Strategy Vs. Execution: Which Is More Important to Your Company's Success?
Bold moves are never easy. They’re also not cheap or safe. But one reason leaders discard maverick thinking is because they pay three seconds’ attention to strategy and immediately proceed to execution challenges.
Which is more important: strategy or execution? The vanilla answer is “both,” which you’ll get from people who also follow (and like!) the popular posts on LinkedIn that claim the secrets to getting hired, promoted, living long and/or being wealthy are to be kind, work hard and avoid hitting bosses in the face.
You need to make a choice. Do you know why? Because strategy is all about choices. Leadership is about motivating. Management is about organizing and controlling. Strategy is about one thing and one thing only: making choices.
Making choices is the hardest thing in the world for successful companies because it means not doing something, and that sounds red-flag-waving, emergency-siren-blaring risky. People are afraid to make a mistake and cause their success to come crashing to an end. Refusing to choose — “covering all the bases” –seems so much safer.
People who think strategy and execution are equally important don’t tell you that they really think strategy is overrated and execution is extremely hard. That’s why they spend three seconds on strategy and fret endlessly about “New Package! Same Great Taste!”
They might be right, but that’s only when the strategy is a mere continuation of the current strategy with a tactical tweak here or there. And that’s what often passes at Corporate for strategy.
The vast majority of employees — 99.99937 percent to be exact and scientific (we checked) — are dedicated to execution. That is, by definition, the role of employees and managers but not leaders. In a typical Corporate unit, that translates into thousands, tens of thousands, hundreds of thousands of people who toil day and night and often on the weekends and during vacations to implement their company’s strategy. If 100,000 employees putting checkmarks on tasks accomplished, meetings attended, quotas met, emails sent and vendors contracted can’t execute, who can?
So why do managers think execution is hard and strategy is easy? Probably because no one gathers them to take a break from the relentless execution for one day and think strategically. When someone does, managers are often shocked at how hard strategy is.
The crux of the issue isn’t actually what’s harder. The crux is the underlying belief that if execution were just a bit better (or actually, perfect), the company will prosper, competition will shrivel and peace will dawn on Earth. That underlying belief fits well with the knee-jerk response to stagnation or decline: Circle the wagons and execute the wrong strategy harder!
Good strategy triumphs
Excellent execution cannot save bad strategy any more than fine china can save bad food.
Strategy stumbling on execution might be saved with honest communication from leaders who prefer confronting reality to listening to the “mirror, mirror on the wall” chorus. U.S. airlines’ strategy of constant price wars was replaced by quiet “territorial division” where the U.S. was neatly carved up by dominating hubs (Delta in Atlanta, American in Dallas, and United in Newark, among others). Prices could then be raised given the fewer options available to passengers, which, coupled with reducing capacity and charging for everything extra (baggage, meals, seat selection; next: bathrooms?), proved a breakthrough to an industry that was once a perennial loser. No one in their right mind would call airline service outstanding, and dragging passengers bleeding from their seats because of overbooking has done little to gain admiration. But the profits keep soaring. And when the strategy of overbooking became a huge PR problem, airlines showed (tactical) agility by quickly replacing the practice of offering a cheese sandwich and a recycled water bottle as compensation for those volunteering to give up their seats with thousands of dollars in incentives.
The strategy of dominating hubs was the result of consolidation. It created barriers to entry. Loyalty programs — a truly innovative marketing strategy — put smaller regional airlines at a crushing disadvantage and further promoted consolidation into big ones. It may have been less than cherished by consumer advocates, but the alternative was bankruptcy.
Interestingly enough, Southwest Airlines, which has proudly kept its strategy of being the only domestic airline that doesn’t charge for the first two checked bags, is also the only airline that has been profitable for 44 years. Now that’s a competitive strategy that doesn’t even need to correct for bad execution.
Why can’t Corporate do the same? Giora Keinan, of Tel Aviv University, and several other researchers studied the effect of stress on perception. His 1999 study, reported in the journal Anxiety, Stress & Coping, revealed that especially during periods of stress, our human tendency is to narrow our focus: “Let’s just do what the others are doing, only execute it better. We have a 6.5-inch entertainment screen while they only have 5.8 inches.”
Strategy is hard — but it’s worth the effort. Execution is hard, but if the strategy is wrong, at best, it’s not worth the effort.
Source: Entrepreneur, 2019
5 Keys to Successful Strategy Execution
You’ve set organizational goals and formulated a strategic plan. Now, how do you ensure it gets done? Strategy execution is the implementation of a strategic plan in an effort to reach organizational goals. It comprises the daily structures, systems, and operational goals that set your team up for success. Even the best strategic plans can fall flat without the right execution. In fact, 90 percent of businesses fail to reach their strategic goals, which researchers believe is due to a gap between strategic planning and execution.
“If you’ve looked at the news lately, you’ve probably seen stories of businesses with great strategies that have failed,” says Harvard Business School Professor Robert Simons, who teaches the online course Strategy Execution. “In each case, we find a business strategy that was well formulated but poorly executed.”
