strategy+business

ISSUE 82 SPRING 2016

Creating a
Strategy That Works
The most farsighted enterprises have mastered
five unconventional practices for building and
using distinctive capabilities.

BY PAUL LEINWAND AND CESARE MAINARDI

REPRINT 16108
 strategy+business issue 82
feature strategy & leadership

1
 CREATING
A STRATEGY
THAT WORKS
The most farsighted enterprises

feature strategy & leadership

have mastered five unconventional
practices for building and using
distinctive capabilities.
by Paul Leinwand and Cesare Mainardi

Almost every business today faces major

strategic challenges. The path to creating value
is seldom clear. In an ongoing global survey of
senior executives conducted by Strategy&, PwC’s
strategy consulting business, more than half of the 2

4,400 respondents said they didn’t think they had

a winning strategy. In another survey of more than
500 senior executives around the world, nine out
of 10 conceded that they were missing major
opportunities in the market. In the same survey,
about 80 percent of those senior executives said
that their overall strategy was not well understood,
Illustration by André da Loba

even within their own company.

 Paul Leinwand Cesare Mainardi Also contributing was This article is adapted from
paul.leinwand@ [email protected] Strategy& campaigns director Strategy That Works: How
strategyand.us.pwc.com is an adjunct professor of Nadia Kubis, a director with Winning Companies Close the
is global managing director of strategy at the Kellogg PwC Switzerland. Strategy-to-Execution Gap,
capabilities-driven strategy School of Management and by Paul Leinwand and Cesare
and growth for Strategy&, a member of the school’s Mainardi, with Art Kleiner
PwC’s strategy consulting global advisory board. He was (Harvard Business Review
business. Based in Chicago, he previously CEO of Strategy& Press, 2016). For more infor-
is a principal with PwC US, an and, before that, of the global mation on related research,
adjunct professor of strat- management consulting firm see strategyand.pwc.com/
egy at the Kellogg School of Booz & Company. He strategythatworks.
Management at Northwestern is one of the principal
University, and a contributing architects of the capabilities-
editor of strategy+business. driven strategy approach
and a contributing editor of
strategy+business.

These problems are not caused simply by external seemingly every woman in Brazil. To give those consul-
forces. They are the outcome of the way most compa- tants a reason to visit their customers every few weeks,
nies are managed. In all too many businesses there is a the company has developed a proficiency in rapid-fire
feature strategy & leadership

significant and unnecessary gap between strategy and innovation, releasing more than 100 new products ev-
execution: a lack of connection between where the en- ery year. It demonstrates respect for nature and local
terprise aims to go and what it can accomplish. communities by sourcing many raw materials from
Yet a few companies seem to have this problem remote villages in the Amazon rain forest, and by us-
solved. They naturally combine strategy and execution ing its business skills to help make those regions eco-
in everything they do. These companies seem to make nomically and environmentally sustainable. You may
the right choices about what type of value to offer and not have heard of Natura Cosméticos unless you live in
how to deliver it — and those choices often run con- Latin America, but it is the largest personal-care prod-
trary to the conventional wisdom of the industry. ucts company in that region. It had revenues of 7.4 bil-
For example: A European retailer–manufacturer lion reals (about US$2.6 billion) in 2014.
sells stylish, functional, inexpensive furniture so that Another case is a U.S. enterprise known for buying
people at any income level can more easily improve industrial and technological companies, reframing the
their lives. Its large retail stores are designed so shop- way its member businesses operate, and managing them
pers can comfortably spend a whole day there, eating for profitability. It has developed its own rigorous day-
3
in the store’s restaurant and leaving their children in its to-day disciplines for managerial excellence and contin-
play area. The enterprise has remarkable capabilities, in- uous improvement. The Danaher Corporation, named
cluding an innovative manufacturing process and sup- after the founders’ favorite fishing creek, is recognized
ply chain; a proficiency in designing attractive furniture among management experts for its remarkable perfor-
that ships in a flat box; and an ability to develop keen mance and its phenomenal M&A success rate. It had
insights about the way customers live at home, and to revenues of about US$19.9 billion in 2014. (See “Dan-
translate those insights into new products. This rapidly aher’s Instruments of Change,” moderated by George
growing enterprise, of course, is IKEA. In 2014, IKEA Roth and Art Kleiner, s+b, Spring 2016.)
had 361 retail stores in 46 countries, with total annual Several other well-known enterprises, includ-
revenues of ¤30.1 billion (about US$40 billion). ing Apple, Haier, Industria de Diseño Textil (Inditex,
Another example is a Brazilian purveyor of high- known for its Zara brand), Lego, Qualcomm, and Star-
quality, natural personal-care products. Its identity, cap- bucks, have also closed the strategy-to-execution gap.
strategy+business issue 82

