Is strategy execution or formulation more important?

Look to Dell for the answer

  • Mobile learning Header Image

Published on: June 2018

Written by: Rommin Adl

For any organization, striking the right balance between strategy development and execution is a top challenge.

Consider Dell Technologies. The hugely successful American tech company completely transformed their ability to execute strategy when they went private in October of 2013. This bold move allowed Dell to drive their goal of growing the intrinsic value of their organization faster than their competitors. Rather than wasting time developing detailed, long-term plans to please investors, Dell could focus on making their strategy a reality.1

The company’s differentiated approach has allowed them to focus on the execution side of driving results, which has amounted to strong growth projections that will continue for the years to come.2 So how did Dell redefine its approach to strategy?

Dell’s results are the product of managing strategy development and execution in tandem—an unrelenting focus on maintaining their growth mindset, and learning while executing. The faster they learn, the more they refine and strengthen the company’s position and adherence to the strategy over time. Strategy development and execution are integrated, not separate and distinct.3

While a heavy focus on execution does not adhere to classical textbook definitions of strategy implementation—first analyze and formulate the strategy, and only then implement—it is proven to deliver results for organizations across industries.

The keys to success

Recent research conducted by BTS in partnership with The Economist Intelligence Unit reveals that 27 percent of surveyed leaders invest more time developing strategy, 46 percent spend more time implementing strategy, and another 27 percent adopt a balanced approach, focusing equally on both.4

Superior performers in terms of revenue growth, market share and profitability are most likely to strike a balance between strategy formulation and implementation. In contrast, companies that place a disproportionate emphasis on strategy formulation are more likely to be subpar performers. In comparison with their market-leading competitors, executives from profitability-lagging organizations are 35 percent more likely to report that they are busier formulating strategy than executing it.

For companies like Dell, these research findings are likely no surprise. It makes sense that to maximize impact, strategy development should not occur in a vacuum, disconnected from implementation. Market-leading companies start implementation planning during the strategy formulation phase and then work to optimize the execution levers at their disposal to effectively engage and develop their leaders.

So, does your organization value strategy development, execution or both? Where does your organization invest time and resources? How does this decision impact your company’s results?