Why Strategies Miss The Mark In Execution
The Strategy Institute for Thought Leadership (SITL) is the research arm of Method Frameworks, surveying and interviewing top executives from leading companies around the world to consolidate meaningful analysis for businesses. Over the past 18 months, SITL collected data from a sample of more than 5,000 executives, managers and planning practitioners as an ongoing part of our research program. Our research is conducted in hopes that business leaders can learn from what other organizations are doing well and poorly. In this article, some interesting results from this research are shared and interpreted related to strategy and execution.
Our research focused on learning the approach organizations were taking in strategic planning, the extent to which they were positioned to execute on strategies once plans were developed and the results they felt they were achieving.
Data was collected over an 18 month period from a sample of more than 5,000 executives, managers and planning practitioners. Views from the Chief Executive down to lower-level managers were captured to provide a more holistic view of the strategy process and implementation results.
The survey demographics by title are shown in this graphic.
To shed some light into problems with strategy implementation, we organized survey results across three categories:
- Category 1: Formalized Planning
– Is there a process and how deep does it go?
- Category 2: Effectiveness
– Is the strategy being measured and how well is it working?
- Category 3: Plan Realism
– Was the strategic plan set up to be realistic and achievable to begin with?
While execution can go awry for a variety of reasons, it is always helpful to understand the cause / effect relationships that exists between actions or omissions and the outcomes or results. In this case, Categories 1 and 3 from survey could be considered at least partially the “cause” of execution problems and Category 2 the “effect” or realization of those problems.
Category 1: Formalized Planning
Let’s look at the data in the first category, then do some interpretation of what it indicates.
While it is encouraging to see that a majority of respondents believe their organization is following a formal strategic planning process, it is distressing to see the number at less than 60%. All companies should have a strategy and plan to execute it, but without a repeatable process to follow – it is hard to imagine the results could be stellar.
The lack of contingency planning, however, was alarming. More disturbing yet, barely more than half are doing any formalized operational planning, which is the lynchpin connecting strategy to execution. Likewise, without prioritizing strategic initiatives, all goals are in competition for resources simultaneously.
Also of interest (although not reflected in the results above) was the finding that less than half of the respondents felt that the executive team knew their organization’s mission statement or core values well enough to recite them.
Category 2: Effectiveness
The data from Category 1 was the prelude for what we found out about strategy execution in this category. Since execution requires far broader employee involvement than the actual strategic planning process, problems in execution quickly become apparent in the Category 2 data.
These results clearly indicate that the vast majority of respondents were unimpressed with there own organization’s execution of their strategy. This can be attributed to the fact that accountability below the executive level appears to be missing in more than half of the organizations and that only 32% of employees understand their organization’s strategy. Clearly, managers need to do a better job of relaying consistent and concise messaging to their employees so that the strategy is known, understood, and feels real as well as achievable. Employees must know how the strategy is applicable to their part of the company and valuable to the customer.
The weak showing on metrics and measurements is not surprising, given the lack of strategy push-down into the organization. Likewise, with the lack of goal prioritization and exhibited in Category 1 and strategic understanding largely missing at lower levels of the organization, it is understandable how non-strategically aligned initiatives could be as big a problem as it appears to be in these results.
Category 3: Plan Realism
The data from Category 3 indicates a strong correlation with the issues identified in the Category 1 and 2 data.
Unrealistic strategic plans fail. They must be founded on well understood and agreed upon priorities at the executive level, then execution must be planned meticulously with regard to how the work will be accomplished. Given the lean operating stature of most companies, workforces are already over utilized. That makes plan realism all the more important.
The Category 3 data indicates many “reality-related” issues that contribute to failed execution. Competition was not factored into planning 53% of the time and important stakeholders were ignored in 66% of respondent answers. Fundamental plan assumptions are being left unvalidated and priorities are fuzzy as best.
What It All Means
Based on the results from this research study, strategy implementation is and will continue to be a problem for business organizations until improvements in planning and governance are implemented.
So why are basic management principles are not being applied when it comes to executing strategy? In many cases, problems in execution come down to executive inattention. Once a plan is developed and approved, there should be communication occurring throughout the organization to inform employees of the strategy and what it means to the organization and to them personally. Unfortunately, that usually is not what happens. Strategies can fail simply because they don’t get communicated to all the people involved. Many times, months after the strategic plan implementation is supposed to be underway, employees lower down in the organization have never even heard of the initiative or that it is underway. Global companies face even bigger challenges in execution for this reason among others (see Corporate Strategy: Multinational Organizations). As evidenced from the 68% of survey respondents that indicated that employees had no understanding of their companies strategy, communication if a major factor in execution failures and strategy stalls.
Governance (including metrics, measuring and managing problems as they impede execution) is at the root of many of the issues uncovered by the survey data. There is often little follow-through to ensure that the strategic plan is executed.
Other factors relate back to the planning process itself. If prioritization is done to identify the most critical organizational goals, goals are refined to be unambiguous as well as measurable and if they are linked to the right people to own accountability – half the battle is already won. Basic project management blocking and tackling can then be applied to carry out detail planning in support of strategic goal achievement, followed by communication and coordination among management (i.e. follow-through).
Until organizations make these improvements in their strategic planning and execution disciplines, strategy implementation will continue to challenge business leaders.
The article, Mapping Out Strategy Execution: Part 2 of “Why We Fail at Strategy Implementation” offers guidance and practical methods that can be applied to improve upon strategy execution. Additionally, complimentary Strategy and Planning Resource Downloads are available in PDF format to assist companies that are struggling with challenges in Strategic Planning, Operational Planning or Change Management.