tured by the Portuguese slogan bem estar bem (“well- These companies are all idiosyncratic; at first glance,
being, being well”) celebrates health and quality of life they seem to have little in common, and they are rarely
at every age, rather than a forever-young ideal of beauty. thought of together. And yet, they have all built the
The company has built a network of 1.5 million direct kind of differentiating capabilities that give them a ma-
sales consultants, who have close relationships with jor strategic advantage.
Extraordinary Enterprises Conventional The unintended The alternative:
In our previous book, The Essential Advantage: How wisdom consequences of unconventional acts
conventional wisdom
to Win with a Capabilities-Driven Strategy (Harvard

features title
feature
Business Review Press, 2011), we described the financial Focus on growth Getting trapped on Commit to an identity:
advantage that companies enjoy when they build their a growth treadmill: Differentiate and grow
chasing multiple by being clear-minded
business around a clear, coherent identity: a few distinc-

strategy
market opportunities about what you can
tive capabilities aligned with their value proposition and where you have no do best

of the
right to win
their lineup of products and services. It’s not enough to
simply have good capabilities; every company has them.

& article
Pursue functional Striving to be Translate the
To sustain success you have to have capabilities that are

leadership
excellence world-class at strategic into the
everything but everyday: Build and
truly superior, and distinctive enough that others can- mastering nothing; connect the cross-
not copy them. When you have several such capabilities treating external functional capabilities
reinforcing one another, you will be able to both dif- benchmarking as the that deliver your
path to success strategic intent
ferentiate yourself from and consistently execute better
than your competitors. Reorganize to drive Falling into a habit Put your culture to
change of organizing and work: Celebrate and
Distinctive capabilities are not easy to build. They
reorganizing: trying leverage your cultural
are complex and expensive, with high fixed costs in hu- in vain to change strengths
4
man capital, tools, and systems. How then do businesses behaviors and
create success by
such as IKEA, Natura, and Danaher design and create restructuring alone
the capabilities that give them their edge? How do they
bring these capabilities to scale and generate results? Go lean Cutting costs across Cut costs to grow
the board: starving stronger: Prune
To answer these questions, we conducted a study key capabilities while what doesn’t matter
between 2012 and 2014 of a carefully selected group overinvesting in non- to invest more in
critical businesses what does
of extraordinary enterprises that were known for their
and functions
proficiency, for consistently doing things that other
businesses couldn’t do. From dozens suggested to us by Become agile and Constantly reacting Shape your future:
resilient to market changes: Reimagine your
industry experts, we chose a small group, representing shifting direction capabilities, create
a range of industries and regions, that we could learn in the misguided demand, and realign
about in depth — either from published materials or conviction that if you your industry on your
listen hard and act own terms
from interviews with current and former executives. fast, you will survive
The 14 we studied are Amazon, Apple, CEMEX, Dan-
aher, Frito-Lay (the snack foods enterprise within Pepsi-
Co), Haier, IKEA, Inditex, the JCI Automotive Systems
Source: Strategy That Works
Group (the seat-making division of Johnson Controls
 Inc., since renamed the Automotive Experience Group), value proposition; and a chosen portfolio of products
Lego, Natura, Pfizer (specifically its consumer health- and services that all make use of those capabilities.
care business, sold to Johnson & Johnson in 2006), Thus, for example, the Apple value proposition com-
Qualcomm, and Starbucks. bines the roles of innovator, aggregator, and experience
To be sure, these are not the only enterprises that provider. (These and similar terms are defined in our
successfully use their distinctive capabilities for compet- online “way-to-play” tool: strategyand.pwc.com/way-to-
itive advantage. You might assemble a different list, and play-tool.) Apple’s computers, tablets, and smartphones
we would probably agree with many of your choices. But form the hub of a single digital system that allows people
these businesses represent a cross-section broad enough to easily manage media production, media consump-
to provide us with a clear understanding of what they, tion, and communication. The company accomplishes
and other businesses like them, have in common. this through extraordinary capabilities in consumer
feature strategy & leadership

