By Mike Loughrin, CEO of Transformance Advisors
Strategy Failure Runs Rampant
An astonishing 95% of employees are unaware of, or do not understand, the strategy for their organization, as reported by Robert Kaplan and David P Norton in the Harvard Business Review.
This lack of understanding is a significant reason that a vast majority of organizations fail at strategy execution, with some studies suggesting that up to 70% fail due to poor execution.
Beyond the pain of failure, you can add the well worn notion that a mediocre strategy well executed is better than a great strategy poorly executed.
Don’t simply hope for a good roll of the dice when it comes to effective strategy execution. You can dramatically improve your chances of success by following a systematic approach which leverages four key elements:
- Three to five strategic initiatives
- Everyone engaged and aligned
- Executive leadership for each initiative
- Refinements and course corrections
Let’s look closer at each of these four key elements.
Three to Five
You cannot be effective with a weak foundation. You must start with three to five strategic initiatives that are the top priorities for achieving the vision of your organization.
Specifically, your executive leadership team needs to craft a strategy using a rigorous process which includes:
- Stakeholder Input: This would include owners, executives, employees, customers, suppliers, and the communities where you operate. You can use surveys or meetings to collect feedback on how things are going and what could be a goal for the future.
- SWOT (Strength, Weaknesses, Opportunities, and Threats) Analysis: An objective assessment of your organization in terms of internal and external factors. Your leadership team needs to debate and rank the factors in these four categories.
- Value Stream Assessment: The evaluation of your critical business processes and how you deliver value to your customers and other stakeholders. Your leadership team needs to have an open discussion on how well your processes meet customer expectations and how cost effective they are at delivering results.
- Planning Retreat: A time for your executive team to debate and discuss the critical inputs; refine the vision, mission, and values for your organization; and then identify the three to five strategic initiatives required to close the gap between where you are and where you want to be.
This first element in effective strategy execution is critical. If you do not have a great strategy in terms of three to five well formulated strategic initiatives, then you have no chance at implementation.
For those that do not have the foundation in place, you need your leadership team to step up and make the hard decisions about where your organization is going and how it will get there.
For those that have a solid foundation and have a good to great strategy, the next key element is to get everyone engaged with the vision, mission, and values and ready to help with the strategic initiatives. This involves:
- Engage the Team: Taking the output from the executive planning retreat and communicating to everyone in a manner that will generate excitement and commitment. Each strategic initiative needs to be clearly articulated, including the introduction of the executive sponsor responsible for ensuring success.
- Implement the Stop List: Some initiatives will be new, while others will reflect programs and projects that are already in process. The big opportunity for many organizations is to evaluate current projects that do not align with the new initiatives and wind these unaligned projects down quickly. This will free up resources and send a message that the new strategy is the only game in town.
- Measurement Workshops: Performance measurements need to be reviewed and aligned with driving behaviors that will take you where you want to go. The vision should have been developed in terms of a balanced scorecard and this will provide an excellent format for the review and adjustment of other performance measurements.
This second element in effective strategy execution gets everyone engaged and aligned. It is a powerful aspect that should not be underestimated. If you have three to five solid strategic initiatives that have not been communicated or you have not implemented the stop list, then your chances of success are minimal.
For those that have not engaged the team, you need to step back and accomplish the three items outlined above – the sooner, the better.
After everyone is engaged and aligned, the next key element is to take a disciplined approach to managing each strategic initiative. This disciplined approach includes:
- Initiative Workshops: Each initiative begins with the executive sponsor directing the development of the business case and securing the resources in terms of people and other expenses required to succeed. There should be a formal launch meeting where the team is brought together to review the business case and develop a list of projects that will be required. An initiative is not one huge project that takes months or years to complete; it needs to be a combination of projects that run 60 to 90 days and deliver frequent incremental results.
- Improvement Projects: All improvement projects need to be directly linked to and sponsored by one or more of the strategic initiatives. The scope for each project should be clearly defined and the project team should be organized for success. While the executive sponsor does not need to be intimately involved, they do need to support each project team and must be able to provide guidance and clear road blocks.
- Individual Plans: Most value added work comes from individuals working as part of a team. It is critical that action items for each project are assigned to the right individual and that these people have the time, talent, tools, and desire to accomplish the task at hand. This includes actions such as pulling together a small group to brainstorm for solutions and implementing an improvement.
This third element is the workhorse when it comes to effective strategy execution. It as an absolute imperative for each strategic initiative to have a fully engaged executive sponsor. This does not mean that the executive sponsor is in every project team meeting or that they need to approve every decision. It does mean that they are committed to success and have prioritized their workload accordingly.
For those that do not have executive leadership for each strategic initiative, you need to step back and revisit your priorities. The best practice is to assign each strategic initiative to an executive sponsor without any individual having more than one.
Turning initiatives into projects with action items will get you going with a great start. Then, something changes and you need to react. You must have processes in place for the routine assessment of your progress and the ability to make course corrections to meet new challenges and new opportunities.
- Performance Review Meetings: The balanced scorecard of performance measurements should be reviewed monthly. Those areas with poor performance require root cause analysis and development of action items to correct the root cause.
- Quarterly Individual Plans: The action items and projects related to each strategic initiative should all be tied to individuals along with a quarterly review process. Success should be celebrated while issues with meeting deadlines will need root cause analysis. It is very common for people to over commit when creating their quarterly plan. They may be assigned too many projects and have too many action items. The quarterly review cycle is a great tool to ensure balance and maintain focus on what is important.
- Quarterly Initiative Reviews: The status of all strategic initiatives should be reviewed once a quarter. There should be significant progress in terms of completed projects and new projects. This also provides an opportunity to adjust resources or react to changing conditions. Some propose that you must be more flexible and make daily or hourly course corrections to your strategy. This seems excessive. While a major event could lead to the need for immediate change, most organizations would benefit from keeping a focus on their vision and letting people execute the action plans that everyone believes in.
This fourth element could be the silver bullet in terms of effective strategy execution. A disciplined approach to routine reviews that allow for refinements and course corrections is absolutely essential.
For those are do not have a system in place, you need to set up the structure outlined above and establish the routines that promote the accomplishment of action items, projects, and strategic initiatives.
Summary – Strategy Development and Execution
Leveraging the four key elements of effective strategy execution will dramatically improve your chances of success.
We began with the depressing situation where 95% of employees are not engaged and that most strategies fail.
The imperative for all organizations is to take a systematic approach to strategy execution that involves:
- Three to five well defined strategic initiatives
- Everyone engaged and aligned with the vision and initiatives
- Executive leadership for each initiative
- Refinements and course corrections along the way