Why Ruin a Perfectly Good Strategy by Trying to Execute it?

Contributor:  Ian Gotts
Posted:  05/25/2011  12:00:00 AM EDT
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Execution is all about getting the entire organisation focused on delivering against the strategy.  So why is it so difficult? Columnist Ian Gotts, looks at the challenge of translating top level vision into reality.

“Every company has a strategy”. That is how my first book Common Approach, Uncommon Results started.  

Many people challenged me and said that is not true. I argued that in most cases, executive teams think long and hard about strategy but in many instances, unless you were part of that exclusive group you probably never got to see it.

Two of the top three biggest issues cited by 769 CEOs survey by The Conference Board, were “Excellence in execution” and “Consistent execution of strategy by top management”. 

Hay’s conducted a survey of “Most Admired Companies” on behalf of Fortune Magazine.  They questioned 10,000 directors from 346 companies who all had over $8bn revenue.  They compared peers in industry groups so that the differences could not be attributed to markets. 

The results were revealing, with a clear gap between the top 5 companies in a given industry and their peers in terms of execution and strategic alignment.

 

Top 5

Peers

Have translated strategy into a clear plan

84%

74%

Roles and responsibilities are sufficiently clear

81%

74%

Jobs are designed so no gaps in accountability

80%

63%

Performance measures tied to business strategy

92%

79%

The results clearly show that strategy execution is critical, but is difficult and rarely achieved.

Strategies are commonly set by senior team members in multi-day offsite meetings, by engaging consultants, or by reacting to the markets. They are often captured in a set of presentation slides or a beautifully bound document.

But it is not the quality of the strategy which makes the difference, but the speed, accuracy and energy put into its execution. General George Patton had it right when he said:

‘A good plan violently executed right now is far better than a perfect plan executed next week.’

Execution is all about getting the entire organisation focused on delivering against the strategy.  The difficulty is that this is a major communication exercise. So the heart of the communication challenge is to ensure that everyone has an agreed understanding of what they should be doing how it is different from their current actions, how it is aligned with the strategy, what is expected of them, and how they are going to be measured.  Critical to all this is that they have the job aids and applications, support and training to be able to deliver.

Frequently the strategy is a change in direction and therefore the added challenge is that strategy is just not about reinforcing current behaviours, but changing them. For some companies, indeed, simply getting everyone on the same page would be a major result.

As Jack Welch says: “Strategy is actually very straightforward.  You pick a general direction and implement like hell”.

But business has never been more complicated:

  • Organisations are now global, distributed and virtual, often built through acquisition, with global competition
  • The pace of change and innovation from small companies challenging larger ones has never been greater
  • Constant change is required, but for many companies the regulatory compliance requirements are a major inhibitor.

Seeing Through Different Eyes

So, first we need to look through the eyes of the senior executive.  They think of vision, big picture, numbers, metrics, and scorecards. They want things done. They don’t do things.

At grass roots on the shop floor is where rubber hits the road. That is where strategy is turned into results – or not. It is the combined actions of all these people, when aligned to the corporate strategy, where the magic happens – or not. They need clear direction.

So strategy translation is required, and this translation is on 3 different dimensions:

  1. Vision vs intent. The vision needs to be converted into tangible and relevant results; e.g. “More customer focused” might mean a target increase of 10% in NPS (Customer Net Promoter Score), or that 20% of customers reorder. Not a 2% increase in shareholder value as this is difficult to relate to concrete actions.  
  2. Metrics related to actions. The question to be answered is “What is it you want me to do differently?”  This might be a different call script, entering different data into the CRM system or encouraging customers to give feedback. These are a change in specific process steps and the related information (documents, policies, help, applications, metrics).  So behavioural change using carrot and stick.
  3. Personalised vs scale. The strategy formulation team is close knit. But the strategy needs to be communicated unambiguously as outcomes (metrics) and actions (process) and cascaded to the entire workforce, at scale, using a variety of devices and in formats that make it easy to absorb and understand. Remember these are carbon not silicon-based life forms, so no BPMN, UML or photos of complex flowcharts that cover the project war-room wall.

There is now technology that is enabling more effective strategy execution. But it will only work with that energy, passion and support that Jack Welch hinted at.

So what is available?

  • Existing approaches such as Balanced Scorecard (BSC) and Lean Sigma are now more effective once enabled by technology. As an example Eddie McDermott, EMEA Operations Director at New Balance Athletic Shoes talks about their application of Lean and the remarkable benefits. In Order to Cash they have reduced outstanding debt from £3m to £360k in 3 months, but eliminated the root causes. Technology has made it stick.
  • The Cloud has enabled applications and data to be accessed with almost no limitations on geographical or time boundaries, at zero cost. This has supercharged communications.
  • Once job related information was only available at your desk or at your PC. Now with laptops, smartphones and tablets across organisations, rich content (process, PDF, video) can be distributed and accessed more easily
  • Finally, a breed of software that Gartner is calling Intelligent Operations Platforms, are available to capture and communicate process and process related information, aligned to the strategy in a secure and governed manner.

An example of how this all comes together - strong vision, passion, process content and technology – is Carphone Warehouse Best Buy Europe.  They have done a fantastic job and to see it in action you simple need to walk into one of their 800 stores in UK.

The results speak for themselves:

  • 1100% ROI
  • Customer NPS up 25% in 3 months
  • Store revenues up 116%
  • Saving of $50K p.a.in  telephone support to stores 

Which is why they recently won the Gartner BPM Excellence award for “Leveraging BPM Technology”. You can hear more about it in their video Passionate about Process.

So in a nutshell Strategy Execution = Strategy Translation  + Strategy Communication. It is tough but achievable.

Ian Gotts Contributor:   Ian Gotts


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