Johan Grönstedt - The Execution Revolution

Johan, welcome to the show. Very, very happy to have you with us today. Anything you want to add before we dive into the meat of the discussion?

Johan Grönstedt: Just saying thank you, Tim, for allowing me to be on your platform. Happy to be here.

Tim Butara: Awesome. Awesome. Happy to have you here. As I said, and looking forward to jumping right into everything with you.

So your book, The Execution Revolution touches upon a lot of the important aspects of modern business. But in today's episode, as I said, we'll focus on the digital components. So one of the things that your book emphasizes is the importance of digital acceleration. In this whole strategy process, and I'm interested in learning more about, you know, what digital acceleration is specifically and why.

Your book, you know, kind of places such a heavy focus on it.

Johan Grönstedt: Yeah, sure. It's a great starting point. So to me, the more that I've worked with strategy execution specifically, the more I've come to realize that execution is a game of behavior change at scale and the traditional model for affecting behavior change, especially when it comes to strategy is a consultancy driven model, primarily.

So the CEO hires. management consultants to help out and really delegate almost the responsibility of the strategy to some experts outside of the company. And to me, this has always seemed like a very unscalable model to affect change. So what I've been focusing on the last five, seven years is building software to really digitalize this process.

And it's also interesting that this is One of the last majorly important processes in companies that is still very analog, very digital, and especially if you look into the mid to large size companies, you tend to run your strategy in PowerPoint or in Excel. And although that might be a fine communication tool, so much about behavior change, it's not just understanding broadly the direction we're going, but it's actually starting to change behavior.

So. The concept of follow up and aggregation of information becomes super cumbersome for companies and it's almost to the point of being impossible for the CEO to get a clear understanding of how is our big transformation initiative or digitalization initiative or sustainability initiative actually going and the answer to that question is going to be spread out on local drives and different power points that has different templates.

So there's this huge need to kind of digitalize the CEO. And I do think there's also a generational component to this having on average older CEOs, not necessarily being as digitally savvy, but they are the, the, Final, let's say C suite executive who don't have a tailored system for their most important process.

So if you compare it to the chief financial officer, they will have their finance systems. Me and as a chief product officer, we use Jira or Trello or Notion or whatever, but the CEO doesn't really have that. And that is a big part that is missing for scalable strategy execution.

Tim Butara: So a system in this case would be more important than, you know, something like, I don't know, a culture shift or a mindset shift or something like that.

Johan Grönstedt: There's a couple of components where strategy typically goes wrong. So the first one would be that you have a tendency not to successfully be able to prioritize what truly matters and what doesn't. So you try to. Execute too many things in parallel. And so the ambition kind of outstrips your capacity to execute.

There are problems with clarity and alignment. There are great studies pointing out. That on average, the alignment already in the executive team is only 50 percent roughly. And on the MP level, it's only 13%, one, three, that would truly understand it, the most important priorities of the company. So there are of course, management behaviors, leadership behaviors, cultural things that goes along with it.

But I do feel that in the context of this podcast, there are so many thinkers out there already speaking on those topics. So we know quite well. Both the problems and kind of the solutions, but what I personally feel is missing from the broader debate is what does technology enable us to do in terms of achieving scale for these kind of change initiatives.

Tim Butara: Can we talk more about that? So. what would be some of the, you know, main advantages of keeping up with all of this digitalization in the C suite. And I guess some of the important considerations and challenges here that we should, we should point out probably.

Johan Grönstedt: So one thing is building a cohesive kind of map of where we're going.

So Whenever you try to affect change, especially if you think about it in a context of we're a big company, maybe a few hundred, a few thousand employees, if we don't all row in the same direction, that is going to create a problem for our ability to execute. So the ability to see the kind of red thread, if you, if you switch the perspective, more looking bottom up from an employee perspective, if you don't see the red thread between what I do on a daily basis.

And how that kind of impacts the broader strategy of the company, you won't be as engaged, let's say, in the strategy execution and in the journey that you're on. And my perception from the employee level is that you truly want to be on that journey, right? That's a really important part of kind of why I go to work, that I want to affect some type of positive change on the world.

