Having adopted a new strategy, the life of the company is changing. More precisely, it should be so. However, it does not always happen. Many managers know a lot about how to make a strategic plan, but very few have the knowledge and experience to implement it.
It is especially difficult for companies that are formulating a strategy for the first time. The lack of expertise in strategy execution can have very serious consequences. Without attempting to provide exhaustive guides to action, nevertheless, I will try to highlight the most typical mistakes encountered in strategy execution and identify the main key points to its successful implementation.
A strategy execution is an independent discipline, and at the same time an integral part of a strategy
As one general director said, “the strategy is simple, its practical execution is not easy”. Execution of the strategy looks like a cart with several horses: if not all horses are pulling in one direction, you will not go anywhere. The job of a shareholder or general manager is to unite the efforts of all participants in one direction. It is important to understand that strategy execution is not just a task for several managers and executives. In fact, it is a job for the whole company, for each of its employees, starting from the first persons and ending with the fighters on the front line: sales and customer service managers. The key to successful strategy execution is to communicate strategic objectives to all employees clearly and convincingly, without exception, so that they become committed and motivated to perform.
But let’s look at it step by step. First of all, we need to decide on the execution model. The strategy is multidimensional. The theory of competitive (or comparative – as in the original) advantages of Michael Porter, for example, makes it possible to get an idea of market leadership. In the analysis of more specific plans, William Sharp’s capital asset valuation model, or the more modern theory of real choice (or the concept of real options, Real Options Analysis ROA), may play a similar role. It is also useful to draw on the work of David Norton and Robert Kaplan for holistic strategy execution management. However, when it comes to change management, there are few practical guides. Nevertheless, a few basic, fundamental aspects make it possible to implement a strategy.
Primarily, it is important to agree upon critical variables, on which formally and informally one can understand the pace of progress
At least among the managers of the company. These parameters will be milestones, concerns and discussions in the development and execution of the plan. Without such a clear understanding, managers will say something like “Tasks are assigned” or “The ball is in ‘your’ court, waiting for the next step”, and this will be the execution plan. This approach does not lead to anywhere.
Remember the plan. Often, strategic development plans, carefully designed, with which all managers agreed, subsequently remain forgotten. Needless to say, business planning is a subject of separate detailed consideration. The implementation of the strategic plan requires regular attention. It would be good practice to hold separate regular meetings on strategy implementation, rather than attempting to squeeze them into a regular meeting agenda where current issues discussed. It is very useful to integrate the strategy into the daily work, but make sure the strategic issues have enough attention and managed properly, not alike regular ones. Especially considering the fact that the company’s management is usually overwhelmed with operational issues. However, it is prudent to separate the issues of strategy execution and management of regular processes.
In addition, it is necessary to translate the adopted strategic decisions to all levels of the company, make it clear, transparent and, more importantly, part of the daily work. It is important that each employee in the company understands his or her role and contribution to strategy implementation. Critically detailed plans for solving strategic tasks should be focused on strategic goals and indicators, decomposing them. If the indicator mapping missed during strategy development, this gap should be filled.
Project program management is one more component of strategy execution. This aspect becomes especially important if decisions made to invest in production modernization, renovation of fixed assets or expansion of activities. Most often, the projects of the strategic program are diverse in terms of topics, resources required and approaches to their implementation. It is critical to provide a carefully planned strategic development program with necessary resources.
So, for example, in a project for a development a new business line (for example, additional service for clients) personal qualities of people will be critical. The charisma of the person in charge and the energy of his team members will determine whether the new service will work and whether clients will pay extra money for it. On the contrary, in a project for a structuring and optimization of business processes, the first role will be played by such the competences, on the basis of which the system skeleton of business (so-called process framework) is created and fixed. Workability and quality of processes, comprehensibility of regulations, the possibilities of their subsequent optimization, and, in the future, automation depend on the methodology, consistency of approach. Or in the project on management skills development the quality and level of provider’s services will be crucial. It depends on its experience, opinion on training, ability to find common language and understand management problems, for how much the general level of the company’s employees will grow.
Each project of a strategic development program requires certain resources, some of which are critical not even for the success of the project, but simply for its completion. If a company does not have such resources, it is time to think about how and where to get them from.
