The strategy-to-execution gap is an enduring problem with no easy solution. You can't have a strong execution without a strong strategy.
In today's tumultuous environment, an agile approach is useful when designing and executing strategy. A 'plan-do-refine-do' approach is required to execute strategy well. Companies can no longer define a plan over many years and then just do. Strategy is a continuous process.
“Plans are only good intentions unless they immediately degenerate into hard work.” - Peter Drucker
According to a global survey of 700 executives across a variety of industries conducted by Strategy&, the strategy consulting division of PwC, only 8% of company leaders were said to excel at both strategy and execution. Executives say that they lose 40% of their strategy’s potential value to breakdowns in execution.
Start with your identity and goal
A good strategy starts with knowing the strength of your organisation, where you want to play and how to compete. One way is to answer the question, 'What business are we in and what business are we not in?'
HBR data suggests that:
High-performing teams, compared to lower-performing teams, spend 54% more time first setting direction, crafting a vision that serves as a guiding light for decisions regarding resources
When it comes to execution, lower-performing teams spend an astounding 83% more time fire-fighting and dealing with issues at a tactical rather than strategic level
We see it important to set precise and clear goals. The more clear you are in describing goals, the more likely your team will be able to achieve the goal. This will then lead to a successful strategy execution. High-performing teams successfully shape the future, rather than always being in a reactive mode in the present. There is always a vision.
Also, strategy is not about sloganeering. An example of sloganeering is such as "Our strategy is to be the best". This type of 'strategy' does not mean anything without a solid plan.
Get stakeholders buy-in and inputs
A strategy is seldom a top-down approach. Strategy is a combination of a top-down and bottom-up approach. It is not a "Strategy is now made; let's implement it" approach. The top-down drives the identity and goals as discussed earlier.
With bottom-up approach, more insights can be obtained and there is inclusive task planning. However, the strategy process gets longer as more stakeholders get involved. Also, when many ideas are sifted and rejected, the team morale may suffer.
Therefore, the right balance between both approaches is important. This should be done by weighing advantages and benefits and it should not be so rigid.
There are many ways to do this such as giving teams autonomy with budgets to try different projects that is in line with the top-down goal/ strategy. This worked in Intel where engineers were given different budgets to try innovative projects.
Some projects failed. But one project was particularly successful and made Intel into one of the most successful technology companies. This project discovered the 'Pentium' chip.
Communicate with the organisation
Communication is also important for strategy to be well executed. Communication should not be measured by how many e-mails and newsletters were sent out on strategy or how many town hall meetings were held.
Communication itself is not sufficient if the organisation does not understand. Therefore, communication should be measured by how well key leaders and employees understand what’s communicated.
“If there is one thing I have learned about communicating choices, it is that we always focus on what the choices are. I now realize you have to spend at least as much time on explaining the logic behind the choices.” Sly Bailey, CEO of UK newspaper publisher Trinity Mirror
In medium to large organisations, employees often need to work together across organisational silos to tackle cross-functional challenges. It requires decisions and actions at all levels and departments.
Cultivate a new habit
Organisation habits have to change to be able to have strategy successfully executed. Identifying and countering bad habits that keep your strategy from getting executed is not an easy process.
There is some good news. In a survey conducted, McKinsey found that the strategic importance of capabilities is apparent around the globe.
But regardless of region, though, most executives agree that they are not building capabilities for purely competitive reasons. This is surprising as the global competitive environment becomes more intense and technological changes are rapidly advancing.
Getting strategy done well often calls for trade-offs between delivering short-term results and implementing foundational changes that require time. It is important to consider capability development for the long-term, rather than for immediate results.
There will always be legacy systems and processes, where employees are resistant to change. You will also need to re-design corporate learning programmes for employees to learn new skills and form new habits.
More than often, organisations find themselves having a disconnect with strategy. This happens when strategy is not well planned and/ or planned strategy is not executed well.
Over a prolonged period of time, employees will face strategic burn-out when intended results of strategy are always not achieved. This is known as the strategic stress and was discussed in our earlier article.
What is your greatest challenge when planning or executing strategy? Share with us by leaving us a comment. If you require more information or assistance on developing your corporate or business strategy, contact us. Subscribe to our newsletter for regular feeds.
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Azcentral, The Difference between Top-Down and Bottom-Up Strategic Management, https://yourbusiness.azcentral.com/difference-between-topdown-bottomup-strategic-management-17085.html, updated 18 April 2018
Forbes, The Importance of Strategic Focus, https://www.forbes.com/sites/annlatham/2017/11/12/the-importance-of-strategic-focus/#354a9d50587d, published 12 November 2017
HBR, Many Strategies Fail Because They Are Not Actual Strategies, published 8 November 2017
Strategy + Business, Strategy or Execution: Which is More Important?, https://www.strategy-business.com/article/cs00005?gko=085dc, published 1 June 2002