How can you equip yourself and your team to implement the plans you’ve crafted? Here are five keys to successful strategy execution you can use at your organization.
KEYS TO SUCCESSFUL STRATEGY EXECUTION
1. Commit to a Strategic Plan
Before diving into execution, it’s important to ensure all decision-makers and stakeholders agree on the strategic plan.
Research in the Harvard Business Review shows that 71 percent of employees in companies with weak execution believe strategic decisions are second-guessed, as opposed to 45 percent of employees from companies with strong execution.
Committing to a strategic plan before beginning implementation ensures all decision-makers and their teams are aligned on the same goals. This creates a shared understanding of the larger strategic plan throughout the organization.
Strategies aren’t stagnant—they should evolve with new challenges and opportunities. Communication is critical to ensuring you and your colleagues start on the same page and stay aligned as time goes on.
2. Align Jobs to Strategy
One barrier many companies face in strategy execution is that employees’ roles aren’t designed with strategy in mind.
This can occur when employees are hired before a strategy is formulated, or when roles are established to align with a former company strategy.
In Strategy Execution, Simons posits that jobs are optimized for high performance when they line up with an organizational strategy. He created the Job Design Optimization Tool (JDOT) that individuals can use to assess whether their organization’s jobs are designed for successful strategy execution.
The JDOT assesses a job’s design based on four factors, or “spans”: control, accountability, influence, and support.
“Each span can be adjusted so that it’s narrow or wide or somewhere in between,” Simons writes in the Harvard Business Review. “I think of the adjustments as being made on sliders, like those found on music amplifiers. If you get the settings right, you can design a job in which a talented individual can successfully execute your company’s strategy. But if you get the settings wrong, it will be difficult for any employee to be effective.”
3. Communicate Clearly to Empower Employees
When it comes to strategy execution, the power of clear communication can’t be overlooked. Given that a staggering 95 percent of employees don’t understand or are unaware of their company’s strategy, communication is a skill worth improving.
Strategy execution depends on each member of your organization’s daily tasks and decisions, so it’s vital to ensure everyone understands not only the company’s broader strategic goals, but how their individual responsibilities make achieving them possible.
Data outlined in the Harvard Business Review shows that 61 percent of staff at strong-execution companies believe field and line employees are given the information necessary to understand the bottom-line impact of their work and decisions. In weak-execution organizations, just 28 percent believe this to be true.
To boost your organization’s performance and empower your employees, train managers to communicate the impact of their team’s daily work, address the organization in an all-staff meeting, and foster a culture that celebrates milestones on the way to reaching large strategic goals.
4. Measure and Monitor Performance
Strategy execution relies on continually assessing progress toward goals. For this to be possible, key performance indicators (KPIs) should be determined during the strategic planning stage, and success should be defined numerically.
A numeric goal allows you and your team to regularly track and monitor performance and assess if any changes need to be made based on that progress.
For instance, your company’s strategic goal could be to increase its customer retention rate by 30 percent by 2022. By keeping a record of the change in customer retention rate on a weekly or monthly basis, you can observe data trends over time.
If records show that your customer retention rate is decreasing month over month, it could signal that your strategic plan requires pivoting because it’s not driving the change you desire. If, however, your data shows steady month-over-month growth, you can use that trend to reasonably predict whether you’ll reach your goal of a 30 percent increase by 2022.
5. Balance Innovation and Control
While innovation is an essential driving force for company growth, don’t let it derail the execution of your strategy.
To leverage innovation and maintain control over your current strategy implementation, develop a process to evaluate challenges, barriers, and opportunities that arise. Who makes decisions that may pivot your strategy’s focus? What pieces of the strategy are non-negotiable? Answering questions like these upfront can allow for clarity during execution.
Also, remember that a stagnant organization has no room for growth. Encourage employees to brainstorm, experiment, and take calculated risks with strategic goals in mind.
Source: Harvard Business Review, 2017
4 Steps to Successful Execution of a Strategy
Every year millions of entrepreneurs come up with great ideas. And every year they spend countless hours creating and re-creating detailed business and strategic plans. Often most of this effort goes to waste as entrepreneurs fail to follow through on their own well thought-out plans.
“A lot of organizations put great strategies together but they don’t follow through,” said Bahaa Moukadam, founder and head coach at SeeMetrics Partners, during a recent interview on my radio show Money Talk. “Eighty-percent of them fail at the execution part of the strategy.”
Indeed, Larry Bossidy and Ram Charan, in their book Execution: The Discipline of Getting Things Done, said the key to proper execution lies in three core areas: people, strategy and operations. “The people process is more important than either the strategy or operations processes,” they wrote. “After all, it’s the people of an organization who make judgments about how markets are changing, create strategies based on those judgments, and translate the strategies into operational realities.”
Execution done right is a disciplined process, a logical set of connected activities by an organization to make a strategy work.
“Without a careful, planned approach to execution, strategic goals cannot be attained,” wrote Lawrence G. Hrebiniak, in Making Strategy Work: Leading Effective Execution and Change. “Developing such a logical approach, however, represents a formidable challenge to management.”