I also think this is really relevant now in a more remote or hybrid. Work model where a lot of traditional management was to be honest, management by walking around a lot, you met your teams more organically. And since most teams, I would argue at least would depend sector by sector, but at least a lot of teams are not in that kind of on premise environment anymore, there is a challenge for the local manager of that team.

To have an effective tool to communicate this is what matters most right now, delegate and follow up tasks and also what's interesting with strategy is that it's not task management because you already have those tools probably in Jira or something like that, but it's figuring out what are the truly most important activities, the key activities that would really move the needle, let's say in the future.

The direction of change, what I see a lot of companies when they try to kind of squeeze strategy into their operational framework in, in their task management tools, what ends up happening is that these really, really key activities, they kind of drowned out by the operational noise. You know, the analogy of signal and the noise, and the signal is not lost in the noise for these kind of strategic activities.

And what's difficult with them as well is that they have a way longer payoff horizon, these activities that are truly the change activities. So they get drowned out also by the kind of feeling of urgency around more operational issues. So all of this ends up in a situation where teams have a tendency to really prioritize what's operationally urgent.

Over what's strategically important and the cost of that you will only see over time, but the cost is huge

Tim Butara: Yeah, it's probably it's like, like if you had that quadrant and it's something that's, you know, both strategically important and temporally urgent, obviously you would focus on that. But for the stuff that's in the other two more neutral quadrants, where you have like a mix of importance and urgency, I guess you would have to balance that on a case by case basis, depending on, you know, how you manage these alignment issues and how you keep the red thread among your different teams and you know, how basically everything else falls together.

Johan Grönstedt: Yeah. And what I guess I'm saying also is that the operationally urgent stuff has a tendency to win that battle.

So the strategically important but less urgent things, they always lose that battle. If you don't have a structure that would combat that specific dynamic, they always lose. So you don't necessarily put focus on them. And I think it's interesting as well, when you think about change, you can think about it in the context of your private lives as well.

I don't think Anybody listening hasn't done a new year's resolution. Like the, the problem is not figuring out that I want to change. The problem is actually changing. The problem is setting your alarm clock one hour earlier on a rainy February morning, right? And actually going to the gym or going out for a jog.

And it's the same thing for strategy that. It's not a problem of me not wanting to do it. The problem is me changing my behaviors and you need some type of support system in place that would be different from your kind of operational system that you run to facilitate that change. And one thing I think your audience is a lot of tech people, y'all.

Probably on a daily basis are in some type of standup structure where you debrief what did we do yesterday and, and take commitments on what will I do today? And I think that structure would work equally great and I've seen it work fantastic, but in a more strategic sense, you do it less often. So you do it perhaps once a week, once every two weeks, but you do fundamentally the same process that you debrief.

What did we promise to do in terms of these key activities that would really move the needle strategically? What did we do last period and then take commitments for the coming seven days or 14 days or something like that. And that structure is a great, really simple process to run in teams really are forcing these strategic behaviors into people's calendars.

Tim Butara: So it should be very kind of very much defined by the business, how, you know, this change happens and takes place.

Johan Grönstedt: That's an interesting question. I think there's, when it comes to kind of onboarding and organization to strategy. One of the primary problems is an inability to prioritize what truly matters.

So there is a top down process in the sense that it's only really the management team that can start that journey in saying this is what matters. And then I would recommend you go layer by layer in an organization. So a team below would say, okay, we have this priority set coming in from the team above.

What can we do? In order to support that goal, but we must also prioritize our efforts and our key activities. And in that sense, you have a combination of a top down and a bottom up process to kind of onboard into strategy. And I think the bottom up asking the team to engage in these ideas is really important for engagement and a lot of the really great ideas on execution concretely are of course, born very close to the actual business itself.

Tim Butara: I like that answer of, you know, needing both the bottom up and the top to bottom approach to kind of drive this, this successfully. I, I like that because often you would talk about the bottom up approach, right? How change has to be driven from within. But then sometimes you would talk about how it needs to be kind of almost dictated in some cases.

And I like this, especially, you know, is this, would this be equally true? Would you say for like smaller businesses as well as larger enterprises, or would there be some important differences to consider?

Johan Grönstedt: I think the principles are mostly the same in smaller organizations, larger organizations, they are more stable.

