As stated by Gerstner, execution (implementation) is really the critical part of a successful strategy. Getting it done, getting it done right, getting it done better than the next person is far more important than dreaming up new visions (or strategies) of the future.1
Risks and challenges impacting strategy execution are typically related to one of the following imperatives:
- Leadership and Governance
- Creating a Performance Culture
- Performance Analysis, Reporting and Informing
- Aligning and Operationalizing Strategy
- Project/Portfolio Management
Below I have described each imperative and the most common problems encountered, each with typical causes and potential solutions.
Leadership and Governance
While one would think that after investing resources for the overall organization-wide strategy development, leaders would be more determined than ever to make sure their investment is protected through effective leadership and governance approaches to implementing the strategy. Often, that is just not the case. While solutions are not rocket science, many leaders simply lack the discipline to make the strategy execution a success.
Here are three problems encountered, unfortunately, more often than you would expect:
| Problem: | Board and/or Leaders lose focus on strategy after rollout |
| Cause: | Leaders lose interest after the engagement of the strategy is over |
| Actions: | Mandatory attendance at calendared strategy cadence review meetings; Leadership constantly keeps communicating strategy organization-wide. George Bernard Shaw’s quote plays hard here in that “the single biggest problem in communication is the illusion that (communication) has taken place.”2 |
| Problem: | Organization structure does not effectively support the strategy focus |
| Cause: | Budgeting and operations are not aligned with strategy; operational plans not adapted to include “strategy focus” |
| Actions: | Integrate separate cost centers, functions, and processes with the strategy; Leaders need to recognize and accept that “heavy-lifting” is required for strategy implementation |
| Problem: | Strategies do not adequately address potential disruption factors |
| Cause: | The “the annual strategy planning retreat” continues to be focused on SWOT and other traditional tools only |
| Actions: | Introduce into the strategy planning process additional tools, while updating the SWOT Analysis and Customer Value Proposition, like Scenario Analysis, Foresight Analysis, Five Forces Analysis or any logical thinking process that prompts leaders to think outside the box and stop worrying about what is on the breakfast, lunch, or dinner menu each day of the retreat. |
Creating a Performance Culture
Strategy implementation is a massive change initiative. Monitoring outcomes and reporting on performance results is a new way to conduct business for many organizations. And analyzing the performance of teams and individuals is often something that was never in place in some organizations until a strategy was introduced. Gerstner reminds us that, “I came to see, in my time at IBM, that culture isn’t just one aspect of the game—it is the game. In the end, an organization is nothing more than the collective capacity of its people to create value”.3
Here are three problems encountered, unfortunately, more often than you would expect:
| Problem: | Performance culture missing |
| Cause: | Lack of accountability and ownership for results |
| Actions: | Increase focus on outcomes and away from operational inputs and outputs; visualize alignment between outputs and desired outcomes; Make sure that well-structured strategic objectives are in place at the organization wide, division and business unit levels with assigned owners held responsible for the success of the strategic objectives. |
| Problem: | Resistance to change (implicit and explicit) |
| Cause: | Lack of leadership focus on performance (at all levels) |
| Actions: | Increase awareness and urgency for organization to perform well; Increase strategy communications and sharing of strategic results; Pay attention to your rewards and recognition system such that it does not fall into a coma – if you have one. |
| Problem: | Breakdown in communications |
| Cause: | Executives and managers have forgotten the simple technique of MBWA (if you do not know what that abbreviation means, Google it. It will be worthwhile time spent about this technique. |
| Actions: | Build cross unit relationships; Executives, managers, and team leaders “show up” at all levels, regularly, to build and foster the performance culture across the organization. |
Performance Analysis, Reporting and Informing
A strategy developed without any aggressive development of the Key Performance Indicators (KPIs) is like designing a car without a dashboard of any nature to understand if the outcome the car was designed for is being realized. Measurement selection requires thought and use of the data you are collecting. Zhu reminds us that we can only manage what we measure. Define clearly how you will measure success in meeting the business purpose and vision. Ensure that these measures are quantitative and implement whatever mechanisms you need to be able to gather the data. It is not the measurement that is important; it is what you do with the data obtained from the measurement. Every measure selected should be part of a link of cause-and-effect relationships, and ultimately affects the growth and long-term perspectives of the organization.4
Here are two problems encountered, unfortunately, more often than you would expect:
| Problem: | Wrong KPIs (Measures) |
| Cause: | Lack of or lazy culture in conducting performance reporting; Lack of follow through from strategy development process |
| Actions: | Measure the right stuff (end-outcomes), not the easy stuff (operational); Strength of the KPIs (Measures) not assessed for the needed contribution to strategic intelligence value; Check your target setting; Check you are NOT incentivizing the wrong behavior. |
| Problem: | Performance data collection, analysis, and reporting folly (just going through the motions of preparing performance reports) |
| Cause: | Unavailability of useful data; Lack of performance measurement system support |
| Actions: | Use the right visual and add context (tell a story with performance information); Verify and validate data; pay attention to correlation versus causation; All strategic objectives have projects/initiatives associated with them so include the projects/initiatives reporting; Maintain a regular cadence of performance review; transition from Excel into a performance management reporting system – not only will you efficiently and easily share information, but your strategy communications effort and results be accelerated. |
Aligning and Operationalizing Strategy
Top-level organizational strategies that are not aligned/cascaded down through the various levels of the organization are just that – top-level organization strategies. Buy in and support for the top-level strategy will be weak unless middle managers are empowered to provide support, coaching, and facilitation of strategy implementation. Once all organization levels take ownership for their share of the top-level strategy and assign accountability for strategy implementation, the organization should be able to realize a fully aligned organization-wide strategy implementation.
