Closing the Loop Between Strategy & Execution - Lessons From the Indian Retail Story

Strategy is a strange word. It is treated like a gospel. Once it is put on paper, it needs to be revered, etched in stone.

Strategy may be all that. But that does not make it sustainable?

Most strategists usually jump headlong into full throttle execution, assuming that the gospel will lead to the holy trail. They do not feel the need to test it. Extensive rollout is planned without doing a pilot. And lessons in execution are learnt in 'hindsight' rather than during the process of execution.

Strategy is never 'sustainable strategy' unless it is backed by successful execution. Lessons learnt during the initial stages of execution should be used as inputs to alter/modify/overhaul strategy . Closing this loop is the only way for generating sustainable strategy which delivers long lasting business results.

An interesting example is the bitter lesson learnt by organized Indian retail in the last few years.

Indian Organized Retail story took off with a bang with the launch of Reliance Retail , followed by a slew of other big retail players like Aditya Birla, Bharti, Walmart, Tatas...the works.

Indian retail strategists opined that retail was getting organized, and the poor corner store was threatened with crippling loss of business . Organized retail would unleash deals driven by economics of scale and a whole new customer experience . This would cripple the neighbourhood store, which would not be able to compete on these attributes.

Consumers did throng the stores, esp. when there unique promotions were launches like Big Bazaar during days of 'maha bachat ' (massive saving), but they continued to patronize their neigbourhood shops.

Unorganized retailers in the vicinity of organized retailers did experience a decline in their volume of business and profit in the initial years after the entry of large organized retailers. But the adverse impact on sales and profit weakened over time.

Big Indian retailers failed to take notice of this. Customers kept flocking to organized retail but repeat buying was not robust.

Any business which does not generate robust repeat sales is a leaking pot. But oblivious to this big retailers continued scaling up, implementing their strategic plan of adding outlets to reach their staggering targets of reaching an x number of outlets .

Size & scale, the strategy proclaimed will bring volumes. It did not.

The neigbourhood unorganized retailer would suffer badly as customers will plumb for great shopping experiences. This did not happen.

Besides, the proximity, which is a major comparative advantage , the unorganized retailer displayed significant competitive strengths that included consumer goodwill, credit sales, amenability to bargaining, ability to sell loose items, convenient timings, and home delivery.

By the times big retailers started realizing that numbers were not coming in and the strategy was not sustainable , a lot of money had already gone down the drain. Reliance was around 700 outlets old, Subhiksha was refuting selloff rumours in media.

I think the day you start executing strategy, you should immediately be open to learning lessons and incorporating them back in.

Day 1 of execution, should be the day that the strategists need to start learning whether the strategy is really sustainable. And unless the execution lessons are incorporated, a closed loop between strategy & execution is fully in place, it is the duty of the strategist to remain fully involved.

It is a leader's job to drive execution and not delegate it. The business leader needs to be held accountable for driving the process till sustainable strategy ( that has incorporated lessons from execution ) is firmly in place.

So initial strategy is more like a direction. It is the inputs provided by rigorous execution that gives it legs and makes it potent and long lasting.