Strategy Execution Life Cycle – All six phases of Guberno’s strategy execution lifecycle
Background context – A private family-owned electrical wholesaler has been in business for close to a century. While the business has built a national presence, it holds a market leadership position in a couple of states with the remaining states securing minor market shares. The majority of sales are sourced from its physical branch network with e-commerce presence representing a small percentage of sales. Branches provide a broad range of behind-the-wall (power and data cables, switchboards, etc) and front-of-the-wall (lighting, air movement, electrical switches etc) electrical products with a dominant focus on small to medium sized electrical contractors that are more heavily exposed to the residential and commercial market segments. Support for specialist products into specific sub-market segments is being supported by centrally located specialist teams that supplements capability in the branch network. The overall demand thematics of the industry are positive with the strong shift to electrification, digitization, and automation.
Strategic Challenge – Like many other retail, wholesale and distribution businesses, the value chain for electrical products is being disrupted by digital technologies and changing expectations and buying behaviours of consumers. The emerging generation of electrical contractors has expectations of a seamless omnichannel experience. This is encouraging digital only competitors to enter the market with alternative value propositions to the traditional branch network-based electrical wholesalers. Suppliers are increasingly using alternative channels to reach consumers and consumers alternative channels to get access to suppliers. In addition, a convergence of business models and approach by traditional bricks and mortar branch network suppliers is reducing differentiation and distinctiveness in the eyes of consumers. The impact of this strategic context is a business experiencing low growth and increasing margin pressures.
Strategic Activities – Guberno provided strategic support in helping the leadership team progress through a structured thought journey to develop their five-year strategy. This was achieved in a very engaging way across a series of three workshops separated by activity workstreams to progress thinking between the workshops. Key activities included;
- Establishing the strategic context – this involved a detailed internal performance and capability review of the business and establishing an external perspective of the business in relation to the demand and competitive environment and industry changes bought about by technology. Aligning around a desired future state – vision, mission, purpose, values and key metrics of success to deliver provided an aligned strategic gap that the strategic journey needed to bridge.
- Assessing alternative paths and prioritisation – this involved a range of divergent thinking around four generic potential growth frontiers – reinforcing the core products/business model in the core geographies, expanding the core products/business model into new geographies through organic or acquisition led growth, expanding or adjusting the existing products and business model into new adjacent categories, and entering new value streams. Workteams established credible pathways for growth in each frontier prior to prioritisation around the pathways that could deliver the highest value in an environment of limited/constrained resources.
- Developing execution plans around the prioritized growth pathway – this involved translation of the preferred and prioritised growth pathways into actionable plans. In addition it involved identification of critical enabling capabilities that is required to deliver against each strategic objectives.
Outcomes – The strategy has been provisionally endorsed by the Board with the leadership team formalising the overall investment and predicted returns to achieve final strategy endorsement. Work teams have been formed and aligned with the strategic pillars where strategic priorities are being translated into tangible actions in project workplans.
Key Learnings – A key learning, and a repetitive one, is the power of meaningful leadership engagement in the strategy development process. For a business that has been in operation for nearly 100 years and with a number of long serving employees, there are all the reasons why dominant norms of ‘how things happen around here’ override the strategic thinking and execution processes. However, a process that requires a collective group of leaders to methodically dissect their own business and that of competitors opens up the possibility to exploring new ways and importantly achieving alignment around executing them. After all, it is the process of alignment and effective execution where value is created.
A learning in relation to businesses that possess a physical branch network is that while technology will change how a value stream operates and consumers engage, the physical presence of branches remains a competitive strength (and gets stronger with network density) – so long as the operating model responds and incorporates the technology change. It is no surprise that digital only companies are increasingly seeking to expand their brand equity into a physical branch network as part of a richer omni-channel engagement with consumers.
MD Guberno Consulting Andrew Rosengren | LinkedIn