Many entrepreneurs allow themselves to become swept up in putting out fires instead of executing their plans. Moukadam pointed out that most entrepreneurs fail at execution due to a lack of “a framework or methodology in place that is repeatable.” These executives need to connect their strategy to the individual goals of each employee. Here’s his simple four-step process to help entrepreneurs execute their strategies:
1. Set clear priorities.
Entrepreneurs might fail in carrying out their strategy if they set too many priorities. Establish only one priority at a time along with supporting initiatives. For example, a priority might be penetrating a new territory. Supporting initiatives could be leasing an office, hiring staff and initiating a marketing plan.
Having too many priorities is like trying to keep too many balls in the air. Then it’s problematic if only one gets focused on. Chances are good that eventually all the balls fall to the ground.
2. Collect and analyze data.
Entrepreneurs often specify measurable goals in their strategic plans. But once the planning process is a wrap, the document might be set on a shelf and not revisited for quite a long time.
A key to ensuring execution is staying on top of results. Entrepreneurs should develop key performance indicators (or KPIs) that can be measured and monitored on an ongoing basis. They need to procure operating data related to these indicators and evaluate results on schedule (daily, weekly, monthly or quarterly).
The executives should evaluate what’s working and continue these proceses and enhance them to boost performance. With failing results, they should determine what processes don’t work and make immediate adjustments to prevent further deterioration.
3. Keep a rhythm to meetings.
Without continuous communication, employees can lose touch with an entrepreneur’s goals and objectives. Over time employees, and even the entrepreneur, can veer off course. This leads to poor results, which can have a disastrous effect on an organization.
To ensure that the entire organization keeps in sync with the entrepreneur’s vision and strategic plan, the staff should gather periodically for different types of update meetings.
Daily huddles should take place within operational groups at the start of the day and last no more than 15 minutes. Such daily meetings aim to ensure that everyone is on the same page and aware of important recent developments such as performance updates, price changes, new products or media reports.
The daily huddle can provide rapid-fire updates specifically tailored to the group. The entrepreneur can oversee the daily huddles at small companies. In larger organizations, line managers should take responsibility.
Moukadam recommends that each meeting conclude with a review of what was decided, who’s responsible for delivering what and when it’s due or a “WWW summary.” This summary should be created at the meeting and delivered immediately by email or other means to ensure that salient points are kept top of mind.
4. Evaluate the strategy.
The entrepreneur should also meet with the executive team and key management personnel on a monthly or quarterly basis to evaluate the progress with the strategic plan. These strategic meetings should be more in-depth and designed to determine if changes are required.
The periodic strategic meetings should discuss strengths, weaknesses, opportunities and threats (or SWOT). They can help executives determine if the strategy’s soundness in light of changes within the organization, industry and economy. The meetings should aim to exploit strengths and opportunities while mitigating weaknesses and threats.
Entrepreneurs can also wield another important tool: a one-page strategic plan. All the essential elements of the strategic plan are boiled down into one page — and give to all employees. A benefit of this information sharing is that employees will feel like they are contributing to the organization’s overall success and will feel excited, motivated and engaged.
Business owners must be careful, however, that the one-page strategic plan doesn’t disclose company secrets and other intellectual property. Do a careful review of the one-page strategic plan prior to its release.
Source: Entrepreneur, 2014
Testing Organizational Boundaries to Improve Strategy Execution
Most organizations struggle with executing strategy. So many of the best ideas on paper never even make it into the marketplace. A global executive survey conducted by Harvard Business Review Analytic Services, in association with the Brightline Initiative, found that roughly one-fifth of organizations achieve 80% or more of their strategic targets. These organizations are also able to quickly adapt to new or unexpected market changes, competitor moves, and new customer demands. The secret of their success? These implementation leaders have found ways to overcome common organizational silos and foster more agile ways of working.
To discover how organizations can change how they work and optimize their strategic execution, Harvard Business Review Analytic Services surveyed 1,636 executives worldwide. Among the findings:
- Cross-functional teams decentralize decision making, regardless of the structure type. The majority of implementation leaders agreed their organizational structures help them carry out strategy. Just as importantly, centralized decision making is present in only 16% of implementation leaders, compared to 24% of followers and 29% of laggards.
- A culture of collaboration is actively pursued and rewarded. Because leaders want to foster the use of cross-functional teams to put strategic initiatives into action, nearly 80% of implementation leaders, versus a scant 19% of laggards, encourage and reward collaboration.
- Executives must be engaged with those around them, coaching just as much as leading. Forty-three percent of implementation leaders strongly agreed about the importance of senior executive engagement and coaching in their organizations, compared to just 19% for those considered to be followers and 13% for those characterized as laggards when it comes to strategic execution.
- Strategic development and delivery are a dynamic, always current activity. Forty-four percent of implementation leaders say the development and delivery of strategic initiatives is a dynamic and continuous process, which isn’t the case for followers (35%) or laggards (23%). In contrast, nearly one-third (31%) of laggards revisit strategic aims only every two years versus 10% of leaders.
