Translating Strategy into Action
Posted by Randy Harrod on Aug 14th, 2011
For every successfully executed strategy, there are probably 10 strategic plans – many of which are rather impressive and complex, resulting from collaboration between a top management committee and expert consultants – now gathering dust. Among those that are adopted, according to a landmark Fortune Magazine cover article, “Why CEOs Fail,” nine of every 10 strategic plans fail, with 70% falling short due to poor execution, not poor strategy. A survey of companies found that roughly two-thirds of strategic plans weren’t reflected in operating budgets or employee performance incentives, and 90% of these strategies weren’t discussed sufficiently to ensure employee understanding. For many companies, annual strategic planning had become a meaningless and painful exercise, disconnected from the urgent short-term issues that dominate management attention. Such failures represent a costly squandering of business resources and opportunity. They can also breed a cynical company culture due to disappointment and confusion as stakeholders mourn their leaders’ lack of true buy-in and implementation discipline. Many CEOs flit from one reactive ‘strategy’ to another, ignoring the need for linkage with day-to-day operating issues, effective company-wide communication, preparation, and follow-through.
As we often say in C12, “What you can’t measure can’t be taught, rewarded, or managed.” The reason most strategic plans aren’t executed is the gap between what we say, after a periodic strategy session, and what we do given the day-to-day realities of our business. This is why a basic strategy, that simply implements a few well communicated new objectives and initiatives that incrementally move the company toward our vision, is far better than an elegant strategy that our team and stakeholders won’t have the time or opportunity to understand, let alone benefit from!
It’s also true that while a strategic plan may focus on particular areas which require increased attention over the next few years, we must be able to actually resource it while continuing to monitor and manage other areas to ensure that we stay on track overall. The reality is that our strategy depends on achieving certain things that will enable other things to be feasible later. Given unpredictable market dynamics and the certainty that a few crises will arise to complicate things, we need to continually discuss our strategic priorities and our readiness to resource them. In this process some metrics are leading indicators (e.g., backlog or delivery time) and some are lagging indicators (e.g., customer or employee survey results). This is why the notion of a management dashboard, a simple visual representation that combines both strategic and operational key metrics, is so helpful.
Once we’ve gone through the process of breaking our high-level strategic objectives (the what and why) into their operational or project-related drivers (the who, where, when and how) and have made sure that our team has their own ‘local’ goals in alignment, we’re ready to adopt dashboards at both the company-wide and departmental or team levels. Since delegation and follow-up is the key to strategy implementation, be sure that each key manager has their own version of localized deliverables tied to the top-level strategic objectives of the company. A simple format which lists their action plans by quarter, along with their current status, can be used along with a quarterly CEO strategy review session and state-of-the-business review to keep everyone aligned and on-track. It’s also a good practice for larger organizations to have similar cascaded goals and key performance indicator tracking in place at yet another level below the key managers (e.g., product lines, critical processes/functions, etc.).
It’s incumbent on the CEO to (1) know what “drives our economic engine,” (2) stay current with how our team is doing against plan, and (3) provide continuing communication and reinforcement regarding the themes and counter-measures necessary to keep a plan alive and well as it’s being executed. In fact, the annual process of sharpening our strategic plan and leading our team toward its implementation is the principal way a CEO delivers on the promise and potential of any business. CEOs are to lead and enable others, not just be owners and hardworking ‘experts’. Scripture is clear that we’re responsible for what God has entrusted to us, and this includes producing fruit consistent with the opportunities given us (e.g., Haggai 1:5-6, Mt 6:19-21, Mt 25:14-30, Lk 19:11-27, 2Cor 5:10, Eph 2:10). Our opportunity is to “Build GREAT Businesses for a GREATER Purpose.”