A Conversation with Suzanne Bates, CEO, Bates, and Tom Shannon, Partner, Bain & Company

“A successful strategy is one that can be delivered. It’s better to have the 80% right answer that’s 100% implementable than the 100% right answer that is 0% implementable.” 

Tom Shannon.jpg

Tom Shannon

Partner, Chicago

Recently I sat down with Tom Shannon, a partner in the Chicago office of Bain & Company who leads Bain's global Industrial Goods & Services practice. Tom also founded and leads the firm's global Chemicals practice, and is a leader in their Private Equity practice. Over the past 30 years, he has worked on assignments in machinery & equipment, chemicals, oil & gas, utilities, building products, agriculture, packaging, pulp & paper, automotive, aerospace and defense, airlines, distribution, consumer products, retail, technology, telecommunications, financial services and healthcare.

Our firms recently worked together on a successful M&A transaction for a mutual, global client. I learned that Tom has deep experience with portfolio and growth strategy, revenue growth and commercial excellence, acquisition evaluation and integration, organizational development and cost transformations. We agreed it would be interesting for us to talk about where the rubber meets the road – how companies execute on a strategy. 

Suzanne:  

Tom, when you’re helping a client set a new strategy what makes the project successful? How do you measure it?  

Tom: 

A strong focus on results. We like to measure our performance by the impact we will have on a client’s profit, share price and shareholder value. That’s central to most everything we do. Bain clients outperform the market by four to one. This is a result of many things our clients do well, but we’re one of the catalysts. Not all results are measured in profit and shareholder value. It could be the successful introduction of a new organizational structure, or cultural change. These are softer but no less important as elements of helping companies strengthen themselves. 

Suzanne: 

Our teams worked together on a merger of two global companies. They needed to do all the things you’ve mentioned – implement a new organizational structure, merge the cultures, and get people on board. Have you noticed patterns in these types of projects that enable senior leadership to bridge the gap from strategy to execution? 

Tom: 

It was a great partnership. What your team did was very valuable. Execution is a huge part of what matters. Change management and cultural change requires burning far more calories than defining the strategy itself. Execution is the bigger job … and underestimating that is done only at your peril. The definition of a strategy is the equivalent of stepping to the starting line, not crossing the finish line.

Suzanne:

When setting new strategy, what do leaders need to pay attention to when it comes to execution?   

Tom:

It’s a rich topic. It starts with having a vision that is both clear and inspirational. It’s also cascading this vision effectively through the organization so that leaders at every level understand it, buy into it and champion it. The message must be about more than just what we want to achieve, but what do I specifically as a front-line employee need to do today. 

Suzanne: 

We like to tell our clients that in business, communication is execution. People need to know what you’re doing and why, but that comes in the first round. Sustained communication and leadership enables them to believe in it, understand why it is important, and what is exciting about it, for them. Even then, driving the change is difficult! 

Tom:

It is important to recognize that along with anything comes the requirement for a change of behaviors and there is anxiety that is associated with this. You need to make sure that the people who are most effected by the change understand the benefits of what you’re doing. You can’t just describe the change; you must work to create deep understanding of how it’s going to help them, as well as the company.  That’s where execution often stumbles – the communication of it down the chain of command.  

Suzanne: 

What happens, when strategies fail?

Tom:

Our focus at Bain is to develop strategies that are implementable. A successful strategy is one that can be delivered. It’s better to have the 80% right answer that’s 100% implementable than the 100% right answer that is 0% implementable. 

What that requires from the outset is identifying the things that might get in the way of pursuing a course of action. You need a plan to address all the obstacles while developing a strategy. Every situation is unique, and has a set of constraints. So, every situation needs a customized plan. In other words, not just a customized strategy, but a customized plan for implementing it.  

Suzanne:

An unprecedented number of companies today are finding that their traditional business structures aren’t working in the digital, global age. We have been helping our clients make their teams higher performing, and getting their networks of teams to break down barriers by sharing information and working collaboratively across cultures, time zones, businesses and functions. Is there a right or wrong way to change the organizational structure?

Tom:

There’s a lot of interest on the part of our clients in finding new operational models to address digital opportunities. The digital age means senior leaders must start to rethink how they configure their organizations.

Suzanne: 

A lot of the work we do is helping teams recognize and break through barriers, mostly communication barriers, by adopting a more interactive, inclusive and intentional style of communication. It can be difficult for teams to sustain the effort. What do you believe is important for teams and organizations to maintain momentum?

Tom:

One solution to this challenge is agile. We’ve done a bunch of work to introduce agile techniques into enterprise processes.  People tend to think about agile in product development and innovation, but it has applicability in a much wider range of situations. The beauty of the agile approach is bringing together cross functional teams where you have all the people who need to be part of solving a problem or developing a solution together as an integrated team with their time fully dedicated to the project.  You’re running a series of short sprints. With each sprint, the goal is to generate a solution that can be tested with customers. It’s a different organizational configuration that allows for greater speed, fewer resources, and better results. That’s the trifecta when an enterprise is trying to do something new, develop a new solution, solve something new. 

Suzanne:

What advice do you have for your clients for who need to capture the promise of the digital age?

Tom:

All our clients are tackling the digital challenge in some way, shape or form. A key ingredient is how you organize yourself to succeed in the digital world. There are a lot of different models. Each client situation is different and in a different stage of development. None of the models are right or wrong, but there is a right or wrong answer depending on where you are. If you’re just starting on the digital journey, distributing the digital responsibility across business units could mean it gets suffocated. You can go with digital as a business or digital as a function until it reaches critical mass, and then re-embed it into existing businesses. You need to get it right or you stumble out of the gate.

 Suzanne:

How did you get interested in management consulting and what has kept you interested in it through a 30-year career?

Tom:

I joined Bain after graduating from Brown University. A few things appealed to me:  an opportunity to work across different industries and functions; our extraordinary training programs.  But what appealed to me most was that our firm had been founded in 1973 with a mission of delivering results rather than reports. It was very appealing to join a firm so mission driven, especially with a mission of delivering results.  

Suzanne:

You have decades of success helping major global clients transform their companies. We all know the statistics on how many strategies fail, not because of what is on paper, but how it is executed. Do you have a last word of advice to share about how to make strategic execution successful?

Tom:

I just had this conversation with a client today. The development of any strategy requires plenty of energy to wrestle all the key issues to the ground and develop the right answer; but the bigger challenge is the change management and cultural change that needs to accompany it. It requires everything we’ve talked about, especially the right signaling from the leadership. It is walking the walk to reinforce the cultural change. 

If you want to read more about what it takes to lead a successful merger or acquisition, you will enjoy reading this post, and this one.




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