TO COMBAT SILOED WAYS OF WORKING, SUCCESSFUL LEADERS NEED TO CREATE INCENTIVES AND FORGE PROCESSES THAT ENCOURAGE AND REWARD COLLABORATION ACROSS ORGANIZATIONAL BOUNDARIES.
Source: Harvard Business Review, 2019
The Future of Work: A Nexus of Strategy and Execution
Digital confusion in the workplace reigns because of multiple platforms and systems. Widely used tools such as email and spreadsheets aren’t designed for the collaboration workers need today, often keeping critical information in silos while also failing to provide dynamic realtime visibility for strategic planning and execution. To deliver products and services at an ever-accelerating speed, teams will need to work across functions seamlessly to meet strategic goals. As a result, the future of work will rely even more on a constant flow of data and real-time communication. Executives in every function and line of business must find new ways.
The lack of interoperability between different applications and platforms, however,is the greatest impediment to achieving the operational coordination needed for the workplace, according to a Harvard Business Review Analytic Services survey of 597 global executives from a wide range of industries.
Thus, it follows that respondents’ top choice (52%) to coordinate operations and better manage their work and resources is to have a single platform that combines workflow management with intelligent automation and collaboration.
There are similar specialized platforms and systems of record for nearly every other function, including customer relationship management (CRM) and enterprise, enterprise resource management (ERP) systems as well as human resource and IT platforms. But most organizations lack such a system of record for operational management. According to Margo Visitacion, vice president and principal analyst in an October 2018 Forrester Research report entitled Portfolio Ecosystem: The Central Nervous System for Delivering Business Strategy, “there is no equivalent system that informs firms about their ability to act on strategic plans.”
Executives are looking for a better way to manage resources, measure execution against strategic goals, and orchestrate work in a more coordinated, collaborative environment. This paper will examine just how highly they value the need for strategic work management tools that can form a nexus of planning and execution ecosystems to become an operational system of record.
When the systems that manage work don’t mix well together, the disorder that results drags down productivity, creates confusion, and fuels frustration that can get in the way of achieving strategic goals.
Most executives are using many more tools now than they did five years ago. For most of us, that means switching between multiple platforms several times a day. But creative designers should be spending most of their day in a creative suite, human resource teams in an HR suite, and financial professionals in an ERP system—not going in and out of workflow tools or checking things in and out of other repositories. Eight out of 10 executives say that the applications, software, and platforms they rely on do not work well together, and an equal number say using so many different tools creates data silos. In fact, lack of interoperability was the leading impediment to better operational coordination, followed by horizontal silos between departments and lines of business and data silos.
When the systems that manage work don’t mix well together, the disorder that results drags down productivity, creates confusion, and fuels frustration that can get in the way of achieving strategic goals. “There is such an increased focus on shared outcomes now,” says Amy Heidersbach, chief marketing officer at CareerBuilder. “It’s critical to have the right automation and the right digital tools in place to make sure that everyone—from product, marketing, and sales teams as well as all the supporting business functions such as finance, operations, security and risk, and customer service—is moving together toward the same goals and can report back on their progress toward achieving them.” To adapt to how work will be done in the future, operational leaders will need to improve data integration and data sharing between systems, according to 63% of respondents.
Making data accessible to everyone who needs it to do their work—employees internally, contract workers and trusted vendors externally—is nearly as important (60%). Establishing an operational system of record is also named as an important step for the future of work. Nearly half (45%) of respondents say COOs and operational executives will need to establish a comprehensive and managed system of record for critical data that can serve as the backbone to work processes in the future, just as a CRM system serves as a platform for front office processes or an HR platform for talent management.
The Tools We Use
Respondents reinforced what most of us encounter every day—the dominance of email, spreadsheets, and video conferencing as the most common tools for managing work today. Some 95% of respondents say email is the most common tool they use for work, followed by spreadsheets (84%). We use these tools not because they are the best but because they are familiar and easy to use, says Robert T. Monroe, teaching professor of business technologies at the Tepper School of Business at Carnegie Mellon University. “Email is awful, but a lot of business happens through email. It’s on every device, and everybody knows how to use it. It is the lowest common denominator,” he explains.
The challenge, says Monroe, is balancing a directed management system in which you need to plan work and resources with a range of existing work styles and the tools people already know. “Traditional workflow solutions are often rejected because they are too rigid, and everyone goes back to email,” he says. “Or we end up trying to do things on consumer devices or social media platforms that are not designed for work.”
Five years from now, executives expect far greater reliance on more sophisticated meeting and collaboration tools. The greatest increases in usage will be in data management tools, workflow tools, and CRM, respondents predict.
Executives say that spreadsheets may finally become a thing of the past and email use will also decrease sharply. They also expect to see greater use of automation and intelligent technologies, such as machine learning, business intelligence, and intelligent automation.Source: Harvard Business Review, 2019
20 Reasons Why Strategy Execution Fails
The success rate of strategy execution is incredibly low. The fail percentages found in scientific studies range from as low as 7 % to as high as 90 %, with an average of about 50% (as reported in a 2015 review article by Candido and Santos in the Journal of Management & Organization). Even though a slight improvement can be seen over the years, such percentages of failure are not particularly satisfying. After all, it means that every second strategy initiative fails to be executed properly.
