When faced with steering their firms in a new direction, CEOs can take months to craft a corporate strategy yet still fail to reach their destination. What’s missing to successfully translate strategy into action? Show Beyond blockbuster ideas and the best-laid plans, successful strategic leadership is built from the ground up, from thousands of concrete actions interweaved into the firm’s day-to-day. “Formulation and implementation shouldn’t be considered as separate processes,” says IESE Prof. Fabrizio Ferraro. “More importantly, they are not the outcome of a specific set of decisions, but rather the cumulative result of all of the decisions made by the executive team.” When deliberating decisions, senior leaders should consider the strategic, operational and political implications, says Prof. Ferraro. Decisions that appear purely operational might actually have important strategic and political consequences. For each potential decision, executives should ask:
Working within this framework, Prof. Ferraro highlights seven areas that CEOs should zero in on when charting new paths for their firms: 1. Resource development and allocationStrategic planning and budgeting are moments of truth when the firm decides where to allocate its finite resources, defined in the broadest sense of the word: financial resources, physical resources, human resources and intangible resources such as time and attention. 2. Organizational structureTo effectively address future challenges, some firms will need to reorganize their activities, redraw reporting lines and recalibrate as the strategy progresses. Structural decisions are key for companies focused on critical strategic challenges, but new structures should be considered as prototypes to revise as priorities shift. 3. Talent poolPeople are the linchpin for any change initiative. The first order of business for GMs is ensuring a solid executive team that’s aligned with the corporate strategy. They should also stay in the loop on other staffing decisions, particularly those that directly impact the new corporate direction. 4. Management systems and processesAlthough less noticeable than people and structures, management systems can be more crucial to winning strategies since they influence how things get actually done in organizations. Corporate, people and operational systems need to work in tandem to drive effective strategy implementation. 5. Stakeholder engagementInternal and external stakeholders play a pivotal role in the success or failure of corporate strategy in function with their alignment and level of understanding of the strategy. CEOs need to identify key stakeholder groups and map out their expectations to make sure they will help, not hinder, the process. 6. Informal power structuresSince organizations are ultimately political coalitions, a CEO’s success will depend largely on their ability to cultivate relationships with people that support and advance their decisions. A keen understanding of the political landscape and sources of power within the organization is paramount. 7. CommunicationTo be successful, CEOs should spend an inordinate amount of time communicating to both internal and external stakeholders – employees, the corporate board, clients, business partners, the media – and the list goes on. They need to be adept at distilling the core of a strategy down to its essence in easy-to-understand language customized for each stakeholder. Getting Things Done (GTD) is an intensive program that helps senior decision-makers build influence and drive corporate strategies within their organizations. The program is offered in two different formats, live online and on-campus at IESE Barcelona.
A great strategy or innovative product can put you in the spotlight for a moment, but you won’t last there if you don’t have a solid and strong execution. Filling in the gap between strategic planning and execution can be what's keeping you away from a proper strategic execution. Having a good strategy is not even half the battle, the real struggle is executing your strategy and keeping it going. And getting to your target goal is not the end of it, you still need another strategy to move from that point on, and so on.
Strategy execution has become a hot topic within management. It is estimated that over 60% of strategies are not successfully implemented. Senior executives have revealed that effective strategy execution is one of their most challenging matters. If you’ve ever tried to execute a strategy, chances are you agree with this statement. If you ask your manager what he thinks Strategy Execution is, he’ll probably answer something like “the successful implementation of a plan” or “follow through with your strategy”. These statements might be somewhat true, but it doesn’t really tell us everything that strategy execution entails and how to successfully do it to drive top results. A more proper definition would be “strategy execution is translating an organization’s strategic initiatives into action”. It is the crucial step after a long planning process, and it is extremely important to do it right not just to make the planning process worth it, but to obtain the best outcomes.
To sum it up, big corporations and leaders spend hundreds of hours and dollars on strategic initiatives that are often not executed as intended. This can deprive customers of innovative technology or service if a company fails to execute a marketing or selling strategy to its target customers. In the end, no matter how amazingly brilliant a strategy looks on paper, it can only shine when put into action in everyday activities. Research indicates that over 80% of strategies fail. And they fail not because they're incorrect, they fail because they're not correctly executed. Day-to-day as people do their daily work, this work is not aligned to the Strategic objectives or priorities. This results in a considerable waste of effort and resources as people from across the organization work in opposition to two other activities. A successful company relies not only on its managers’ shoulders, but also on their teams’; every employee no matter their position or hierarchy has an important role to play, and if one piece is not properly executing their job, the whole strategy could fail.