Success has not always come naturally to them. At insight, intuitively accessible design, technological inte-
some point in their history, each moved away from the gration, and breakthrough innovation of products, ser-
conventional wisdom of mainstream business practice. vices, and software. It has applied these capabilities to
Each in its own way, these businesses followed a similar its computers, mobile devices, retail stores, online ser-
path — a path of five unconventional acts. These five vices, wearables (the Apple watch), and media players
management practices represent an approach to strategy (Apple TV).
that makes it easier to consistently succeed (see table, Haier, the Chinese appliance company that has
previous page). held the world’s largest market share in “white goods”
since 2011, competes with Apple in a few categories,
Beyond Conventional Wisdom including televisions and computers. But it has a very
Why does it pay to run your business with these five different value proposition: that of an innovator and
unconventional practices? Because most conventional solutions provider, offering products and services that
management practices have developed through trial and meet the needs of particular customers and help them
error, often without a direct link to a company’s strat- deal with problems. For example, Haier makes a small
5
egy. The enterprises we looked at tend to seek success on washing machine designed for undergarments (which
their own terms. The five unconventional acts embody are washed separately in China) and a large one de-
the attitudes and actions that help them accomplish this, signed for the robes of Pakistani men. It makes no-
day after day, in their businesses. frost freezers for countries where power outages are
common. It makes air conditioners that clean polluted

1.
Commit to an identity. These enterprises may offer a
air (and indicate the level of air quality with colored
lights), and water conditioners that can be tailored to
filter out the particular chemicals in the water supply
wide variety of products and services in multiple sectors, of thousands of different Chinese neighborhoods. To
but their identity is always clear. Everyone who interacts provide products like these (and many others), it has
with them — including customers, employees, suppli- developed its own capabilities system, very different
ers, shareholders, and regulators — knows who they are from Apple’s. Haier’s system combines consumer-
strategy+business issue 82

and what they stand for. The identity of a successful responsive innovation, operational excellence, the
company aligns three basic elements: a value proposi- management of local distribution in a variety of re-
tion (how this company distinguishes itself from others gions, and on-demand production and delivery. Like
in delivering value to customers); a system of distinctive Apple, Haier applies its capabilities to a broad portfolio
capabilities that enable the company to deliver on this of products and services. These include water-quality
WE FOUND MANY REMARKABLE
CAPABILITIES AMONG THE COMPANIES
WE STUDIED, AND FEW, IF ANY, OF THEM
RESIDE WITHIN A SINGLE FUNCTION.

monitoring for cities in China, interior design for new fruition. After all, if they could be created overnight,
homeowners there, and microcredit lending for Chi- they wouldn’t be worth very much, because anyone
nese purchasers who need it. Despite the variance could copy them.

features title
feature
within the portfolio, all the offerings are fitting for a We found many remarkable capabilities among the
global innovator and solutions provider from a large companies we studied, and few, if any, of them reside
emerging economy. Haier’s capabilities will also fit its within a single function. Instead of aiming for func-

strategy
expanding global portfolio after its planned purchase tional excellence or external benchmarks, these capa-

of the
of GE’s appliance business. bility builders make their processes and practices their
Staying true to your identity doesn’t mean be- own. If you ask people at Starbucks what they know

