5 tips on how to successfully execute an Operational Strategy
Trying to develop and deploy operational strategy throughout your organisation can be a major challenge. However, ensuring that all related change activity is wholly co-ordinated towards meeting these goals can prove even tougher.
All organisations have the need to change what they do, how they look and what services they offer in order to remain competitive and attractive to customers. This need to change and become fit for the future can be a difficult distraction given that the performance of today’s operation also needs to be managed.
Here are 5 tips to help you successfully execute an operational strategy, based on my experience working with various organisations and industries.
1. Setting the appropriate strategic objectives at the outset
Having an appropriate number of strategic objectives is very important. From my experience there should be a maximum of 5 top level objectives and maybe as few as 3. Deciding on these for the business or organisation can be difficult which is why senior executives typically need to debate and discuss these multiple times before they can be agreed.
“Businesses often list 15 or 16 objectives to start with which rarely have a specified time frame or are not particularly specific or measurable.”
The old acronym of SMART (Specific, Measurable, Achievable, Relevant, Timebound) works well to sense check whether an objective is appropriately formulated. Some of the top-level objectives may be to be delivered within 2 years, others may be up to five years.
There is a strong argument that setting the strategic objectives is the most important element of strategy deployment. If the strategic objectives have not been constructed effectively, the whole cascading process is likely to be very difficult, with different people having their own interpretation of what each objective actually means.
2.Break down the 3-5 year strategic objectives into shorter time frames to add focus and emphasis on delivery
I typically advise my clients to use an annual process for strategy deployment. This allows the organisation to review the longer-term objectives but also focus on the next 12 months to ensure there is a high level of urgency and progress in the right direction in the short term.
So, for example, if a finance operation created a three-year objective to improve right first time on-time of invoice processing from 76% to 98% they might decide they want to achieve half of this improvement in the first year. In this example, they would need to achieve 87% by the end of next year.
“Having clear annual objectives allows the business to track progress throughout the year (typically monthly) but also align improvement activities in the near term to
focus on that goal.”
In our invoice processing example, there might be multiple improvement projects linked to that objective such as standardisation of documentation, data validation implementation, supplier engagement to submit complete & accurate invoices etc.
3. Review the existing programmes and projects for alignment with the newly defined strategy
A key part of the strategic deployment process is to align the improvement priorities with the strategic objectives. This often requires aligning the current improvement programmes and projects with the strategic objectives to identify gaps, any conflict or duplication. This may not be comfortable for all stakeholders of the business as they often see their own initiatives as the most important and will stake a claim to keep them running.
It is also very common for an organisation to identify multiple projects which are not aligned to the strategic objectives set by the business and in many cases those projects may have conflicting benefits and purposes.
Organisations that effectively deploy their strategy will challenge current projects and make decisions to modify and potentially stop them or other planned initiatives.
New improvement priorities may need to be designed which closely align to delivering the strategic objectives.
4. High levels of understanding and ownership of the strategy deployment process throughout the hierarchy and across different operations
Unfortunately, the strategy deployment process often stops at a senior level and programmes and projects are expected to deliver the required improvements to achieve the set objectives without cascading a good understanding of what the strategy is and how it will be achieved.
The best examples I have witnessed of good practice are from organisations that successful deployed the process down to multiple levels of the hierarchy.
“This sounds simply like pushing down targets and deliverables but if each level of the hierarchy is challenged to come up with their own solutions and plans and their own proportions of the objectives this can be a very engaging process.”
This process is often known as ‘Catchball’ and involves the back and forth negotiation of how the annual objectives will be delivered and in what timescale.
A strategic objective of improving right first time on-time of invoice processing of 76% to 87% by the end of 2016 may have been deployed, but how that is going to be achieved and the innovation required may be determined by the operational management team at each level. For example, if invoice processing in the organisation has been split by countries or suppliers, each operational team may have a different target. If all areas meet their targets the overall 87% would be achieved.
Again the best examples I see of effective operational strategy execution is when every individual in the organisation is able to talk me through the top objectives of their area of the business, the current focus to improve and how they are performing currently against them. Providing wide awareness training alongside a simple cascading method that is easy to understand makes this achievable.
5. A robust and structured mechanism to track progress throughout the year
Over the years we have witnessed organisations put a great deal of time and energy into creating their strategy deployment objectives and plans (especially towards year-end) only for the focus to drop a couple of months into the year.
“A robust and structured mechanism to review the associated success measures of the improvement priorities is required to track progress (typically on a monthly basis). If kept simple and up to date this will help focus managers on the breakthrough activities as well as the day to day running of their operations.”
This also can trigger root cause problem solving when measures are not on track and create the appropriate actions required to get things back on course.
The success of strategy deployment relies on the implementation of 3 key stages:
- STAGE 1: Capturing and defining your strategic goals.
- STAGE 2: Cascading goals to individuals and teams.
- STAGE 3: Systematically reviewing goal achievement and instigating actions at all levels of the organisation.
Many organisations fail to see beyond stage 1 and 2 and are frustrated that the strategies they have created are not being fully achieved. Find out more about our approach to strategy deployment and how we have helped many organisations successfully deploy their operational strategy in a range of business sectors.