Closing the gap between strategy and execution remains a challenge. It must be taken into account that a series of keys must be produced so that the execution of the strategy has a more efficient and aligned implementation.
Some 40% of executives say their business responsibility and leadership are not aligned with executing strategy.
The big challenge is often due to insufficient visibility and control, a short-term “firefighting” mentality (see profile WOLF) and employee change fatigue (see Tips to Counter Transformation Change Fatigue).
Sometimes the problem starts with the very definition of the strategy. Many executives don't have a documented three- to five-year business strategy because managers haven't produced, updated, or shared the latest version, and it hasn't been done effectively with business and functional leaders. In other cases, the strategy has changed without many leaders realizing it.
The risk of the strategy not being executed effectively is only increased in volatile and disruptive conditions such as those experienced during and since the COVID-19 pandemic, the transition to the digital economy, or any other time of market, sector or corporate crisis. .
Principle 1: Strategy Definition
83% of strategies fail due to wrong assumptions. It is necessary to carry out tests on the assumed scenarios during the formulation.
History is littered with examples of organizations that experienced severe growth stalls due to strategies based on faulty assumptions about customers, competitors, or internal capabilities.
Lack of clarity leads to unwelcome surprises during execution and reduces managers' ability to follow new market requirements and respond accordingly.
To achieve successful execution, the relevant assumptions must be clarified and tested. This includes using mechanisms to identify and challenge strategic assumptions so that the organization can avoid unforeseen issues that derail implementation.
Principle 2: Planning
It is estimated that in 67% of organizations the key functions (technology, operations, legal, human resources, etc.) are not aligned with each other, with the business and corporate strategies. The objectives must be aligned with the strategy, clarifying what the objectives are for those in charge of execution.
Strategic planning sessions costing millions in direct investment and hundreds of people hours each year often occur in large organizations. Despite these efforts, strategic objectives are often unclear or misaligned, leading to resource accessibility and adequacy challenges that limit successful implementation.
It is necessary to focus the planning process vertically from the steering committee and the business units, and the horizontal alignment between said business units and those responsible for functional execution. To avoid confusion, it starts from clarified and explained objectives and the inclusion of the necessary roles for said objectives, included with the team in the business, in charge of execution.
Principle 3: Performance Management
58% of organizations believe that their performance management systems are insufficient to be able to measure execution and alignment with the strategy. Assuring responsibility for the critical actions for the execution of the strategy and being able to measure performance at this point is not an easy task since the strategy cannot be pigeonholed into standard questions.
Markets can change between a company's strategic planning cycles, thereby invalidating assumptions and the strategic plan. Without an effective system to monitor strategy performance, organizations can execute the wrong plan for months, or even years, before correcting it.
To correct course in a timely manner, it is necessary to use performance management systems to hold employees accountable for key metric goals (for example, in the case of Google, the OKR's). Frequent plan reviews can determine if poor performance was the result of poor market assessment, incorrect strategy, or poor execution.
One should also consider an approach adaptive strategic planning.
Principle 4: Strategic communication
67% of women do not understand their role when new initiatives are launched, especially if they are related to exploring or growing markets. Fostering a two-way dialogue about strategy is one measure to ensure organizational buy-in and understanding.
To effectively implement a new strategy, people need to understand and support it, both before and during execution. Lack of buy-in only reduces commitment and motivation for action, and messages that lack credibility increase the organization's resistance to change, increasing the cost of execution.
Engage critical people with targeted communications to gain support for the strategy, with basic public relations principles within the organization to keep everyone involved and actively engaged in achieving company goals.
Principle 5: Organizational Capacity
Organizations that can successfully mobilize capacity to execute new growth strategies increase profitability by 77%. Focus on mechanisms that unlock the ability to ensure successful execution.
Many organizations do not allocate resources (assets, time, people, etc.) for the actual implementation of new strategies. They depend too much on internal bureaucracy, planning, performance metrics and communication with those responsible for control or administrative areas.
The net result of poor coordination is a reduction in the firm's overall capacity through increased unnecessary cost and market opportunity cost.
Some practices to unlock organizational capacity that can be used are:
- Implement diagnostic models to test organizational capacity before launching growth efforts.
- Use new tools to clarify middle management tradeoffs on resource growth proposals.
- Build new models to release blocked or poorly used resources.
- Create support structures to integrate strategic projects into existing businesses.