To do better, we need to understand why this is the case—why, after hundreds of academic studies and thousands of failed strategy projects, we still don’t do better than this. The simple answer would be that successfully executing a good strategy is just exceptionally hard. But that is hardly a gratifying answer. There are many other things that are exceptionally hard, but where we succeed nevertheless.
Therefore, to start with, we need to have a good understanding of the problems that organizations face when executing their strategy. When we know these problems, we understand the underlying reasons why strategy execution fails, which helps us find the solutions.
As part of the research done for Part 2 of The Strategy Handbook (which is about strategy execution), I have made an inventory of the most important problems that organizations experience when executing their strategy. As it turns out, this list of problems is surprisingly stable over time. Over the past thirty years or so, they boil down to the following list of 20 key problems in strategy execution:
- Unclear communication
- No or insufficient communication
- Lack of commitment
- Insufficient or inadequate resources
- Isolated and fragmented actions
- Ambiguous or conflicting goals
- No or unclear strategy
- No clear priorities
- Ambiguous responsibilities
- Lack of performance information
- Silo behavior and sub-optimization
- Wrong or ineffective culture
- Resistance to change
- Insufficient management capabilities
- Delay, plans are not met
- Budget is exceeded
- Lack of middle management support
- Strategy is not adapted to changes
- Poor leadership
This list of problems shows what goes wrong in strategy execution and what keeps going wrong over and over again. If we want to improve our success rate in strategy execution, it means these are the problems to tackle.
Source: Forbe, 2019
5 Simple Rules for Strategy Execution
In survey after survey, the execution of carefully developed strategy comes in as a key problem that evades solution by executives. They acknowledge that they can’t seem to get it right. It’s one thing to design a strategy in the boardroom and quite another to get it operating at all levels of the organisation.
Here’s an example involving an oil and gas company I’ll call Pacific. Their implementation issue started when the board and senior executive team flew to Hong Kong for a “strategy retreat.” Over the course of three days this group of six board members and eight executives listened to presentations, reviewed financials, and developed 26 “strategy statements.” They didn’t use a theoretical framework to come up with these statements, the details were simply thought out by the assembled group. Twelve months on and the needle on execution had barely moved. This was the second year in a row this had happened. The CEO decided it was time to do something – anything.
That’s when I was brought in as a strategy consultant. When I reviewed their “strategies” I could see that they used the word loosely – not that this is uncommon. They were really a mixture of nice-to-happen results, e.g. “become an operator of .…” and goals, e.g. “an engaged workforce ….”. But, in the main, the list was composed of descriptions of corporate-level programs, e.g. “enter into strategic alliances with .…”
The question was: how could Pacific move this material forward to make a genuine difference to business performance? Here are a few principles that guided me in the task of helping Pacific to answer it.
Narrow Your Focus
Pacific’s recurring nightmare on execution started with the number of strategy statements it had decided to implement. I could see from reviewing the 26 that they required much resources and considerable executive time. It would be a mammoth task.
I recalled a previous client’s experience. One of the senior managers at their strategy retreat said: “I don’t know why we do this. Each year we meet. We write all this stuff down and hardly any of it gets done.” I sensed a feeling of disillusionment and described this to the group as “setting yourselves up for failure.” I suggested, “better to aim for a few important things for the year and celebrate success when they’re achieved.”
So the first step to successful execution in Pacific’s case was to identify three of the 26 strategy statements that were most important to performance and focus on them. The remaining statements would be implemented over time, just not in the next 12 months.
Don’t try to achieve too much and set yourself up for failure. The more you try to achieve, the less you’ll accomplish.
Make the Statements Imperative
Each of the three chosen statements had to be translated into action. So one of the first things we did was to design an action-plan to capture the actions as they were developed in the subsequent workshops.
What’s an action? You might think it’s obvious – but no. “Action” is often confused with “activity.”
As I pointed out to the teams, an action starts with an imperative. “Train staff in the new customer relationship management system” is an action that I can assign to someone for completion by a certain date. By contrast, the use of a gerund like “training staff” denotes no more than an ongoing process. It’s not addressed to anyone.
Give the Statements Real Owners
The very nature of strategy statements works against their execution. They’re developed at the organization level but implementing them involves individuals in specific departments. We’re jumping from one level to another. Take this strategy statement from Pacific: “Enter into strategic retention and development licenses.” When we sat down to consider implementing this, we found that it involved three departments – Legal, Finance and Operations.
That’s a problem because no one department “owns” it, i.e. is responsible for making sure it happens. You could argue that the CEO owns it – and owns all the strategy statements. But in this case, given his involvement in issues outside the organization, that wasn’t feasible. So the decision was made to assign an “owner” for each of the three chosen strategy statements from the department heads.
These “owners” answered directly to the CEO and became accountable for that strategy’s execution. For example, “Manage health and safety in line with international best practice” concerned employees, so it was assigned to HR. The head of Operations became the owner of “Enter into strategic retention and development licenses,” and Operations was responsible for coordinating inputs from Finance and Legal.