& article
coming complacent or losing your ability to change. about the customer experience, ask people at Danaher

leadership
It means using your strengths as a guide as you move how they manage postmerger integration, or ask people
through a rapidly changing world. When the entire at Natura how they organize their supply chain, they
company focuses on a specific way of creating value, respond with precision and artistry about what they do
employees are not easily distracted. They can concen- and why it matters. Each company is a broad ensemble
trate on differentiating the enterprise in ways that natu- of virtuoso performers, continually learning from one
rally outpace their competitors’ efforts. another. Their individual skills and talents become
more significant when the company weaves them to-

2.
6
gether to produce something unique to that enterprise.

Translate the strategic into the everyday. The com-

panies we studied focus on a few capabilities that are
worth their full attention, and devote themselves to
3.
Put your culture to work. Business leaders know that
making them excellent — rather than supporting doz- the culture of a company — the way people collectively
ens of capabilities that merely have to be pretty good. think and behave — can either reinforce or undermine
To develop these capabilities, the companies often blue- its strategy. Because culture is difficult to manipulate or
print them (designing in detail how they will work). control, many executives tend to regard it as an enemy
They continuously build them out with small manage- of change. Indeed, at companies stuck in the strategy-
ment changes (we call these “point interventions”) and to-execution gap, executives tend to complain about
with regular breakthrough innovations in their own cultural resistance and disharmony. This complaint is a
technologies and practices. They bring these capabili- symptom of lack of strategic focus. Since the company
ties to scale by combining tacit (ingrained) and explicit isn’t clear about where it is going, employees don’t know
(codified) knowledge. Though these capabilities tend where they stand.
to pay off even in their early stages of development, it The companies we studied, however, view their
usually takes quite some time for them to reach full culture as their greatest asset. The details of their cul-
 ture may be unique, but all of these companies have a its industry, it suffered during the 2008 housing crisis
culture that reinforces their distinctive strengths. With- and the recession that followed. But even in the midst of
in them, people are committed to the work; they feel a threatening debt crisis, CEMEX continued to develop
mutually accountable for results and develop a kind of its internal knowledge-sharing platform, an investment
collective mastery that is hard to duplicate. in technology and training that other companies might
You immediately sense the high level of trust and have considered superfluous. Doing so allowed the com-
enthusiasm in these cultures in the very specific pride pany not just to sell cement, which is a commodity, but
people have about their companies. Natura’s people to offer guidance to its customers (such as home build-
refer continually to the importance of relationships in ers and small municipal governments, often in emerg-
everything they do, and Starbucks employees speak of ing economies) about materials, construction financing,
their genuine love of coffee, along with the ambience and urban design and development. CEMEX’s leaders
feature strategy & leadership

of a barista-style establishment. At Qualcomm, you knew that its return to growth depended on maintain-
hear about the company’s persistence in solving com- ing a distinctive edge with this capability.
plex technological problems and promoting its solutions
throughout the industry, “even when others doubt us.”
At Danaher, people refer to their willingness to learn
from one another at a moment’s notice, taking every op-
5.
Shape your future. Over time, most of the companies
portunity to raise their management game. we studied have developed capabilities that take them
far beyond their original ventures. They seek out higher

4.
Cut costs to grow stronger. Companies that close the
aspirations — applying their capabilities to a broader
range of challenges and loftier goals, serving the most
fundamental needs and wants of their customers, and
strategy-to-execution gap spend more than their com- ultimately leading their own industries. These compa-
petitors do on what matters most to them and as little as nies are relatively unthreatened by disruption, because
possible on everything else. Rather than managing to a their capabilities give them opportunities for expansion
7
preconceived bottom line, they treat every cost as an in- into new markets. They build on their early success to
vestment. They know that the same sum of cash could shape their future.
be used to fund either powerful, distinctive capabilities They tend to work hard to avoid complacency.
or incoherent activities that hold them back. They base They explicitly try to anticipate how their capabilities
their decisions about where to cut and where to invest will need to evolve. They build privileged relationships
on the need to differentiate themselves. with their key customers, creating demand instead of
These companies don’t treat costs as something just following it. In the same way that beavers and earth-
separate from strategy. Cost management itself is a way worms (known as ecosystem engineers) transform their
to make critical choices about identity and direction. It environment to better meet their needs, these companies
moves these companies to a high level of financial disci- stake out a dominant role in the sectors where they are
pline, redirecting resources to the core capabilities that clear leaders — using M&A in many cases to influence
are strategically important. Even when times are tough, the structure of their industries.
strategy+business issue 82

