CLOSING THE GAP BETWEEN STRATEGY FORMULATION AND EXECUTION
By: Jeff robinson
Winter 2020 Issue
Is it that time of year again in your organization? Time to bring the members of the C-Suite together for the annual strategy offsite. Are you excited about this, concerned, irritated about the amount of time this will take? Have these sessions been productive in the past, or have they really only been valuable for fostering better working relationships?
Hopefully, your organization has a well-structured strategy formulation and planning process that is engaging, accessible, and drives execution and accountability through all levels of the organization. From my experience, working with organizations of all shapes and sizes, the strategy formulation process frequently does not directly drive executable projects within the organization. The goals are frequently financial and there’s nothing wrong with that, they need to be there.
However, they are often lagging indicators that do not provide the structure that the executive team needs to determine what products or services should be the focus for what markets. Who is going to do what, when, and how? How do we develop leading indicators to know when we are on track, what process should we use to prioritize project for resource allocation, and how will we hold people accountable?
Defining strategy formulation is often the basis for an argument, or at least a long discussion, so we define it as:
“The set of decisions that define the nature and direction of an organization.”
If “why strategy?” had to be answered in one word, that word would be focus. In addition to guiding daily decision making and channeling the allocation of resources, a strategy establishes an organization’s identity and serves as the backbone of its culture.
Strategy defines the high-level goals from which all others cascade. In today’s constantly changing, global environment, leaders need to control their destiny and invest wisely for the future. Operational pressures are intense and can easily overwhelm strategic vision. When a major opportunity or threat appears, your business strategy can ensure that your strategic framework supports your competitive advantage. While current success does not determine future success, failure does not either.
Strategic clarity is often the first step toward extricating an organization from operational difficulty. For many organizations, difficulties can grow from an unshared vision. Getting senior management together and thinking about the future can help them to work as a team, understand where they are going, and appreciate their roles in getting there. The same is true for key business units. When a division has a clear, easily communicated strategy, it is more likely to gain corporate support.
Changes outside the organization – the market, technology, competition, and other factors – are triggers for rethinking strategy. The same is true for changes within an organization. A new leadership team, maturation from an entrepreneurial start-up to a focused enterprise, rapid growth that brings new people into senior management, a greater commitment to innovation – these are a few of the changes that can indicate that it is time to rethink strategy. It is also important to review and, if necessary, update your strategy on an annual or semiannual basis.
When working with organizations to formulate business strategy, there are three key areas to examine:
- Products/services: What will we offer?
- Markets/customers: To whom will we offer our products/services?
- Competitive advantages: Why will customers buy products/services from us rather than from others?
| Additional strategic questions that need to be answered include:
The benefits of a viable strategy, effectively implemented and regularly reviewed and updated, stem from having powerful answers to the above questions. Organizations that fail to answer these questions face huge risks, the most serious being the failure to reach sales, profit, growth, market share, and related goals. But there are other risks: poor resource allocation; confused priorities; no cohesion in product, market, supplier, and partnership decision making; and misaligned structures and jobs. Poor executive leadership is the result, and the effects are contagious. Survival becomes doubtful. The search for answers is rarely conducted in a vacuum. Much of the focus should be on implementing strategy – an area that has proven to be the Achilles’ heel of strategic success. Other objectives include:
Implementation and Execution As a result of formulating a clear strategy, many projects emerge, the execution of which leads to successful implementation. Most organizations initiate more projects than they can handle, which often leads to poor or unpredictable results. To successfully implement the business strategy the leadership team needs to focus on a few fundamental questions:
The design of a Strategy Project Portfolio, consistent with an organization’s strategic intent, is a necessary output of the strategy formulation process, providing clear strategic prioritization. Strategic projects may be identified in any or all these areas:
The creation of a strategic Master Project Plan is the recommended next step in the strategy implementation process. The Master Project Plan provides a detailed definition of each project, a sequencing structure, a project schedule, and indicates the required resource levels for each project. With an agreed and prioritized portfolio of projects identified to develop and implement the strategy, senior executives have a platform to assess and measure the implementation of the organization’s business strategy. The successful execution of approved projects is often a leading indicator that is used to determine that the strategy is being implemented successfully. Given the rate and pace of change, ongoing review of the strategy is essential for keeping the strategy vibrant, relevant, and a key tool in the continuous quest for success. Typically, executive leaders are adept at reviewing the operations and financial dimensions of the business. The strategic review process is equally, if not more, important. It focuses on monitoring assumptions upon which the strategy rests to determine if they remain valid, assessing the strategic direction to determine if it continues to make business sense, and keeping abreast of progress toward implementation. Change Management and Communication “There is nothing more difficult to execute, more dubious of success, nor more dangerous to administer than to introduce a new system of things; for he who introduces it has all those who profit from the old system as his enemies, and he has only lukewarm allies in those who might profit from the new system.” – Machiavelli “The Prince” 1513 Realistically, not much has changed in 500 years. For the strategy to be implemented successfully the broad involvement of employees at all level of the organization is required. Everyone should be briefed on the strategy with the aim of creating understanding, commitment, and answers to the questions, “Why are we doing this”, and “What’s in it for me?” The plan is modified as circumstances change, and the strategy is revised as necessary to meet changed industry or marketing conditions. To ensure those responsible for initiative delivery are adequately encouraged, supported and rewarded, ask the following:
The answers to these questions form the foundation of a change management plan and drive the successful implementation of the organization’s strategy. Strategy Implementation Barriers
Initiative roles – Strategy implementation team Team Roles
Team Members
My organization helps its clients to formulate and implement strategy with a flexible, state-of-the-art, five-phase model that is specifically tailored to each client’s unique situation. The model is dynamic and can be entered at any phase, depending on an organization’s need. The foundations of the model are identified in the following table: |
Developing an effective strategy and executing that strategy to its fullest is one of the most significant challenges that an organization will face. A careful consideration of the criteria outlined here will hopefully help your team reach its strategic goals – and make your next strategy off-site a session to look forward to.
For over 30 years, Jeff has worked with organizations to develop and execute business strategies and growth initiatives to create sustainable, profitable revenue. His focus is on implementing management strategies that improve processes within client organizations and embed critical thinking behaviour into their operating culture.
Jeff Robinson can be reached at jrobinson@kepner-tregoe.com.