Separate Out Your Strategy Meetings
Strategic issues and operational issues always compete for senior executive attention. If the day-to-day (operational) problems appear on an executive meeting agenda alongside the longer-term (strategic) problems then, try as the chairman may to achieve otherwise, the day-to-day will take precedence. All managers I know acknowledge this problem without hesitation.
One solution is to create two meeting schedules for executing on a strategy: one for operations reviews and the other for strategic reviews.
Bain’s Michael Mankins suggests that operations meetings should take place once a week and strategy review meetings occur once a month. As the implementation cascade continues down an organization, execution meetings could take place more frequently. Pacific opted for a once a month schedule for implementation reviews at the senior executive level.
I have two other clients who split meetings. One is a public company in insurance, the other a private company in transport. The COO of the insurance company reports that “we’ve found that this [having separate meetings] is the only way to keep strategy moving.” The transport company has monthly “executive meetings” at the group level. The General Manager for the business unit in freight, reports that these meetings are “steered towards strategy.” For her business unit, she holds fortnightly “management meetings” which are operational in focus and, continuing the cascade, weekly meetings to schedule “production for the week.”
Appoint a Monitor
We’ve all heard the saying “what gets measured, gets done.” Well, it’s not quite right. Numbers are important, no doubt. They certainly help to attract peoples’ scrutiny, and they should be employed in any evaluation. But what we really respond to is attention from other people – especially if that attention comes from our boss. The hierarchical structure of organizations dictates this.
You can witness this in organizations. If a manager stops asking about results on “improving quality”, for example, and staff haven’t heard about that of late, they revert to other issues that they might favor, like “output.” If this lack of attention becomes widespread, “improving quality” drops down everyone’s list of priorities.
To solve this, and this is a vital step, assign someone in authority to call statement owners to account by regularly inquiring about execution progress. In Pacific’s case, the monitoring role fell on the shoulders of the COO – Chief Operating Officer – who conducted the monthly strategy meetings.
The basic challenge in strategy execution is to translate broad ideas about what makes you competitive at the organization level into concrete actions for progress at the individual level. To rise to that challenge effectively, follow the simple rules I’ve set out here.
Source: Harvard Business Review, 2019
Innovation And Strategy Execution In The Age Of The New Normal
You had finally decided on a handful of innovations that were going to accelerate your business, but then, as if figuring out how to execute those ideas successfully wasn’t hard enough, the pandemic hit. Now, the path to success is even more complex.
It’s enormously disappointing when your opportunities don’t realize their potential. But what if you already had the invaluable intelligence in your possession to solve your problems?
Rather than guess at what will work in this volatile time, business leaders will get better results using the tools already in their possession — data embedded in their business — to contend with the root cause of their strategic problems: execution readiness.
When companies lack execution-readiness insights and pursue initiatives they aren’t well equipped to execute on, their innovative ideas can fall flat. In the age of a new normal where resources are scattered and the landscape changes daily, execution readiness will dominate as the root cause of missed opportunity.
By using data to gauge execution readiness and navigate this new operating environment, companies can choose either to pursue only the initiatives they are best positioned to carry out successfully or to make adjustments to their people, processes and technology that will position them for success.
Let’s look at the root cause of why companies struggle to execute their innovation and growth strategies and, more importantly, how to apply data to thrive in the new normal.
Intuition Is Out; Data-Driven Decision-Making Is In
With markets reflecting the new-world economic realities, the already well-documented statistic that only 50% of strategic business decisions succeed will worsen and impact businesses more than ever. Initiatives fail when decisions are made on intuition, not data. Using data effectively, however, is easier said than done.
The pervasive problem affecting businesses at every level is that leaders rely far too much on intuition and biases, which provide unreliable results. In McKinsey’s global survey on strategic decision-making, researchers learned that “at companies where executives rate their strategic decisions overall as good, they are much likelier than others to say the company’s assessment of its own capability to carry out the particular decision was realistic, regardless of whether this decision had a good or bad outcome. Indeed, at companies with good overall processes, realistic assessment of execution capabilities is the third highest-rated activity.”
Now, more than ever, leaders don’t have the resources to waste on hunches and should instead turn to execution-readiness data. Harvest this data to make objective, measured decisions, and you’ll not only solve your strategy problems, but also set your innovation free by bridging the gap between your ideas and execution.
Identify Vulnerabilities Before You Start
Save yourself months of analysis by injecting this information early enough in the decision process that you can recognize an idea that won’t work right away. “This is a solid idea, but we won’t be able to execute it at this time.”
If you still believe it’s the right idea, you can say, “We first have to remove some obstacles in our business. Do we have the money for that?”
What if you’re forced to move on an initiative because of a change in the market, or you have to get something done within a certain time constraint even though you still have obstacles in the way?
For example, with the pandemic driving higher demand for medical equipment across the globe, GE employees recently protested to have the company shift all jet engine factory production capacity toward the production of ventilators.
