Research shows that only 10% of businesses succeed at strategy implementation on a consistent basis.
‘Plans are only good intentions unless they immediately degenerate into hard work’ – Peter Drucker.
For some companies, the culprit is a flawed strategy, resulting from a poor decision-making process that focuses on the wrong things.
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For others (which can represent as much as 75% of the cases, in some studies), the issue lies with strategy implementation, as they fail to quickly translate important strategic decisions into actions.
So how do the top 10% manage to achieve dependable strategic excellence?
- Their strategy is sound. It is the output of an objective ‘thinking exercise’ about the strategic issues the company faces. Their strategy creates focus and sets achievable goals. It presents a realistic scenario based on explicit assumptions, tested hypotheses and a pragmatic competencies match.
- The analysis work is objective. Their strategy implementation process is the result of a tough-minded analysis – a mix of quantitative data, blended with experience-based wisdom, insight and risk taking. It is created through sound decision-making, mindful of cognitive biases which create perceptual distortion, inaccurate judgment, illogical interpretation or irrationality.
- Their strategy provides perspective. It reflects a deep understanding of the company’s competitive environment, external market trends, and relevant structural changes. It is insightful, adopts a long-term view and takes a position to address uncertainty. This perspective is often gained through processes that enable accurate and up-to-date market information that flows from staff closest to the customers back up the decision makers, allowing them to become aware of both opportunities and threats on a near real-time basis.
- Their strategy process is effective. Less time is spent on running a ‘process’, and more time on having thoughtful conversations with the right people about strategic issues and opportunities. It focuses on asking the right questions, and on making deliberate rational choices. The resulting strategy provides focus on the critical few strategic moves that will lead to future success. It is believable as the validity of the plans is regularly challenged.
- Their strategy is viewed as a continuous journey. It emanates from a flexible calendar, allowing the company to adapt and respond with agility to rapid market changes. Detailed road maps are the backbone of their strategy implementation, but the process is dynamic and fluid as the plans are continuously evolving, to mitigate unexpected threats and seize fleeting opportunities, while at the same time not losing sight of the overall strategy and its boundaries.
- Actions result from the strategy. The strategy gives a purpose, is executable and spells change – it is not a plan for a plans’ sake, or a series of meaningless graphs or statements, disconnected from reality. It provides something tangible against which to align capabilities and mobilise people to build a business. Where necessary, the strategy drives rapid reallocation of funds, people, and attention to support the strategic priorities. Unsuccessful initiatives are stopped rapidly to avoid wasting resources that could be redeployed.
- The execution of the strategy is actively managed. The strategy is translated into programmes, detailed action plans, and focused capabilities build-up plans. Change is actively managed: core to the execution is the ability to seize opportunities aligned with strategy while coordinating with other parts of the organisation on an ongoing basis. The execution is guided by the top executive team and driven by the management teams across the company. Focus is on ensuring that the strategy is understood throughout the company, and on facilitating the peer-to-peer co-ordination, agility and teamwork required in volatile markets. The leaders, who are closest to the situation and can respond most quickly, make the important decisions.
- The operations of the company are aligned with strategy as it gets translated into objectives that then are cascaded down the organisation, and integrated as part of operational plans and budgets. Processes and ways of working are aligned with the goals and the strategy, through tools such as management by objectives, and balanced scorecards that capture outcomes and leading indicators of those outcomes. In addition, such processes provide a structure to coordinate activities across units, to explicitly map dependencies, and define performance commitments across silos.
- The strategy is communicated time and time again. The message is clear, simple and consistent, and focused on what matters most. It shows genuine engagement with employees – it explains the logic behind the strategy, and states how employees can participate, and help with its successful execution. Communication success is measured in terms of how well the message has been understood throughout the company.
- The employees are committed to the strategy. Much time is spent on strategy and there is a continuous commitment such as reviews on an on-going basis to measure progress and achievement. The strategy becomes the driving force behind everything the company does – with employees having a clear sense of their respective roles and responsibilities. Decision rights and parameters are defined for employees at all levels. They are then empowered, incentivised, and held accountable for the delivery of specific results, through a clear link between performance and rewards.
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A recent survey of more than 400 global CEOs found that achieving this type of strategic excellence is the number one challenge facing corporate leaders in Asia, Europe, and the United States. It headed a list of approximately 80 issues, including innovation, geopolitical instability, and top-line growth.