these companies don’t cut costs across the board. They Frito-Lay was already successful when it faced the
find ways to double down on their strategic priorities prospect of disruptive competition in the early 1990s.
and cut everything else. It responded by investing more in its most important
CEMEX, a global building materials company, cut capabilities, dramatically cutting other costs, taking
most expenses to the bone when, along with the rest of charge of the snack food retail shelf, and (for at least the
The Idea of IKEA The second statement embody- company began explicitly creating
by Per-Ola Karlsson, Marco Kesteloo, ing the identity of this enterprise is a a capability in consumer insight,
and Nadia Kubis succinct reference to the way IKEA learning how IKEA’s customers lived,
involves customers in its operating how they aspired to live, and what

F or a good example of the five

unconventional acts of coherent
leadership, consider the story of IKEA,
model: “You do your part. We do our
part. Together, we save money.” Each
store, for example, is laid out so that
frustrated them about their current
living situation. Kamprad became
known for walking up to shoppers
the world’s largest furniture manu- customers pick up their furniture in IKEA stores and asking, “How did
facturer and retailer. The identity of from the warehouse and assemble we disappoint you today?” Today’s
this enterprise is embodied in two it at home. company-wide requirement that
simple statements. The first lays out From its earliest years, IKEA has managers visit customers in their
its value proposition, which founder devoted itself to building and manag- homes is a direct extension of this
Ingvar Kamprad articulated this way ing this identity. Kamprad started the original practice.
in the mid-1950s: “to create a better enterprise as a college-age entrepre- As IKEA expanded around the
everyday life for the many people.” neur in 1943, selling seeds, postcards, world, it codified and standardized
and stationery. In the 1950s, he real- many practices, but it also purpose-
IKEA’s Identity Profile
ized that furniture in Sweden was fully reinforced its participative way

features title
feature
Value Proposition so expensive that many people, of bringing capabilities to scale, and
IKEA delivers value as a low-price player
and experience provider. It creates “a better
especially those moving into their thus translated the strategic into
first home, could not afford it. Part of everyday practice. IKEA is a place

strategy
everyday life” at home for many people
around the world — providing functional and
the expense came from an elaborate where managers routinely let their

of the
stylish home furnishings at very low prices
with a high level of quality, sustainability, and system of middle merchants that coworkers figure out new ways to do
customer engagement. bought and distributed furniture. things, and it deliberately percolates