So they need to pivot less often. And in smaller organizations, you might need to pivot more often because you're still trying to figure out your, your product market fit or whatever. And that would mean that the. You would probably need in smaller organizations, almost everybody on board in that, or in that discussions, like I run three tech teams, for example, they are heavily involved in understanding the commercial aspects of the product that we build in order for them to be a part of understanding why are we making the priorities that we do?

And for me to kind of delegate decisions as far as I can reasonably do it, I think an even more interesting question might even be. Would you make a difference in a very economically thriving environment versus a harsher economic downturn? I think there's a need, especially now, either during a.

Disruption events, no matter if it's high inflation or COVID or whatever, or during a bad economic trend to be more top down than you would typically are. And what's difficult, I see a lot of companies struggling with this, that they've built, they perhaps over leaned. Into the bottom up approach for a strategy.

So when it comes to now, we urgently need to do this change. They don't have any great systems in place to push things top to bottom.

Tim Butara: If that makes sense. Okay. And that's, that's very interesting. And what could be done about that? Would you say?

Johan Grönstedt: I think it's a, it's a question of, of training a company and like, I don't know how many people actually think about this, but the truth is the last four years has brought.

More change than really ever before in human history. And if you draw that line outwards on, on kind of the years that you and I still have left in our careers, it's like 30, 40 years. Can we even visualize the amount of disruption still ahead? So I think the ability to. Successfully drive change that will be a hallmark for successful leaders and companies of the future.

And that's why I call my book, the execution revolution, because I think it's companies who are successfully managing to execute through this kind of tumultuous external environments. Those are the companies that are going to thrive. And you're going to have companies who. Won't manage this and they won't be as successful.

So to me, it's, it's almost a question of if you're a leader or a potential leader, what skills should you invest in at this phase of your career and driving change to me seems to be one of the only constants left.

Tim Butara: So there is this kind of shift. of these traditional models kind of, kind of fall, starting to fall behind and becoming obsolete in, in these proper, like large scale transformation efforts, right?

Johan Grönstedt: Yeah. And the traditional model for say a digital transformation, for example, which is probably on, on every strategy of every mid to large size company that I've, I've seen, they are typically born through a consultancy effort. So, so the CEO and the management team, they figure out that we need to digitalize our business model more than it is currently.

And it needs to undergo change that is not. Something that you can easily delegate to your IT department because the digitalization will touch all departments. It will touch sales, operations, legal, whatever. But it's still born typically that they need guidance. They don't have the skills themselves to define what does digital transformation look like for us.

So you have one of the big consultant's houses come in. They make up a plan that plan typically ends up as a 90 page PowerPoint that is handed over to, to the management team and the management consultants, their business model is selling hours. So their incentive is actually to make this plan a little bit too complex for the management team to implement themselves.

So what ends up happening is that they then get more consulting services that they can sell in terms of actually implementing this. The problem with this, at least in my mind, even though. You could argue that the problem is that it's it seems like a shady business model, but that's not really the main concern that I have.

My main concern that I have is that you. Allow the delegation of change to somebody else outside of the company. So you build a constant dependency on these kinds of outside skills. So to me, what's more scalable is saying we as a company, this, okay, this digitalization transformation, that's one change that we need to go through the coming 10 years, but there will be other changes.

So it's more economically viable for us to say, we need to invest in our leaderships and our employee skills to manage this change ourself. And to me that seems to be the only really logical conclusion if you're optimizing for a horizon that's longer than let's say two years long. And then we obviously talked about the digitalization of the strategic process itself, how can you effectively both communicate out, ensure that everybody's aligned, follow up, generate reports.

So a lot of, I don't know if you've had a lot of like middle managers on this podcast historically, but a lot of their time is actually generating Reports to superiors on how, what is the progress of X. And so that would take up roughly like 30 percent of their time sometimes in, in especially larger organizations.

If you have more complex organizational models, like matrix as you're part of multiple teams, a few projects, perhaps it's a lot of your time is, is spent trying to aggregate the information upwards and you generate almost zero value in that process. So you have a lot of kind of high paid middle managers that are spending too much time generating things that could just be automated away.

Tim Butara: So, so basically in order to get the most out of, you know, a digital transformation or digital technologies, you would first need to, you know, put them to good use to kind of digitalize the whole process so that then you would be able to kind of read the rewards of stuff like, I guess, AI machine learning and more advanced stuff such as such as those examples.

