By Steve Lewis
Strategic planning is easy, the doing is much harder. All too often we see a huge effort expended in creating a corporate strategy that is launched to great fanfare, but then day to day priorities take over and nothing changes.
A well-crafted, thoughtful and relevant strategic plan gives an organisation a sense of direction and as direction is set by the organisation’s leader it should be clearly led by them. The task should not be delegated.
Once completed, the organisation is then tasked with its execution. For this to happen, functional leaders, teams, and individuals, often at a variety of dispersed locations, need to allocate the organisation’s three critical resources: time, money and people. There is never enough of these to do everything and this is where it is critical that the organisation’s leader is passionately prioritising the strategy.
Strategic plans often fall short of expectation because of a failure to effectively build the systems, processes and practices needed to delegate authority and accountability for resource allocation, and the outcomes their deployment deliver.
So let’s assume the plan is rigorous in its preparation and addresses the critical strategic options and opportunities for the organisation to pursue. How do make your strategic implementation plan successful?
Be explicit about your choices and priorities
Michael Porter, Harvard Business School’s globally recognised leader on strategic thinking and practice says that “the essence of strategy is choosing what not to do”.
If your strategy fails to make the appropriate choices, the task of communicating and aligning organisational priorities will be compromised from the outset. Further, if the measurable value created by these choices is not apparent then they are not effective choices.
Your plan needs to be explicit about the strategic choices your organisation is making. This includes considering where competitive advantage is created, what markets you will participate in, and the customers and consumers you seek to serve to the exclusion of others. These choices will eliminate ambiguity and contradictory thinking and kill off non priority noise and pet projects that are not contributing to the strategic agenda.
When you move your strategic plan into action, it’s no longer about making the big decisions. It is about the hundreds of daily decisions made across your organisation by multiple levels of management about resource allocation. The clarity of your strategic plan will impact how quickly and consistently decisions get made across the organisation aligned to the long term strategic direction it desires.
In the March 2015, Harvard Business Review article ‘Why strategy execution unravels – and what to do about it’[1], a survey of 8000 mangers across 250 organisations revealed the 52% of respondents believed their organisation invested in too many nonstrategic projects outside the agreed strategic objectives. Tellingly, only 11% thought they had the resources they needed to successfully deliver their company’s strategic priorities.
A small number of critical company-wide priorities should inform all business line or function priorities. Delivering each priority will likely require multiple initiatives by function and role. So if there are too many company-wide priorities, it gets harder for functional leaders and employees to understand how their project aligns to the bigger picture.
Complete a robust SWOT analysis
The SWOT analysis (Strengths, Weakness, Opportunity and Threat) is a well-known, simple tool to help you develop your execution plan. By being honest and clear about your organisation’s strengths and weaknesses, you can determine how these internal issues can be directly influenced, leveraged or improved. And by identifying those external factors to your organisation – opportunities and threats – you can determine whether a specific response, initiative or mitigation is needed.
Conducting a robust SWOT analysis and communicating the findings to the broader organisation, is an effective way to build awareness and understanding of your organisation’s circumstances and to provide context for the strategic choices that have been made.
A further nuance is to periodically review and assess critical changes that may have taken place both inside and outside the company and how these impact on the SWOT analysis. These can inform adjustments to the SWOT, which may mean your strategic priorities may change or evolve. This allows organisations be agile, responding to changed circumstances as they arise. Rigidly adhering to a plan that doesn’t allow for different conditions becomes a flaw in itself.
Clearly articulate your goals
For a plan to be properly executed, you need to be clear about what has to be done, who needs to do each task and when. Do this by setting achievable goals with measurable targets that can be monitored.
The components of your strategy need to be translated into specific goals that have specific targets and measures that will be actioned through and across the organisation.
For example, a strategic priority to grow revenue may be expressed by a goal that states that 20% of the company’s revenue will be derived from new products introduced in the previous three years. This sets a clear expectation that the company will be prioritising investments in R&D, market research and new capability.
Your goals need to cascade throughout the organisation, where a goal is delegated and re-interpreted along hierarchical, functional lines.
So a sales target gets chunked down into many component parts as it is cascaded through the sales structure. For example, a single revenue growth target gets divided into target for growth by channel, customer and product segment across a range of responsible managers. This still needs to keep all the relevant players’ efforts aligned to deliver the larger goal and the best way to do this is instil a culture that if you are going to miss your target the team has to come together and work out collectively how they are going to make up the difference.
Without a specific commitment or plan to consistently execute to a common agenda, individual leaders are left to their own interpretation of what they need to be working on.
Coordination and alignment across functions is a challenge many organisations grapple with. In the HBR research, participants reported that while they felt they could rely on their boss or direct reports (85%), when it comes to colleagues outside the chain of command, they could only rely on colleagues in other departments 59% of the time and external partners 56% of the time. Getting this right requires robust discussion and agreement of specific goals and measures for each division that measure their support for other divisions.
Formally audit your resource loading
An evaluation often overlooked by mangers as they move from plan to implementation is testing the organisation’s capability to execute the plan.
