Company leaders understand what strategy is, but they have a lot less success executing a strategy to achieve results.
With all the books written about strategy and execution, one would think that how to accomplish it has been neatly figured out. But, successful execution is as difficult today as it was in the 1980s when Michael Porter made strategy an en vogue topic.
Following are three explanations why even the best-planned strategies unravel during execution, and what to do about it.
1. Not Delivering on Promises
How strategy is executed in organizations follows a predictable path of:
- translating strategy into objectives
- cascading those objectives down the organizational hierarchy
- measuring progress
- rewarding performance
All these activities are designed to increase alignment up and down the chain of command.
As it turns out, in the vast majority of companies have sound processes in place that they use to achieve strategic alignment, such as a small number of goals and objectives, and conducting monthly strategy review meetings.
Yet, the question begs to be asked: if most companies are doing everything right in terms of alignment, why are they struggling to execute their strategies?
It turns out that counting on others to deliver on their promises is a reliable measure of whether things in an organization get done-or not.
The good news is 84% of managers can rely on their direct reports to deliver on their promises all or most of the time.
The bad news: only 9% of managers can rely on colleagues in other functional business areas to deliver on their promises.
When managers can’t rely on colleagues in other functions to deliver on their promises this undermines execution, as well as leads to increased interpersonal conflicts: neither of which leads to execution or achieving desired business performance.
2. Lack of Agility
When crafting strategy, many organizations create detailed road maps that specify who should do what, by when, and with what resources.
Unfortunately, no Gantt chart survives contact with reality. Managers and employees need to quickly adapt to overcome unexpected obstacles, and take advantage of fleeting opportunities.
Such real-time adjustments require firms to be agile. Yet a lack of agility is a major obstacle to effective execution. To successfully execute strategy companies must continually adapt to changing market circumstances.
An organization needs a process that is used to anticipate, identify, and quickly adapt to changing circumstances.
3. Employees Don’t Understand the Strategy
According to research, only 14% of employees understand their company’s strategy and direction. (Source: Performance Management: Putting Research into Action (2009), by William Scheimann)
Many company leaders and managers relentlessly communicate strategy, and objectives during weekly meetings, monthly strategy review meetings, and email communications. So, how can so much communication yield so little understanding?
One part of the problem is that communication is measured in terms of inputs (the number of e-mails sent or meetings conducted), rather than by finding out if employees truly understand strategy, and objectives.
Broadcasting a message does not mean it is being received.
Another issue is leaders dilute or overcomplicate their core message. For example, a leader will introduce the strategy, and objectives—and then in subsequent communications introduce additional corporate priorities (which are different from the strategic objectives), or change their message, which evokes confusion, and a lack of clarity.
How An Organization Can Successfully Execute Strategy
The starting point is ensuring that promises are kept, and activities are getting done. Did others do what they said they would do? Measure how many promises were made, and how many were kept. Strategy, after all, boils down to how well day-to-day actions are taking place.
Second, pointedly ask employees if they understand the strategy, and if they know what are the top three organizational objectives. If they don’t—succinctly communicate your message to promote deeper understanding.
Third, a fundamental redefinition of execution is the ability of an organization to anticipate, identify, and quickly seize strategic opportunities—or address unexpected challenges. A unique organization is, indeed, one that has a process in place to increase agility.
Focusing on these factors will help your organization be more successful translating strategy into results.