& article
From that moment, Kamprad’s the best of these ideas back up to

leadership
Capabilities System
IKEA delivers its value proposition by company, IKEA, would give people the central organization. As Torbjörn
excelling at four differentiating capabilities: low-cost style at home. Lööf, CEO of Inter IKEA Systems
• Deep understanding of how customers
live at home: IKEA applies this insight to
Kamprad demonstrated his B.V. (which manages the worldwide
a variety of design, production, and retail commitment to this identity when he store franchise system and the “IKEA
practices.
began buying furniture direct from concept,” the intellectual property
• Price-conscious and stylish product
design: IKEA integrates customer manufacturers, bypassing dis- shared by the full system), puts it: “Of
engagement, supply chain efficiency, and tributors to reduce the prices paid by course there are areas where we’re
price considerations into the design 8
customers. When Swedish industry very strict and structured. But people
process itself.
• Efficient, scalable, and sustainable leaders saw the threat he posed, they don’t resist. They know [the IKEA
operations: IKEA has developed its own tried to prevent their suppliers from concept] has been extensively tested,
distinctive operational capability integrating
supply chain, manufacturing, and retail
selling to him. So he moved on to pro- [and] they know we’re constantly try-
practices. ducers in low-cost Eastern Europe, ing out new things, and if they prove
• Customer-focused retail design: The
where manufacturers could custom- out to work, [those ideas] become
company knows how to create a distinctive
combination of immersive and open- ize the product to his needs and give part of the concept.”
warehouse environments that provide him an even better price. IKEA is also known for its
engagement, inspiration, and a distinctive
The first IKEA retail store ability to cut costs to grow stron-
“day out” shopping experience where
people can comfortably spend time opened in Älmhult, a Swedish vil- ger. (See “Is Your Company Fit for
choosing the things they live with every day. lage, in 1958. Kamprad and his staff Growth?” by Deniz Caglar, Jaya
Portfolio of Products and Services began to put a great deal of time and Pandrangi, and John Plansky, s+b,
Known for its flat-packed furniture and its thought into translating the strate- Summer 2012.) Its people look for
self-pick, self-carry, and self-assemble
gic into the everyday: designing and cost-saving opportunities relentless-
model, IKEA sells affordable furniture and
other home-oriented products. building capabilities that set IKEA’s ly in every way that doesn’t affect the
retail stores apart. For example, the (continued on next page)
 second time in its history) using its prowess in distribu- board, and agility are all regarded favorably in business
tion to gain leverage over its category that continues to- circles. But those are precisely the approaches that often
day. Danaher did something similar in the early 2000s, lead to a gap between strategy and execution.
when it expanded its innovation capabilities to meet Another insightful comment came from a high-
the needs of more scientific and technical businesses. In ranking official of a branch of the U.S. military. The
2015, it announced a still greater effort to shape its fu- conventional wisdom, he said, accurately captured the
ture by splitting into two companies — one a focused management style of his overall organization. “But there
science and technology company, the other a diversified are small groups that do [the unconventional acts] very,
industrial enterprise — each of which will benefit from very well.” These groups, he said, were typically the spe-
capabilities systems more tailored to its business. cial forces units: Green Berets, Navy SEALs, and other
elite groups that take on highly sensitive jobs. Most
feature strategy & leadership

How the Five Acts Fit Together companies also have similar elite groups, which are in-
At one business school where we presented these find- sulated from the rest of the enterprise. Company leaders
ings, a student raised his hand. “I get that the conven- delegate the premium activities to their special forces.
tional wisdom is problematic,” he said. “But most of our But if you truly want to have strategy linked seamlessly
professors are telling us to do those things.” with execution throughout your company, you can’t
Executives tell us something similar. The five acts rely on a few extraordinary performers. You have to cre-
of unconventional leadership contradict what many ate distinctive capabilities that will scale across your en-
believe is the right way to run a business. Companies terprise, involving everyone in applying them to all the
that focus on growth are universally applauded, even company’s products and services. That takes a level of
if the new offerings don’t fit well together. Functional attention, and a way of thinking and acting, that may
excellence, organizing for success, going lean across the seem difficult to achieve at scale. These five acts em-

(continued from previous page)

quality of the merchandise, the cus- tural part,” says former CEO Mikael come complacent. As Jesper Brodin,
9
tomer experience in the stores, or the Ohlsson. If you’re an IKEA manager, the range and supply manager for
efficiency of operations. That frugal- and you visibly waste resources or IKEA of Sweden, put it, “Our number
ity is reinforced by an annual moment reprimand a subordinate for sug- one threat is not the markets or the
of discipline: The company reduces gesting an idea, you’ll hear about it European economy or the recession
prices by an average of 2 percent at immediately, not just from your boss, or anything like that. It is ourselves
the start of every fiscal year. “This but from everyone around you. and our own capacity to transform
means we always start with a minus,” Finally, IKEA uses its global and deliver.”
says Peter Agnefjäll, president and scale, and its status as the world’s
CEO of the IKEA Group. “If our group Per-Ola Karlsson leads Strategy&’s
largest home furnishings brand, to
activities in Dubai. He is a partner with
turns over ¤27 billion [US$28.7 bil- shape its future. For example, it PwC Middle East.
lion], we start with a minus of ¤ 500 purchases furniture in such large
million [US$532 million]. If we don’t Marco Kesteloo leads the Strategy&
strategy+business issue 82

