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This book is intended to help leaders navigate the differences, the polarities, and sometimes the contradictions between the theory of how things are done and the practicality of what must be done, the what and the how. Business leaders today are even more challenged in delivering profits and value as societal changes, new trends in globalization, impact investing, and shifting expectations from the role of Boards all contribute towards a turbulent environment in decision making. We develop a framework and a methodology within which leaders can think about changes in the business environment, opposing forces, and contradictions that weigh on their shoulders as they move forward.
Our methodology advances the notion that business success leading to value creation is based on five fundamental drivers: (a) a strategy which identifies the company’s competitive position in its industry; (b) an asset deployment plan that helps build capabilities and competitive advantages; (c) a financial model, which includes a capital allocation plan and an operating budget along with benchmarks; (d) a leadership team that drives execution; and (e) a culture which includes compensation and measurement systems. While these drivers independently are well understood as key components to a plan, the management of the process is the catalyst for value creation. All these drivers are interdependent; however, they should be considered in an integrated way. Conventional wisdom and theory suggest that strategy is the singular element that will define the success of a business. We believe the contradiction is that, in practice, strategy is one important facet, but not the singular determinant for success. While strategy provides a roadmap, it remains an aspirational plan unless it is supported by strong leadership, a robust asset deployment program, a financial model that aligns investments with profits, and an inspiring culture focused on executing the strategy. All these considerations taken together represent concepts that deliver a powerful perspective and offer implementable methodology in managing a company. It is a new paradigm based on the idea that two possible contradictory views, the theory and practice, can provide answers to adopt to unique circumstances. While it is intuitive to think about the paradigm for companies with cash flows and profitability, the paradigm is equally applicable for non-profits where the key drivers such as assets, a financial model, leadership, and culture are present.
Each chapter presents a synopsis of key theoretical views with emphasis on “what we know” about strategy, asset deployment, leadership, and culture.