Many of the companies we work with spend a considerable amount of time formulating their new business strategy. It’s a time consuming and often frustrating process. Weeks, if not months are devoted to scenario planning, external trends, competitor and SWOT analyses along with financial modelling, to craft the business strategy.
More time is then dedicated to converting the company strategic plan to detailed business unit plans and budgets. And yet many companies struggle to successfully execute their strategy. Our consultants hear stories of strategic planning documents gathering dust in drawers and struggles getting senior executives committed to the strategic goals of the organisation. Others tell us that the strategic plan is too complex to understand, and that there are too many strategic imperatives and performance metrics to support, measure and record.
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Managing business as usual alongside organizational strategy also goes to the top of the concerns pile. And given the rapidly changing environment, organisations are still grappling with how to rapidly flex well established strategies to address disruptive trends.
What are the key ingredients that make for successful strategic execution?
Ensure shared understanding and all-in commitment from the top team and key decision-makers and stakeholders before execution of the new strategy
Effective strategy execution starts with a shared understanding and an unwavering and selfless commitment from the top team, to the company’s strategy. Executives need to make some tough calls and be prepared to make some sacrifices in their own patch. This means that some executives may need to make tough choices such as offering up key resources to support agreed company strategic goals and deprioritising some of their own business goals to add capacity and resources to the system.
Successful implementation is a delicate and often painful balancing act, that requires executive team members to step out of their functional silos, and be prepared to make some sacrifices in their own patch in service of the overall company strategy.
“The essence of strategy is choosing what not to do.” — Michael E. Porter, American economist and founder of strategic management
Build in accountability, and tie strategic goals to financial incentives for strategy execution success
The executive’s collective accountability for a vital few strategic goals is key to success.
To further bolster this shared commitment, it’s important that the team signs up to a vital few core strategies to actively progress the strategic plan over the next six to twelve months, with clear performance measures attached. These strategies will typically be high-impact courses of action that will significantly grow the bottom line and accelerate the organisation’s journey to achieving its vision. They must be appropriately resourced and funded.
Additionally, the top team should be held collectively accountable for delivering these strategic goals, and successful implementation of each tied to a shared financial incentive.
“Building a visionary company requires one percent vision and ninety-nine percent alignment.” – Jim Collins and Jerry Porras, Built to Last
Active and visible sponsorship of key strategies will increase your chances of execution
Active and visible sponsorship is also key, so assigning an Executive Sponsor to each of these strategic priorities will up the chances of success. Ensuring that all have skin in the game for shared success, will accelerate vertical and horizontal alignment in the organisation, and increase chances for strategic alignment and successful strategy execution. It will also improve the odds for aligned decision making.
Research shows that taking the time to develop shared strategic goals and ownership of strategy outcomes, leaves little opportunity and room to “second guess” the decision making process, making strategy implementation easier.
“Strategy execution isn’t something other people should worry about while you are doing something far more important.” — Jeroen de Flander, Dutch expert on strategy implementation
Be clear about the organisational capabilities you need for business strategy execution, and open to how you might secure them
Weak execution organisations fail to spend sufficient time on identifying what they need to be brilliant at for successful strategic execution. And if they do, the may not take the time to conduct a thorough audit of how well they stack up against this “must have” list.
If an organisation does indeed identify and audit the capabilities it needs for strategy execution, it then needs to be creative as to how it might go about plugging any gaps.
Often, a technology solution might need to be put in place and rather than build it in-house, the organisation might seek out an external provider. Or there may be opportunities to develop strong strategic partnerships with other organisations who may offer an ability to very quickly tap into the desired capability.
Engage all levels of employees in planning, to ensure buy-in and to challenge strategic assumptions
The chances of successful strategy execution can be also boosted if senior leaders, field and line employees are effectively engaged in the strategic process, from strategy development through to implementation planning. Engaging employees, functional leaders and key managers early and ensuring representation from across the business will help get your people on the same page and promote your chances of successful strategy implementation. It will also promote rigorous testing of your strategic assumptions before you launch into detailed planning of strategies.