By running an execution readiness assessment (which can be done in as little as one day), GE could quickly remove the biases that detract from a clear understanding of capability. Then, it could identify the vulnerabilities that will impact the changeover in manufacturing and take corrective actions to mitigate the impacts. This assessment and subsequent correction would allow for an accelerated transition, which, in the end, may save lives.
Knowing what vulnerabilities lurk on the execution path in advance of committing resources is the most sought-out intelligence leaders want. No one likes surprises that limit opportunity.
Driven from 20 years of academic research, the most influential areas of impact are captured in these 14 domains of scoring: alignment, technical capabilities, management, technical environment, priorities, stakeholders, business process and rules maturity, business capabilities, governance, decision-making, subject-matter understanding, organization adaptability, criticality and vision.
By measuring (rather than using intuition or guessing) where the vulnerabilities are, a corrective action plan can be immediately fleshed out and put into action.
Returning to the theoretical application in GE’s manufacturing shift, the company’s vulnerabilities lay in its operations. Once identified, GE could act quickly to allay these vulnerabilities before the switchover started.
For other companies, changing market conditions are outpacing traditional methods of decision-making, causing ideas to lose value faster than leaders can get them out the door. By leveraging an execution readiness score that removes biases and gets straight to the problem areas, leaders can realize faster decisions and a more precise go-to-market.
A New Model For The New Normal
In the face of market disruption around the world, we’re living and working in a new model that may or may not revert to what we understood up until now. There’s less room for error and waste as businesses pursue new initiatives, so we must plot our courses of action with more informed decision-making than ever before.
As business leaders, we must adjust our approaches to leverage every asset we can get our hands on. Fortunately, the most valuable asset, understanding our own execution readiness for each idea we have, is right inside our own companies.
Now, all you have to do is go harvest it.
Source: Forbes, 2020
Strategy Execution: Can A New Management System Help You Execute Effectively?
What often keeps CEOs up at night is the gap between the execution of their strategy and the actual results. So how are CEOs of top-performing companies able to achieve their expected results? How do they quickly and successfully adapt to events and rapid changes in their business environment or those that are necessary to grow their business? Let’s take a look at new best practices for effective execution.
Why Execution Doesn’t Always Deliver Expected Results
According to a survey by the Harvard Business Review, only “20% of organizations achieve 80% or more of their strategic targets.” Companies invest a lot of energy into formulating their strategy, often hiring specialized consulting firms in the process. Unfortunately, they often do not invest the same degree of energy into the execution phase.
Every company is characterized by a body of know-how called the company’s “RUN.” By replicating this know-how year after year, a company is able to generally achieve the same results. Therefore, to improve its results, a company must formulate a strategy that defines everything it wants to do differently from its present RUN (new products, new markets, new processes).
Next, many companies think that breaking their strategic objectives down into individual objectives for employees (strategic alignment) then tracking the progress of the transformation projects that support those strategic objectives is enough to bring the strategy to fruition. This is a mistake. In my experience, and the results of the above-mentioned survey support this, while aligning projects with the company’s strategy and tracking those projects as well as conducting annual reviews of the strategy are certainly essential steps, they are incomplete and, therefore, ineffective if one hopes to see their strategy successfully executed in the real world.
Three Challenges That Hinder Execution
Here are three difficulties that contribute to an inability to reach one’s strategic objectives.
• Distributing resources between “the RUN” (to reach short-term and annual objectives) and strategy “the BUILD” (to reach medium-term/three- to five-year objectives): To be more competitive, companies often have just enough resources for the RUN. This means resources are limited and rarely available, which makes freeing up resources to work on strategic projects difficult.
• Prioritizing strategic objectives: Since strategy is established over a three- to five-year period, strategic objectives must naturally be prioritized over time; however, this must be done while taking into account the availability of key resources depending on the strategic objectives. Coordinating this prioritization with resource availability is, therefore, the second difficulty.
• Taking steps to resolve the first two difficulties by continuously adapting them to an ever-changing environment: This is the most important lever to successfully steer strategy execution. Since the distribution of resources must be dynamic, prioritization of objectives must also be dynamic; therefore, execution of the strategy must become dynamic.
A Fixed Or Dynamic Strategy
It is clear that keeping to a fixed strategy is no longer suited to an environment that has become increasingly dynamic. Therefore, an annual strategic review, such as those conducted at most companies, is no longer viable. On the contrary, a strategy must be continuously updated based both on the results obtained as well as on the changes that have taken place in the corresponding markets.
This is particularly true, for example, during the current economic crisis brought about by Covid-19, which has upended many of the rules of the game. An economic downturn forces the CEO and the executive team to focus on the short-term (even the very short-term) in order for the company to survive. At the same time, the markets continue to transform, players continue to disappear and customer expectations continue to change. This means that while it works to ensure short-term survival, the company must simultaneously prepare for the near future by transforming its RUN to adapt to the new changes demanded by its customers and markets.
Furthermore, the uncertainties of the environment that company leaders are faced with make projections difficult. At present, making a five-year plan is a considerable challenge, but that shouldn’t prevent it from being a goal to strive for, with the understanding that it is a target that can change over time based on reality. Given the uncertain times we face, this adaptation process must be continuous.
