According to the Conference Board of Canada , the most enduring item listed in the challenges facing CEO’s is strategy execution (2008). The adage, “Dear CEO, when you get tired of telling the strategy storyline, you have reached three percent of your target population” appears to hold a kernel of truth. In this blog, we want to highlight three of the most pervasive ill-advised practices that consistently undermine the effectiveness of executing on strategy.
Practice 1: Discounting the Impact that Culture has on Strategy Execution
When strategy fails to translate into tangible results, CEO’s often point to the lack of a performance culture in their organizations. To be clear, there is room for improvement. Research shows that 33% of organizations delay action in dealing with underperformance, 34% address underperformance inconsistently and 11% tolerate underperformance indefinitely (HBR, 2015). However, the corporate cultures of most organizations do not foster the coordination that is so critical to execution. Effective execution of strategy requires the ability for organizations to support decision-making and action at all levels. Frequent and direct intervention from senior leadership encourages middle managers to escalate problems, issues and conflicts and then to step away, awaiting resolution. This tendency erodes the abilities of middle management to collaborate effectively and work things out with colleagues in other departments, thereby stalling progress of strategy execution.
Practice 2: Resistance to Change Compounds Barriers to Strategy Execution
When executing on strategy, adopting a change in approach or adopting a new way of conducting business is inevitable. Typically, creating the “burning platform” where the case for change is articulated effectively is where most of the battle is won or lost. However, convincing people that the chosen approach is the right approach often proves to be more challenging than first thought. Constantly changing realities, new information, competing priorities and political agendas can support or undermine the willingness of stakeholders to support or resist a change. Small items of disagreement can quickly compound into major issues of disconnect. This makes it essential that a clear understanding of stakeholder requirements be built into the strategy and how it is executed, an unequivocal (and simple) statement of strategy and clearly articulated performance measures with feedback mechanisms be established. Consistent, relevant and appropriate ways to communicate the strategy and how to execute it needs to be spread into all corners of the organization, offering opportunities for people to genuinely raise concerns without fear of being labeled as undermining the forward progress of the organization.
Practice 3: A Great Strategy is ONLY a Good Start!
According to McKinsey Quarterly, 32% of global organizations indicate that better methods need to be developed and implemented to monitor progress against their strategic plans (2007). A good strategy is seldom sufficient to motivate effective execution. Fortune Magazine estimates that approximately 95% of people in a typical workforce don’t understand their organization’s strategy, including people in more senior levels of leadership. Execution commitment is not for sale! It is something that has to be earned the hard way, typically by creating a sense of ownership in employees. It is well known that communication is integral to increasing employee ownership of the organization’s strategy; however communication is not synonymous with understanding. Employees filter information, past experience influences their interpretations of the strategy and they are, many times, unable to “connect the dots”.
In conclusion it is becoming increasingly clear to us, as we support organizations with strategy execution, that the interdependence of factors in the strategy needs to be clearly spelled out for people. Responsibility, accountabilities and clear parameters of scope of practice for decisions and actions needs to be clearly outlined and agreed upon. Areas of overlap need to be outlined and collaboration principles defined for all involved parties. Organizational structure needs to be considered ahead of the roll-out of a strategy. Will the organization’s structure create tensions, support collaboration or result in turf wars? Managing change, managing resistance and communication are required pre-requisites for effective strategy execution. Increasingly, we are finding that shared stakeholder communication models, is proving to be more successful than pure senior leadership led communication models.
Conference Board Survey of CEOs, Conference Board. 2008. Franken, A., Edwards, C., Lambert, R., Executing Strategic Change: Understanding the Critical Management Elements That Lead to Success. California Management Review, Vol. 41, No. 3, Spring 2009.
Why Strategy Execution Unravels and What to Do About It. 2015. Homkes. R., Sull. C. & Sull. D. Harvard Business Review. March 2015.
How to Improve Strategic Planning. 2007. Dye , R. & Sibony, O. McKinsey & Company, McKinsey on Finance, www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/how-to-improve-strategic-planning. Autumn 2007.