It can be difficult to change your employees’ mindset from a fully operational framework to a strategic execution framework and getting everyone involved in what the whole company needs and how they fit into those needs. Effective and successful strategy execution requires that their employees have discipline, and this is achieved through setting detailed and doable tasks to move the company strategy from paper into action. To achieve strategic goals, a strategy needs to be created through a strategic plan that can be followed. Many companies struggle with growth because their strategies are based on wrong assumptions regarding what customers want, what their teams are capable of, or what the competition is doing. Not having clear information to plan the strategy will eventually result in bumps in the road that will only delay the execution and prevent the strategy’s success. When creating your strategy, it’s important to test different scenarios, using mechanisms to identify and challenge strategic assumptions to get ahead of whatever issues are possible to appear and prevent implementation. Often organizations hold strategic planning meetings spending hundreds of hours, and therefore, money. But all of these efforts can go to waste when there are not clear strategic goals and target alignment throughout the organization, preventing a successful execution of the organizational strategy that took so many hours to plan. Do not miss the main focus during the strategic planning process, choose a vertical alignment going through corporate and business units, and choose a horizontal alignment across business units and operational ones. When discussing the strategy with your teams, be specific regarding the objectives and roles for everyone in each business unit. Keep in mind that every hour held to the strategy development should be put to good use, so leave no room for confusion. It takes way less time to get aligned than it costs not to be; each quarter people have 530 hours to contribute to victory, and it takes about 5 hours to set proper OKRs that maximize their contribution. Yes, everyone is a key piece when it’s time to execute a strategy, but it is up to the corporate leaders to verify everything is going according to plan; and this strategic plan could sometimes shift depending on the ever-changing markets. We cannot always predict how the market is going to react or respond to different situations, but we can anticipate ourselves with backup strategies and preparing our senior leaders to face these emerging threats and not waste precious time working on a strategic plan that’s bound to fail eventually. The techniques listed below are intended to help managers understand the complexities of strategy implementation and to provide guidance on the aspects that will help companies achieve a successful strategy execution.
Having a system to monitor the performance and development of the company's strategy is a key element for successful strategy execution and achieving strategic goals. When assigning your employees OKRs and/or KPIs, hold them accountable and ask them to keep you updated on their performance. Using a project and performance management dashboard can determine if underperformance is the result of a shift in the market, a misleading strategy, or simply poor execution from your team. A lot of the problems companies face today revolve around a lack of communication. Sometimes we aren’t clear enough, sometimes we are afraid to ask questions or have a hard time admitting we don’t fully understand what we have to do and just wing it expecting the best results… which obviously doesn’t work out. But the truth is that to execute a good strategy, its implementation completely depends on a 100% understanding (and supporting) of such strategy. Still, Behind a successful strategy implementation lies an effective communication strategy, one that motivates employees to thrive and avoids resistance from employees to perform satisfactorily. Employee Engagement plays a huge part here. Remember that engaged employees transmit motivation to their peers, and an employee committed to a specific business strategy can get more support towards it from other employees. Maintain a two-way communication channel between key managers and employees to continue motivating and engaging employees in order to achieve the company’s strategic goals.
Unfortunately, it’s common to see many companies failing to allocate resources strategically for the implementation of strategies. A common mistake is to heavily rely on the creation of the business strategy, planning, and OKRs and KPIs implementation. But what about the loopholes? Research shows that There’s always one or more areas where the performance is poor or there’s a lack of coordination on a strategic plan. The result of poor coordination is a substantial reduction in the overall capacity of the organization, and this is becoming quite an issue. An increase in the cross-organizational dialogue and careful communication between departments can thoroughly help identify these deficiencies and conflicts before they happen.
There are four areas organizations need to address to easily improve the likelihood of a successful strategy execution: 1. Accurately cascade the strategy down the organization and/or build the strategy up from the grassroots. This is not the ongoing debate about whether the strategy should be talked down or bottom-up, but rather the need to ensure strategic alignment whether it is established from the top-down, or bottom-up. What we see frequently is a strategy set at the top, such as “enter new markets with our existing products” gets restated and restated and restated as it's cascaded down the organization, and by the time it is reviewed at the front line that same strategy is articulated as “grow our existing markets with new products”. This is reminiscent of the child game “broken telephone”, whereas a story gets repeated from child to child and it gradually changes, until it ends up being something either somewhat or entirely different. 2. Clearly setting corporate priorities. Not all of the organization’s strategic objectives are equally important. It is critical that the organization understands which objectives are more important. Moment-to-moment departments, teams and employees are making strategic decisions between doing activity 'A' and activity 'B' without the proper framework to make an informed decision. Again, the output here is misalignment across the organization and employees working in opposition to each other. It is also important to note that these strategic priorities shift over time. Back when many of the foundational business books and practices were established, for example in the 1960s with Peter Drucker, a philosophy of annual strategic planning was established. With the current pace of business and business turbulence, we feel that in many cases even a quarterly strategy update is too infrequent. The COVID lockdowns of 2020 are a classic example where annual or even quarterly strategic refreshes are too infrequent. 3. Strategic goals and objectives need clear owners to ensure success. People need to know what they're accountable for, and even the type of accountability they have. This is where Concepts like RACI and RAPID allow for clear role clarity and responsibilities. Frameworks that ensure all of us work the right way on the right tasks. 4. Establishing a learning organization. Someone once said, “every strategic battle plan fails on first contact with the Enemy” (not the exact quote from Helmuth von Moltke the Elder). The same happens in your organization. Day to day as the markets change, your product development process moves forward (or not), competitors enter and leave the market, etc., the plans you made at the beginning of the year quickly get outdated by day-to-day events. It is critical that you build into your organization the ability to quickly gather data, put it into strategic contact, learn from what is recorded, and act with agility in response. This practice of agile management will differentiate the winners from the losers. |