volumes that suppliers go to great retail team. He is a partner with PwC

do more, we’re going to lose.” lengths to meet IKEA’s specifications. Netherlands.
IKEA’s culture reinforces all Although the leaders of this enterprise
Nadia Kubis directs campaigns for
these practices. “The glue, or the are conscious of its enviable market Strategy& and is a director with PwC
inner strength, of IKEA is the cul- position, they are careful not to be- Switzerland.
EVEN TAKING A FEW STEPS
IN THIS DIRECTION CAN BOOST A
COMPANY’S ENERGY AND MORALE.

body practices that help companies reach that state. cally rewarding. Even taking a few steps in this direc-
The five acts themselves are so interconnected that tion can boost a company’s energy and morale. To be
you have to adopt them all together. If you overlook any sure, it requires you to have the courage of your convic-

features title
feature
one of them, you fall back. For example: tions. You have to be discriminating and decisive, will-
• When you don’t commit to an identity, you risk ing to say no to opportunities that don’t fit the strategy
becoming scattered among a variety of objectives. It is and persistent enough to bring the entire organization

strategy
all too easy to continually shift your focus — to deal along for the ride. But it is not a leap into the unknown.

of the
with exigencies and never quite build the capabilities There is a great deal of precedent, and you are in good
you need. You gain a right to play in many markets, but company: Some of the most renowned, creative, and

& article
a right to win in none. influential enterprises in the world keep moving for-

leadership
• When you can’t find a way to translate the stra- ward along this path. +
tegic into the everyday, you have to rely on your exist- Reprint No. 16108
ing functions to achieve your strategic goals. You risk
becoming a company that perennially promises great
things but never seems able to deliver. Resources
• When your company doesn’t put its culture to
Anders Dahlvig, The IKEA Edge: Building Global Growth and Social Good
work, your people feel trapped and disengaged. Yours at the World’s Most Iconic Home Store (McGraw-Hill, 2012): The author 10
might be one of those passive-aggressive companies is a former CEO of IKEA.
where new strategies fail because people pay lip service Paul Leinwand and Cesare Mainardi, The Essential Advantage: How to
to them without believing they will last. Win with a Capabilities-Driven Strategy (Harvard Business Review Press,
2011): The authors’ original look into coherence lays the groundwork for
• When you fail to cut costs to grow stronger, you
the five unconventional acts.
starve the parts of your company that matter the most
Paul Leinwand and Cesare Mainardi, with Art Kleiner, Strategy That
and overindulge those you don’t need. Your critical ca- Works: How Winning Companies Close the Strategy-to-Execution Gap
pabilities lose support, and they blend and blur into the (Harvard Business Review Press, 2016): In-depth guide to the strategic
rest of the enterprise. path described in this article.

• If you can’t shape your future, you run the risk Strategy&’s Strategy That Works interactive profiler,
strategythatworks.com/profiler: An online survey that can help you
of falling behind competitors that are shaping theirs. rapidly diagnose your organization in terms of the five acts.
You might lose the opportunity to become influential
Strategy&, “Our Leading Research on Strategy,” 2015, strategyand.pwc.
and thereafter be dependent on more coherent and thus com/cds-leading-research-strategy: Source of data on executive responses
more dominant players in your industry. on strategy. Also see “Companies Spend Money and Time at Odds with
We do not hold up the five unconventional acts Their Own Strategy,” July 22, 2014: strategyand.pwc.com/
ffg-indexprofiler-results-infographic.
as the only path to success. But it is the only path we
More thought leadership on this topic:
know that provides this kind of long-term, sustainable strategy-business.com/strategy_and_leadership
success. It is also an appealing path that feels intrinsi-
strategy+business magazine
is published by certain member firms
of the PwC network.
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