New York, NY, June 4, 2013—What’s keeping global executives awake at night? Having too many unconnected priorities, having strategies they don’t believe in, and having strategies that don’t build on the things their company does better than its competitors.
Those are some of the key insights from a current Booz & Company survey of more than 3,500 global leaders, including 550 CEOs and 325 other C-suite executives.
Among the data points that illuminate business leaders’ frustrations:
- A majority of leaders (64 percent) said the biggest frustration for managers is having too many conflicting priorities.
- Most executives (54 percent) said they do not believe that their company’s strategy will lead to success.
- Most (53 percent) could not say their strategy is understood by employees and customers.
- Only a third (33 percent) said they feel the company’s core capabilities fully support the company’s strategy.
- Only 21 percent could say all of their businesses leverage their core capabilities.
- Just 20 percent said they feel their company has a “right to win” in all the markets it competes in.
More than half of the respondents said they were facing significant strategic challenges. 56 percent said their company has not allocated resources in a way that really supports the strategy, and 55 percent reported difficulties in ensuring that day-to-day decisions are in line with strategy.
But when strategy and capabilities fit together, there is a sense of success:
- When strategy is linked to the company’s most important capabilities, growth follows.Executives who say their company’s core capabilities support the strategy are more likely to say revenue growth is above average. At companies where executives said that capabilities fully supported strategy, 47 percent reported above-industry-average revenue growth. That figure fell to 26 percent at companies where capabilities only partly supported strategy and to 14 percent at companies where capabilities did not support the strategy at all. At that last set of companies, 48 percent of executives reported below-industry-average growth.
- The key to success: coherence.A “coherence score” helps measure the fit between a company’s way of creating value for customers, its capabilities, and its product and service portfolio. Executives from “coherent” firms reported much stronger revenue growth than those from “incoherent” ones. At firms scored “coherent,” 57 percent of respondents reported above-industry-average revenue growth. At firms that scored “on the journey toward coherence,” only 31 percent reported above-industry-average growth. At firms scored “incoherent,” only 18 percent reported above-industry-average growth—and fully 37 percent reported growth that was below industry average
"Leaders confirm that performance is best when strategy is built on a foundation of a few key capabilities that differentiate their company and create value for customers," said Paul Leinwand, partner at Booz & Company.
The results were compiled via a Web-based survey that consisted of 21 questions about strategy development, decision making and priority setting, capabilities, growth, and cost cutting.
The survey is available online at www.booz.com/coherence-profiler.
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