Chris Zook on the importance of “Commander’s Intent”

Here is an excerpt from an article written by Chris Zook and featured at the Thinkers50 website, an organization whose definitive global ranking of management thinkers is published every two years. The 2009 winner was CK Prahalad. The ranking is based on voting at the Thinkers50 website and input from a team of advisers led by Stuart Crainer and Des Dearlove. The Thinkers50 has ten established criteria by which thinkers are evaluated — originality of ideas; practicality of ideas; presentation style; written communication; loyalty of followers; business sense; international outlook; rigor of research; impact of ideas and the elusive guru factor.

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“Commander’s intent” is a legacy of Napoleon Bonaparte.  It is a way that the strategy and priorities of a mission can be stated in a simple, and operational, way so that the field commanders at the front line and the most senior general can have a shared view of what is most important.  At its best, a one-page “Commander’s intent” creates a more aligned organization that can respond faster by decentralizing decisions better. The practice is even more important in today’s world of near-instant electronic surveillance and response.

Yet, the typical business organization today, to its peril, is going in the opposite direction:

• Only about two in five people in the typical business say that they have any idea of the strategy and the key management priorities.  Yet imagine a marching band where only 40 per cent knew the formation?

• Over half of “yield loss” from strategy targets to results is now attributable to faulty “wiring” as the strategy is driven to action at the front line, not to the high level idea itself.

• Though 80 per cent of executives feel that their core product is highly differentiated in the consumer experience, only 8 per cent of end-users agree – a large delivery gap.

Today, only 9 per cent of companies worldwide have achieved even a modest level of sustained, profitable growth in the past decade (5.5 per cent real growth in revenues and profits while earning the cost of capital) and the percentage has been declining for decades.  Sustained growth is getting harder, though few deny that change in the world creates plenty of opportunities for most businesses. What can be done about this?

We recently completed a three year study at Bain & Company which concluded that the growing complexity of companies has become the silent killer of profitable growth – slowing companies down at the same time that markets are moving ever faster.

We examined hundreds of companies to define the design principles of businesses that permit faster response and better ability to adapt to change than their rivals. We called these companies the “Great Repeatable Models.” What we found at their centre was an essential simplicity of concept, and ability to use the hidden power of simplification as a competitive weapon increasing speed and the ability to learn, while controlling the growth of complexity that can accumulate like barnacles, layer after encrusted layer.

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To read the complete article, please click here.

To read my interview of him, please click here.

Chris Zook is a partner at the management consulting firm Bain & Company. He is co-head of Bain’s global strategy practice. The Profit from the Core books offer a blueprint to finding new sources of growth from a core business, based on a three-year study of thousands of companies worldwide. Chris ranked No. 50 in the Thinkers50 in 2007.

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