Strategy Execution Life Cycle – All six phases of Guberno’s strategy execution lifecycle
Background context – Through the lens of Porter’s five forces model of competitive intensity, the construction industry is one of the most intensely fought. Bargaining power of customers is inherently high due to the dominant procurement model of competitive tendering. Threat of new entrants is high from both a domestic and international perspective. Rivalry amongst competitors is high which often leads to both low pricing/margins for contractors and inefficient risk sharing along the construction value chain. The outcome is low levels of industry profitability, often conflictual relationships, and a high frequency of contractors suffering financial distress. In markets characterised by such high competitive intensity making choices, and ensuring alignment, around a targeted strategic positioning is key to building an enduring competitive advantage.
Strategic Challenge – After experiencing a period of financial distress, the civil construction company was emerging from a five-year period of stabilising the business and creating a strong viable platform to launch growth. The business was seeking to recast its ambition over the five-to-ten year period and to develop a longer term Group strategy that would deliver on its growth ambition. During the stabilising period, the nature of the business had changed from its long held historical strategic positioning. A key strategic challenge in the project was assessing the relative merits of returning to its heritage market positioning or to chart a new course in response to changing external market trends and competitive dynamics.
Strategic Activities – A Guberno consultant worked within the CEO and executive team for the duration of the strategy development process and facilitated a structured process of strategy review and development. In addition to process facilitation, Guberno supported internal and external analytics and provided rigorous and independent assessment in the strategy process.
Key activities included;
- Diagnostic – this involved undertaking a detailed financial and operational review of business performance relative to historical performance trends. The diagnostic review was also key to articulating the current capability platform for the business.
- Visioning – this involved defining the what and why for the ambition of the business in a five-to-ten year horizon. Seeking alignment around the ambition with internal and external stakeholders was key to defining the scale of the strategic growth ambition.
- Strategic positioning – this involved a deep analysis of both the external demand environment and the competitive landscape. A range of strategic positioning options were articulated and assessed with implications for the required capability platform to underpin the strategy. A preferred strategic positioning was selected amongst alternatives.
- Contracting strategy – the contracting strategy defined key elements of the required operating model, capability platform, and target geographic footprint for the business.
- Strategy endorsement – this involved crystalising the key outcomes of the strategy development and achieving alignment for the preferred strategy with the company’s Executive and Board.
- Business planning – the business plan is the primary mechanism to translate the strategy into actionable plans with timelines and accountabilities. Importantly business planning helped cascade the strategy’s communication thereby building ownership and alignment through the organisation. Making clear choices on resource (capital and human) allocation is a key output of business planning.
Outcomes – The Executive team deeply engaged with the strategy development process and after consideration of a range of alternative pathways achieved alignment with the preferred strategic pathway to deliver the longer-term vision and ambition. This alignment was endorsed by the company’s Board and the company is now well into communicating the strategy and enabling execution through the business planning process.
Key Learnings – Executive’s ownership of a defined strategy is a key precondition to effective strategy execution. Ownership is best achieved through intimate Executive involvement in the strategy development process and in particular the debating around strategic choices and selection of the preferred strategic position. Guberno played an important role in facilitating, enabling, and challenging the strategy development without ‘doing’ the strategy on behalf of the Executive team with the outcome being higher levels of executive ownership and alignment.