Here are two problems encountered, unfortunately, more often than you would expect:
| Problem: | Unit operations and employees not aligned |
| Cause: | Organization did not complete strategy alignment (cascading) from the organization-wide strategy level |
| Actions: | Organization-wide strategy does NOT work unless aligned (cascaded) to ALL levels of the organization; Conduct the alignment as this process answers the question, “How do we fit in organization-wide strategy?” and “How does what I do matter?” |
| Problem: | Strategic guidance to operating units and/or budget formulation process missing or insufficient |
| Cause: | Executive-level did NOT conduct the alignment (cascade) process and results in sub-optimized operating units, sub optimized technology choices, lack of customer-centric focus and process bottlenecks and breakdowns |
| Actions: | Once alignment (cascading) is achieved, reduce focus on non-strategy supporting work and effort; Avoid budgets defended with “arguments by vigorous assertion” business and support units acting like independent businesses, and technology implementations resulting in redundant tech solutions; Look customer facing backwards, not products or services forward (“start with the end in mind”) what do the customers need and review strategic processes for improvement. |
Project/Portfolio Management
Projects are everywhere in all organizations. And as Nieto-Rodriguez states, organizations around the world have evolved into creating a project economy with a reminder that operations (strategy) run the organization, but projects change the organization. And Nieto-Rodriguez further states that good portfolio management increases business value by aligning projects with an organization’s strategic direction, making the best use of limited resources, and building synergies between projects.5 And let’s not forget that the track record of projects completed on time and on budget still has a poor track record in many companies per a Standish Group study where only 35 percent of projects were considered successful.6
Here are three problems encountered, unfortunately, more often than you would expect:
| Problem: | Projects/Initiatives/Portfolios are islands |
| Cause: | No central clearing house for project/initiatives review |
| Actions: | Adopt a systems approach; Implement a Project Management Office (PMO) with full view and oversight of Projects/Initiatives/Portfolios across the entire organization |
| Problem: | Projects/Initiatives/Portfolios not aligned to strategy |
| Cause: | Lack of attention that Strategic Objectives have two streams of influence to measure success: KPIs (Measures) and Projects/Initiatives to assist the Strategic Objectives to be successful |
| Actions: | Think “strategic” project management; Combine the Strategy Management Office (SMO) and PMO |
| Problem: | Capability/capacity/competency deficiencies |
| Cause: | Lack of investment into “project” mentality and available skillsets to the entire organization |
| Actions: | Keep in mind that while strategy, at all levels, contributes to running the organization, projects “change” the organization; As Nieto-Rodriguez states, organizational ambidexterity provides a company the ability to exploit its current capabilities while simultaneously exploring new competencies.5 |
It is critical that your organization takes the time to research what your organization needs to do to bridge the gap from strategy development to strategy implementation and develop action plans to chart the course for your organization’s success. If you would like to learn more about each of the strategy execution imperatives and how to develop an action plan for your organization, reach out to the Balanced Scorecard Institute to speak with our consulting specialists.
Sources
- Gerstner, Louis. (2002). Who Says Elephants Can’t Dance? Inside IBM’s Historic Turnaround. Harper Business – Harper Collins Publishers.
- Shaw, George Bernard. https://www.goodreads.com/author/quotes/5217.George_Bernard_Shaw
- Gerstner, Louis. (2002). Who Says Elephants Can’t Dance? Inside IBM’s Historic Turnaround. Harper Business – Harper Collins Publishers.
- Zhu, Pearl. (2018). Digital Maturity: Take a Journey of a Thousand Miles from Functioning to Delight. Lulu.com. ISBN: 978-1-387-66947-9
- Nieto-Rodriguez, Antonio (2021). Harvard Business Review Project Management Handbook. How to Launch, Lead and Sponsor Successful Projects. Harvard Business Review Press.
- Shane Hastie and Stéphane Wojewoda, “Standish Group 2015 Chaos Report: Q&A with Jennifer Lynch,” InfoQ, October 4, 2015, https://www.infoq.com/articles/standish-chaos-2015. Nieto-Rodriguez, Antonio (2021). Harvard Business Review Project Management Handbook. How to Launch, Lead and Sponsor Successful Projects. Harvard Business Review Press.
Joe is the Senior Vice President, as well as a senior consulting associate, who has 40+ years of extensive experience in business structuring, strategy formulation/implementation including balanced scorecard use, change management, and the design/execution of innovative operational business models/solutions in the private, public, and nonprofit sectors with first-line and executive level management positions.