Strategy and execution are equally important in business

Your strategy should be the convergence of those three answers, and the more debate that goes into it, the better. Then, set out your agreed strategy in a 20-word mantra that everyone who works with you can understand, remember, repeat and act on. It should be immediately communicated internally, and always recognised externally.

We have just been through this exercise at the Business Leader network to agree our strategy: “We inspire our founder and CEO members to fast-forward their growth via facilitated learning and unique content.” Creating that guiding principle sounds simple but, believe me, it isn’t. The history of HomeServe is littered with self-induced mistakes brought on by my entrepreneurial instinct for grabbing every good idea that crossed my path, instead of sticking to the strategy.

I should have put more time into figuring out that strategy, rather than rushing off to execute new projects, such as furniture warranties with retailers and smart home devices to compete with Google Nest. They didn’t work because they were two steps removed from our core strategy for success: a home-assistance membership model with recurring subscriptions, given credibility through partnerships with utility brands so we could expand internationally.

I should have also listened to AG Lafley, the former chief executive of Procter & Gamble, the consumer goods company where I began my career. He wrote a brilliant book, Playing To Win, about making clear strategic choices. That way, you will get an edge over rivals, consumers will clearly understand what you represent, and you will know exactly “where to play” and the resources you need to achieve your ambitions.

Once you’ve agreed on the recipe, you and your colleagues need to build on the strategy by listing the ingredients on a single page. These are the absolute dos and don’ts — the durable operating practices that will turn your strategy into reality.

At HomeServe, we took inspiration from Southwest Airlines, whose pioneering low-cost model was copied by the likes of easyJet and Jet2. We got hold of its “recipe card”, a list of about a dozen things that it would either adhere to or avoid. These weren’t tactics, but commitments.

Southwest would fly only Boeing 737s, so it needed only one maintenance team. There would be no food, nor allocated seats. It was the uncomplicated approach that struck us — the desire not to do too much and risk getting distracted. Constantly ask yourself if doing a certain thing fits with the strategy. If not, stop doing it. Make a not-to-do list and keep adding to it.

However, there was something else about the Southwest recipe card that resonated. It was created in 1978 and hardly changed over the next 30 years. There were some new priorities and others had been tweaked but, in essence, the strategy was so well planned at the outset that it was able to evolve gradually.

Strategy needs first to be simple and then to evolve as you execute it. If your business is constantly undergoing revolution, dramatically shifting its focus and changing to adapt to new realities, something is wrong.

In HomeServe’s past decade as a public company, I think we have changed less than 20 per cent of our recipe card and the core strategy has remained firm. Our disciplined approach has allowed us to rapidly execute that strategy with energy and unanimity. If you’re changing more than a fifth of your strategy, then you’re doing too much and aren’t focused enough.

After all, you should have already proved your business model by copying, testing, pivoting and perfecting. Why would you need to revolutionise? Instead, think of the kind of constant evolution that Apple has achieved. When Steve Jobs died in 2011, commentators feared for the company because, they believed, no one else would be able to create revolutionary new products. Well, they didn’t. But the company evolved with airpods, watches, goggles, Apple Pay and cloud services. Jobs bequeathed a clear strategy that enabled the company to keep thriving.

One reason why Next continues to be one of our great retail success stories — its shares have risen 45 per cent in the past year — is that Lord (Simon) Wolfson has constantly evolved the company — from stores to online, and now by selling and distributing other fashion brands via Next’s Total Platform service. The company has gradually pivoted, tested and learnt, as we did at HomeServe. For example, we started replacing boilers rather than just providing annual breakdown cover.

You need to get the balance between execution and strategy right. Too much of the former and you’re busy fools, too much of the latter and you’re underachieving procrastinators. My suggestion is 50-50: put strategy first, then execute it — and then evolve and execute, again and again. And when it comes to execution, ensure that the entire company knows the priorities. Ask yourself whether every employee knows your simple strategy statement; they need to know it in order to make sense of their work.

With our international operations, we localised a small element — but the strategy and ingredients remain the same. After all, like a good recipe, your strategy should work wherever in the world you are.

Richard Harpin is founder and chairman of HomeServe and Growth Partner, and owner of Business Leader magazine