How To Minimize Execution Shortcomings
The key lies in the execution steering phase, a phase still largely unknown in many organizations. Steering the execution means successfully (re-)linking the strategy to short-term operations (the RUN), in order to continuously adapt it to both results obtained and market changes. Thus, the company must have a management system that is capable of making this link.
But a management system that doesn’t include the involvement of the executive management is insufficient of itself. Teams are too often focused on the RUN and not enough on the strategy execution in parallel; they find it hard to handle unspoken objectives, collaborative participation is almost non-existent and, most importantly, they are not involved enough in the decision-making process, putting a damper on their willingness to execute. This means that without the involvement of executive management, the execution is bound to fail.
The dynamics of the executive management team must be reinforced to facilitate collaborative behavior, as a company’s key to success will be the speed of execution of its strategic changes and the adaptations resulting therefrom.
A management system that links strategy with short-term operations and is optimized to improve the way executive management works, provides effective decision support and steering of strategy execution, thus making your strategy dynamic. This is what will help your company become one of the 20% who reaches 80% or more of your strategic objectives.
Source: Forbes, 2020
Leadership Development Business Simulations: The New Tool For Accelerating Strategy Execution
In full transparency, I run a company that specializes in improving strategy execution by creating business simulations that are used within corporate leadership development programs. With that out of the way, according to this article, the execution phase can power a strong idea riding on a ground-breaking product or service.
In fact, the input introduced by a perfect execution is so powerful that its absence could ultimately denature an intricately composed business strategy. Harvard Business School reiterates that strategy execution dwells on the implementation phase of most corporate goals, though only a paltry 10% are able to succeed at it. The remaining 90% often languish between uncertainty and failure due to avoidable mistakes.
Accelerating strategy execution.
You want your corporation to not only execute strategies but also accelerate them. Accelerating strategy execution gives the entire strategic process the speed and vigor it requires to burst through precedented and unprecedented challenges and gives your corporation a better shot at achieving successful strategy execution and implementation process.
Strategy acceleration is not a matter of instructing the workforce to get things done on a shorter deadline, but rather a holistic corporate masterstroke, which requires tweaking of the leaders and employees to be in their highest productivity states.
Thus, an accelerated strategy takes the equipping and retooling of the entire workforce, introducing in-demand skills, phenomenal corporate training, utilization of business simulations within leadership development. If a corporation ticks all the boxes, it stands a chance to book a slot in the coveted 10% of successful strategy implementations, executions and accelerations in the corporate arena.
The result of this achievement is the joy of operating in a new corporate strategy, customized to navigate the corporation past, present and future challenges resulting in increased productivity, a contented workforce and improved quality of the products and services. Once the efficiency and quality issues are resolved, happy and satisfied customers refer their friends to your business, translating your corporation into a profit minting hub.
What are business simulations?
Corporate trainers have evolved from paper-clutching lecturers to skills disseminators utilizing business simulations, simulation games and, in some cases, augmented reality. In this Forbes council post, business simulation is defined as creating highly informative and engaging business training scenarios, which equip trainees with hands-on, highly applicable leadership development skills. The skills are disseminated through in-person facilitation and simulations, which present the trainees with a controlled, risk-free business setting to carry out duties, make critical decisions and get feedback.
Leadership development business simulations are high-engagement training where the trainees get their business models powered by simulation software. These models allow the trainees to test drive the new leadership skills they just learned, make critical decisions and significant business moves, and get results on whether their decisions were superb or need polishing. The realistic training environment gives trainees the confidence boost they need, and if the decisions they make do not resonate with the projected outcomes, they have a chance to modify their strategic moves and achieve the desired outcomes.
Corporate trainers have thus evolved from archaic and unsure training methods to modern and accurate strategic accelerants, which give trainees a glimpse of what corporate leadership feels and tastes like, the implication of wrong strategic decisions and what can be done to salvage wrong business moves. At the end of the corporate training, learners are equipped with a wealth of expertise, which helps increase the chances of change success and accelerate the corporate strategy forward.
How are business simulations used within leadership development?
Strategy execution and acceleration heavily rely on how equipped the leadership team is. Business simulations fuel leadership development to bring out a team of highly skilled leaders who can efficiently steer the corporate strategy through execution and successful acceleration. The primary benefit of using business simulations with leadership development to accelerate strategy execution is the holistic growth it delivers to the corporation.
If the leaders undergo the business simulations-laced leadership development training, it has the potential to shake them from their cocoons, show them the importance of corporate training and sharpen their decision-making skills regarding matters strategy, execution and acceleration.
Highly skilled leaders value training and will undoubtedly secure corporate training for their employees. The corporation thus has a skilled workforce with zero skills gaps and a standby leadership bench. This preparedness helps the corporation brace for any eventualities and gives it high survivability if a storm hits the marketplace.
Utilizing business simulations within leadership development is a holistic way of preparing the leadership team, the employees and the entire corporation for strategy execution and acceleration.