I often meet situations when clients say “we are really good at project management”, implying that we can easily deal with a strategy execution. Such statements are more often made by companies where the project activity is a core one, such as construction and installation. For example, one of the clients that I helped develop a growth strategy had difficulties in implementing a strategic development program for over a year. Some of the twenty-four projects that make up the program, which are not the most critical, have been implemented, the rest things hadn’t got forward an inch. The client formulated the main reasons for this situation in the following way:
- no time to solve strategic tasks
- there are no people to carry them out
In my opinion, the reasons are somewhat deeper. The main reason was that their view of the strategy execution reduced to only the program projects that were entrusted to individual managers. The rest of the aspects of strategy implementation remained out of focus. It should be noted though that it was the very first their experience of strategy development and execution. Meanwhile, the absence of both the strategic management system itself and the desire to build it led to a delay of more than two years in achieving strategic goals.
At the same time, management of the strategic development program is only a part of strategy implementation. Project management related to the strategy implementation only in the part that such a program should be managed.
The work of each employee should be focused not on daily routine operations, but on changing them
The main plot of changes is the restructuring of the company at all levels in accordance with the strategic vision. This is another important point. Any strategy involves organizational changes. They may be significant or, conversely, minor. However, if you do not make the necessary changes, your strategy has many chances to be destroyed by the existing structure.
So, for example, when developing the strategy for the FMCG holding company, in which I helped, among others, it was decided to make a new segmentation and change the structure of the product portfolio (partial replacement of products, changes in branding, distribution channels, etc.). The idea was to narrowly focus the products on their respective segments. In fact, the logical next step was to allocate several business units for these purposes, probably “virtual” for the first time. This aligned with the growth plans and allowed to get a group of independent businesses for each segment of the promising market in the near future. However, no changes were made in the structure. Instead, the head of the product marketing department was instructed to “prepare and make changes to the marketing materials”.
As a rule, an adoption of a strategy requires alignment of a structure in accordance with the strategic vision. This is not only and not so much a question of organizational structure. It is often necessary to change the business processes of a company, reorganize business units, and adjust functions and role of a management company. Having a plan, formulated and drew up competently, of such changes helps a lot to ease an organizational structure alignment that only follow the strategy.
Quite often, it is necessary to form a team to support a strategic development program. Success of strategy execution will largely depend on the competences and abilities of these people. Such team should include employees of different levels in order to avoid the situation when a work on a strategic task becomes a job for a one narrow specialist only. If the task or its part is outsourced, it is important to include the company’s employees in the project team.
To manage project team and maintain its effectiveness, it would be useful to establish a strategic office, perhaps a small one. Its functions include, among others, preparing reports on strategy execution, which should be regular. An important point is to define a system of indicators, based on which you will assess the progress of strategy execution. The best way to do this is to take a widely known approach such as the Balanced Scorecard. It allows you to form a holistic system of measurement, focused on a strategy.
In addition to required organizational changes, it is crucial to involve every employee in its discussion, detailed plans and, ultimately, execution. Undoubtedly, it is difficult to overestimate the leadership role of the company’s top executives. It is not uncommon to observe a situation when managers talk about lack of time to solve strategic tasks. In other words, strategy execution becomes a kind of an optional activity, which is done in the time left from the “main work”. This approach certainly needs to be changed.
The main and the most important job for managers is to execute the strategy
Remember the example that is often brought up in a time management training? The one, when large, medium and small balls placed in a large vessel? The vessel symbolizes the limited time, and the size of the balls – the importance of things and tasks. If you first fill the vessel with small balls, and then try to put large balls in it, we will clearly see that there is no room for them. Conversely, by placing the largest balls into it first, consistently adding smaller ones, we can easily fit all the cases. So, strategic goals are the biggest balls.
Last, but not least, evaluate the progress of the strategy execution regularly. When you have identified critical variables (do you recall the very first point in the article?), do not forget about them. Communicate and discuss! Create a unified, holistic picture of the progress of the strategy, summarizing the opinions of all involved employees.
Also, do not forget that the challenges are constantly changing. Sometimes it is necessary to adjust, and sometimes revise, previously made decisions. To avoid voluntarism in this matter, you need a regular process. And, of course, it is important to assess the progress as objectively as possible. However, strategic indicators are a rather extensive topic, which we will consider in a future article.
The article was published as well in the magazine “On the Executive’s Desk” in issue 13 of 26.03.2012.