This needs to go beyond ensuring the appropriate financial resources are secured in both operational and capital expense budgets. The gap most often missed is a resource audit that looks at which people are actually available to carry out the necessary work. Essentially, do you have enough of the right people, with the right skill set to complete the work as well as do BAU activities?
The challenge of having enough of the right people, skills and time is even more starkly highlighted when the resource audit looks beyond functional resources to cross-functional resourcing. Typically, major strategic initiatives have multiple touch points across the organisation in order to be effectively implemented.
For example, the Marketing Director may quickly identify the marketing people needed to deliver an initiative. And they may have a view on the support required from other functions, but do not necessarily have the visibility as to these people’s total work load and responsibilities. Often they can assume these people are readily available and not surprisingly, this quickly throws up clashes with priorities that have already been delegated to these people by their own functional leader, against their functional priorities.
A resource audit, then needs to be applied to the holistic program to map the availability of people to carry out the work across all initiatives. This will identify conflicts and clashes before implementation commences and allow them to be resolved by considered prioritisation, reallocation or securing additional resources.
In many instances, the resource audit will throw up the ‘usual suspects’. That is, those resources who the organisation consistently goes to because they are trusted, capable and have strong track records. Sadly, they are typically a narrow group, with a work load that will balloon with demands of leaders looking to compete for and secure these favoured resources for their projects, if not properly managed. An effective resource audit spreads this load and seeks ways to delegate tasks deeper into the organization, tapping into new resource pools, while deepening their peoples’ experience and capability.
Structure your incentives
Most contemporary organisations include a component of incentive or ‘at risk’ remuneration (that is only paid if agreed goals are achieved) in their overall compensation plans. This allows for their people to share in the benefits of well executed strategy, while aiding the alignment of their personal performance plans to these strategic goals. Well-structured incentive plans should be developed to enable the effective implementation of strategic plans.
If the elements of good strategy are thoughtful choices, executional priorities and organisational alignment, then it flows that how people are rewarded against these elements must be consistent in both delivering desired outcomes and according to agreed timeframes.
Further, for ‘at risk’ incentive schemes to work well they need to cover goals in three key areas. Namely company, team and individual achievements. This provides balance and the opportunity to motivate and reward against multiple strategic outcomes. And this approach can avoid the demotivating effect of an all or nothing incentive scheme through providing scope for partial achievement.
It is also important for alignment that people have a clear ‘line of sight’ to the incentive goal. That is, targets are transparent, agreed and measurement understood. This way teams and individuals can track their own achievement of the agreed goals. Again this leads to motivation and self-correction if plans are off track or indeed can be accelerated or over delivered.
Consistent two-way communication to ensure alignment and action
Enormous effort is typically invested by the senior leaders of an organization in the communication of strategy and strategic priorities. Large conferences, ‘roadshows’ and ‘town hall’ meetings, glossy graphics and posters are all deployed to motivate and inform the ‘troops’ on the business direction and its ambitions. In many instances the strategy is even communicated in public forums like investor briefings or through business press which are again accessible and visible inside a business. So why do we see a consistent failure for strategy to be misunderstood or unclear?
HBR research revealed only 55% of middle managers in an example organisation, which invested heavily in strategy communication, could even name one of five strategic priorities. These are the same managers charged with the responsibility to communicate and align the people in their teams to execute the strategy. Further from this same survey, fewer than one-third of senior executives clearly understand the connections between corporate priorities.
So what is going wrong? Well in the first instance senior leaders fail to recognise that most large presentations are largely a one-way communication process. Little effort is then placed in assessing how the messages have been heard and understood; and most importantly how various groups and individuals have connected all this information to what it is they now have responsibility and accountability to do in their day-to-day efforts.
This effort in delivering effective communication is further undermined by peripheral messaging or clutter that distracts from the critical messages and priority. And if the message is not rigorously consistent it will rapidly dissipate and confuse.
So the communication task is informed by clarity and then needs to be followed up by a process that validates understanding and alignment that is then translated into strategically consistent tasks and projects across the organisation. The ‘acid test’ would be a CEO being able to ask any manager to explain how what they are currently working on is delivering against a strategic priority and be perfectly satisfied with the response.
7 steps to switching on your strategy
- Ensure your strategic plan focuses on thoughtful and disciplined choices about how to compete, differentiate and create value.
- Prioritise how your three critical resources – time, money and people – are best deployed.
- Establish rigorous priorities require tough choices that kill off irrelevant and resource draining activities.
- Articulate your strategic goals in a measurable, time bound fashion. Ensure they are cascaded and delegated into the organisation through and across functions.
- Conduct a resource audit to ensure you have enough of the right people, with the appropriate capability and availability to deliver the strategy.
- Incentives for managers need to be supportive and aligned to strategic priorities; and they need to have a clear ‘line of sight’ to how their actions impact on the achievement of strategic goals.
- Two-way communication of the plan is essential. It explains, prioritises, what is critical to be executed and then ensures this is understood and is translated consistently into the day-to-day priorities and actions of every person in the organisation.
References
- [1] Sull,D; Homkes, R; Sull, C; ‘Why Strategy Execution Unravels—and What to Do About It Harvard Business Review March 2015
- https://hbr.org/2015/03/why-strategy-execution-unravelsand-what-to-do-about-it
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