Ensure both horizontal and vertical alignment to the strategy
While organisations appear to have good processes and mechanisms in place to cascade strategy in their own businesses, managers (30%) typically cite the failure to coordinate across units as one of the biggest challenges in executing strategy. These managers feel they cannot rely on colleagues in other functions and business units, resulting in a raft of dysfunctional behaviours that negatively impact execution (Why Strategy Execution unravels – and what to do about it. Donald Sull, Rebecca Homkes, and Charles Sull. Harvard Business Review. March 2015).
These findings suggest that sufficient structures and processes need to be put in place to manage and support delivery across business units. Of course, this is not likely to succeed unless the executive team are working as one team, and committed to making these interdependencies work.
Clearly communicate the business strategy and progress on an ongoing basis
Developing, implementing and regularly adjusting a compelling communication and engagement plan is a key element in successful strategy execution. Getting employees involved in the end to end processes is a good start, but they will quickly forget about the strategy as the demands of business as usual attract their attention.
Even if employees have been involved in the strategic process, you can’t be sure that they are all aligned, or even clearly understand the strategy, or the bottom line impact if the strategy is successfully implemented. Nor might they clearly understand their role in execution.
Aim for simplicity and check for understanding
Communication is of no use if it does not lead to understanding. Managers need to be crystal clear on what the strategy is, where they and their teams fit and what they are expected to deliver. To aid this process, executives should focus on a handful of core messages to outline to managers what matters most.
Executives and leaders should make a point of regularly communicating the most important aspects of the strategy. They should keep employees up to date on strategy performance, discuss progress, invite input, feedback and questions from their teams, and highlight key successes and wins. Not only that, but the strategic narrative they convey to the team must authentically and wholeheartedly be in support of the overall company strategy. Any signs of a lack of alignment amongst the top team will erode commitment to the strategic plan.
Regularly monitor strategy performance, discuss and review progress and be open to flexing the strategic plan
Establishing a few strategic priorities, and clearly defining the expected outcomes will allow an organisation to develop a handful of metrics that will allow the executive team to monitor performance, and discuss strategy progress. These strategic dialogues are a top priority for strong execution companies. They occur with regularity, and are frank, open and honest about what is working and what is not. They are approached with a “we”, collective accountability mindset.
All members of the team celebrate success and failure together, and willingly collaborate to address problems or act quickly when opportunities arise. While each member of the executive team is held to account for their part to execute a strategy, there is no finger pointing or blame.
Supplement your annual strategic planning process with less structured strategic dialogues
In the midst of rapid change, a company fails if it adopts only mainstream approaches to strategy, by sticking to an annual strategic planning process.
Introducing more opportunities to explore and think about internal and external issues and emerging trends and how the organisation might respond ensures that the company is able to quickly adapt its strategy when it needs to.
Get the right balance when it comes to devolving decision making
Effective strategy execution, particularly in large organisations, happens as a result of decisions and actions taken at many levels. Often, the right people to make these decisions are those closest to the action.
Concentrating all the decision making power at the top when it comes to decision-making is risky. It slows things down and runs the risk of strategy unravelling if a senior executive leaves (especially the CEO) or if the executive team is not quite functioning effectively.
Having the right levels of empowerment in the organisation is vital
Strategy execution is complex, and needs organisation and structure if it is to succeed. This does not mean going overboard with hierarchy, layers of approval or red tape. It means being crystal clear about who owns which components of the strategy, and where and how strategic decisions get made.
Chamorro-Premuzic and Lovric recommend that “good management systems explicitly ensure that there is sufficient accountability and flexibility in their design to avoid the ‘bureaucracy trap’ and enable sufficient levels of empowerment”.
They cite Ritz-Carlton’s famous $2,000 rule, which states that employees can spend up to this amount to make customers happy, without seeking approval from their manager (How to move from strategy to execution. Tomas Chamorro-Premuzic and Darko Lovric. Harvard Business Review. June 20, 2022.)
Work on the “soft stuff”, in service of delivering a successful business strategy and lifting company performance
Poor strategy execution is not just about an ineffective planning process, poor coordination, sloppy project management or insufficient performance management. Any successful company recognises that strategy execution is both an art and a science. There are many soft factors that must be taken into consideration to successfully execute a strategy. It takes a high-performing, cohesive executive team to successfully lead strategy execution.
Strong execution requires alignment of your company’s core values and strategic plan. Managers across the organisation need to have strong levels of trust with one another. And perhaps most importantly, the culture and core values need to be aligned to and support the strategy.