Industrial companies are exceptionally good at operational excellence.
They have spent decades building systems and disciplines around safety, quality, productivity, reliability, cost, and continuous improvement. Those capabilities are deeply embedded in how successful industrial organizations operate—and they have created enormous competitive advantage.
But excellence inside the plant does not automatically translate into excellence in the marketplace.
Bain & Company has described the parallel challenge well:
Commercial excellence aspires to bring the same scientific approach to the customer side of the business that operational excellence brought to operations.
That distinction is important. Commercial excellence is not a substitute for operational excellence. Nor is it a distraction from it. It is the discipline of bringing comparable rigor to understanding markets, customers, value creation, pricing, commercial organization, and execution.
I came to appreciate that distinction firsthand during my industrial career.
I was part of an organization with an extraordinary record of operational success. Operational prowess was central to the company's identity—and deservedly so.
But success creates its own strategic challenges.
As the company grew, our market reach needed to broaden. Customer requirements became more diverse. New markets and applications had to be developed. And competing primarily on the basis of cost would inevitably become more challenging as existing competitors modernized and new, efficient capacity entered the marketplace.
The strategic question was no longer simply:
How do we continue to become better operators?
It was also:
How do we become equally excellent commercially?
That led to a significant effort to strengthen commercial capabilities across the organization.
We had strong support from the very top. In fact, the CEO became the visible face of the effort.
That mattered.
Senior leadership sponsorship can get an initiative started. It can create urgency, provide resources, overcome resistance, and signal that something is important.
But I learned that executive sponsorship alone does not ensure that a strategic initiative becomes embedded in the organization.
That is where execution becomes difficult.
The Organization May Agree Without Really Believing
When leadership announces a strategic priority, people rarely stand up and openly oppose it.
They attend the meetings. They participate in the training. They learn the terminology. They incorporate the initiative into presentations. They may even enthusiastically support it.
But participation and belief are not the same thing.
In an organization whose success had been built largely around operational prowess, the need to become more commercially sophisticated was not necessarily obvious to everyone.
Why change something that had worked extraordinarily well?
That is a reasonable question.
And it points to one of the most important lessons I learned about organizational change:
Leadership can communicate what the organization needs to do without successfully communicating why the organization needs to do it.
If people do not understand the underlying strategic necessity, an initiative can easily be interpreted as another corporate program rather than a fundamental change in how the company must compete.
Customers Can Be Skeptical Too
The skepticism does not necessarily stop inside the company.
Customers can also be skeptical when a supplier announces that it intends to become more customer-focused.
And perhaps they should be.
Customers have heard these messages before. They have seen customer initiatives launched, slogans introduced, surveys conducted, account programs created, and presentations made—only to watch enthusiasm fade when leadership attention moves elsewhere.
Customers do not judge commercial excellence by what a company says. They judge it by what changes.
- Do we understand their business better?
- Are we easier to work with?
- Do we anticipate their needs?
- Do we bring them ideas?
- Do we solve problems differently?
- Do we create measurable value?
Commercial excellence ultimately has to become visible in the customer's experience.
Then Someone Said Something I Never Forgot
Several years into our commercial improvement effort, a general manager made a comment to me that has stayed with me.
He essentially said: "I bet you're glad this commercial excellence focus is over."
I remember thinking: Over?
That comment taught me more about organizational change than many strategy sessions ever could.
What I viewed as a permanent capability the organization needed to develop, he apparently viewed as an initiative with a beginning and an end.
We were seeing the same effort through two entirely different lenses.
To me, becoming commercially excellent was part of adapting the business for its next stage of growth.
To him, it had apparently been a program.
And programs end.
This Is Where Many Strategies Die
Most strategic initiatives do not fail because the strategy was necessarily wrong.
They fail because the organization never changes the way it operates.
The leadership team goes off-site. The market is analyzed. The strategy is developed. The presentation is compelling. The initiative is launched.
Then everyone goes back to work.
- Existing incentives remain.
- Existing metrics remain.
- Existing meeting structures remain.
- Existing decision processes remain.
- Existing behaviors remain.
Eventually, the organization absorbs the new language without absorbing the new way of operating.
The initiative slowly becomes something people remember rather than something they do.
That is the execution failure.
The CEO Cannot Carry the Change Forever
Visible CEO sponsorship is enormously powerful. I experienced that firsthand.
But it can also create a hidden vulnerability.
If the organization associates the initiative primarily with the CEO—or with a particular executive champion—it may never develop broad enough ownership to survive without that sponsorship.
The real test of strategic change is not whether the CEO talks about it. It is whether operating leaders begin to own it.
- Do general managers use it to make decisions?
- Do commercial leaders use it to allocate resources?
- Do operations leaders see how they contribute to it?
- Do frontline employees understand what it means for their jobs?
- Do the metrics reinforce it?
- Do the incentives reward it?
- Does it influence where capital goes?
Most importantly: Would the organization continue doing it if the executive champion stopped talking about it?
If the answer is no, the strategy has probably not yet become institutionalized.
Commercial Excellence Is Not the Opposite of Operational Excellence
This may be the most important point.
Industrial companies should never become commercially excellent instead of operationally excellent. The objective is to become both.
Operational excellence creates tremendous value: quality, reliability, productivity, safety, cost competitiveness, and the ability to deliver.
Commercial excellence ensures that those capabilities are directed toward markets and customers where they create differentiated value.
One without the other eventually creates vulnerability.
A commercially sophisticated company that cannot execute operationally will disappoint customers.
An operationally exceptional company that does not evolve commercially risks producing efficiently without fully understanding where future value will come from.
The strongest industrial companies connect the two.
Operational excellence creates capability. Commercial excellence converts capability into customer and enterprise value.
Strategy Becomes Real When It Becomes Routine
In hindsight, I would spend even more time helping leaders understand why commercial improvement was strategically necessary—not simply what we wanted them to do.
I would also focus earlier on embedding the change into the mechanisms through which the company actually operated:
- How markets were evaluated.
- How customers were selected.
- How customer insights were captured.
- How opportunities were prioritized.
- How commercial performance was measured.
- How leaders were developed.
- How resources were allocated.
- How capital decisions were made.
Because ultimately, strategy is not institutionalized when everyone knows the terminology.
It is institutionalized when people stop thinking of it as an initiative at all.
It simply becomes: the way we operate.
That may be the real lesson from any major transformation effort.
The objective is not to launch a successful program. The objective is to build a capability the organization no longer believes it can operate without.