Johan Grönstedt: I think that's true. I think a lot of this can be done in parallel as well. Mostly, the people that would be really impacted by this is the C suite themselves in terms of they have to learn a new system, for example. From a user perspective, it's not going to be that high touch necessarily and you're going to see the benefit really clearly in the amount of PowerPoints that you have to fill in is decreasing quite rapidly.

But I do think for sure that Digitalizing this process unlocks a lot of other processes. .

Tim Butara: Okay. And, and as I mentioned, AI and ML and that, that wasn't just random, obviously I wanted to, to return maybe back to some of the more digital aspects and kind of looking forward and, and, and also, you know, kind of how do we proceed from, from now to, to the future, I guess.

And you mentioned before that it's, it's one of the priorities and one of the things that it's sometimes difficult to do is knowing. What matters and what you should focus on. And I'm wondering if this is becoming harder now with, with all this hype surrounding AI and, and I mean this in the sense that, you know, is it, is the draw and the appeal of this AI hype so big that it's often, it seems inevitable for businesses that they should prioritize that when in fact, in a lot of cases, it shouldn't even be one of the key strategic priorities or.

You know, is it really an all around a goal that, that, you know, businesses and organizations should strive towards.

Johan Grönstedt: It's a, it's a great question. And I've listened to, to a few of your other episodes discussing AI as well. And I think most larger organizations aren't necessarily at the place where they would need to look into large scale AI implementations, but that doesn't mean that single Processes in sales, in marketing or stuff like that can really be benefited by, by AI implementations.

But when it comes to their kind of big data and ML stuff, they don't have the data structure in place to do that. Great stuff yet, but you also have, when it comes to AI and strategy, you have a great use case for it because one of the, one of the biggest problems for successful strategic planning. So, so if you have a vision, you know, kind of broadly where you want to go, but the, one of the bigger problems for managers is trying to break that down into two manageable chunks, like milestones, deliverables, stuff like that.

There are very few managers that are actually. Great at doing that type of planning, like almost like in a reversed engineer planning from a, from an end goal, that might be two or three years away into what does that actually mean for this quarter, this week, right there. I see AI being immensely beneficial.

Because you can, without any type of custom trained bots, you can straight to chat GPT, ask for process guidance. And we've actually built, because I build a strategy execution software, obviously, so we built a feature doing exactly this and I'm wondering how little information do we need to provide as context in order to generate the type of advice that you would honestly get from a expert management consultant.

And we are absolutely blown away by the ability to provide that type of action plans based on transformations that you are, that you need to go through and then the quality of advice that AI can generate. So that's a really low investment scenario to implement AI into the strategic process.

Tim Butara: And this also ties back to what, to what we talked about earlier about this shift in, in consulting models.

Johan Grönstedt: Yeah, absolutely. And I follow a lot of, you know, management consultant, influencer accounts or LinkedIn accounts, etc. And it seems like even, even the highest paid management consultants are equally using chatGTP.

Tim Butara: I mean, I guess it makes sense. And then, as you said, that then. And if they are, and they probably are, then there's no reason why you should, you shouldn't just people shouldn't just, you know, lean more and more towards skipping this middleman and just, you know, getting this, the same answer themselves from the same software that, you know, the person that they used to pay probably large amounts of money to used to do in the same way, basically.

Johan Grönstedt: Yeah, exactly. And it's, it's almost like having a personal trainer for each and every manager. That's a fantastic scenario, right? And then with technology, that's well, at least around the corner.

Tim Butara: Well, I think that's actually a great note to finish this particular conversation on Johan. Thank you so much for joining us today for sharing insights from your book.

We'll add a link to, to Amazon or some other popular online bookstore, probably Amazon, obviously, of your book. But if listeners would like to reach out to you, get in touch with you, learn more about you, what's the best way to, to reach you online?

Johan Grönstedt: I'm very active on LinkedIn. So that's the absolute best place to reach me.

I'm very eager to have these conversations as well. So just shoot me a DM.

Tim Butara: Okay, perfect. Thank you again, Johan. This has been a great conversation and it was a pleasure speaking with you today.

Johan Grönstedt: Thank you.

Tim Butara: And to our listeners, that's all for this episode. Have a great day, everyone. And stay safe.

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