Keep You Awake at Night?". Focusing everyone's attention on these uncertainties is key. Leaders signal priorities by visibly focusing on specific issues ("everyone watches what the boss watches"). Using interactive control systems stimulates dialogue and learning about these uncertainties. Crucially, you must encourage bottom-up information sharing and never punish those who bring bad news.
Simons emphasizes that successfully executing strategy requires cutting through complexity, simplifying, and making tough choices based on clear principles. These seven questions provide a simple approach to achieve that focus.