The execution of strategy is dependent upon executives and team members on the front line being clear about the organization’s priorities and how they must act to achieve the stated objectives. To be successful leaders, executives need to be as diligent in guiding strategy execution as they are at setting and communicating strategic direction.
“The classic pitfall in executing any kind of strategy is not properly engaging your leadership and broader employee population on what it is that you want them to do,” said Rommin Adl, executive vice president at BTS, a strategy implementation consultancy. “Lack of alignment, mindset and capability are leading barriers to effective execution. It is very straightforward: If your organization doesn’t get what you want them to do, [is] not passionate about doing it, and [does] not have the proper skills to execute, chances are your strategy is dead in the water.”
Despite the great amount of time and energy that goes into such strategy development, many companies have little to show for their efforts. Research by consultancy Marakon Associates has found that on average organizations only deliver 63 percent of the financial performance their strategies promise.
A 2007 study by OnPoint Consulting on the gap between strategy and execution reported that 49 percent of leaders surveyed perceived a gap between their strategies and execution. Of this group, 64 percent did not have full confidence that their company would be able to close the gap.
“A good strategy includes proximate objectives whose accomplishment lie within the organization’s capabilities,” said Richard Rumelt, author of Good Strategy/Bad Strategy. “That by itself is a huge step toward execution. When executives define strategy in terms of financial or other performance measures, the gap between these goals and their accomplishments is really a failure of strategy. However, it’s often blamed on execution.”
Successfully achieving execution takes more than clarifying and communicating the organization’s strategic direction. A good business strategy also addresses problems and challenges.
“Too many so-called strategies are all hope and forward-looking projections,” Rumelt said. “A strategy acknowledges the frictions and difficulties. It is those difficulties [that] shape it.”
He added that a good strategy sets priorities as well. “A good strategy addresses the issue of focus or choice,” he said. “Many organizations try to ring many bells at once and consequently do not coordinate enough energy on any one bell to actually get a good, solid ring. Good strategy focuses energy on what it critical.”
In May, a survey by consultancy Aon Hewitt of 1,328 employers nationwide reported 56 percent of respondents indicating leaders play a vital role in meeting business goals and profitability targets and delivering service. Forty-four percent said they play a vital role in retaining talent. However, only 12 percent of respondents said their leaders are extremely effective at meeting business goals. Further, the survey discovered that almost half of the leaders surveyed do perceive a gap between their organizations’ ability to develop and communicate sound strategies and their ability to implement those strategies.
The leader’s job is to create the vision for the enterprise in a way that will engage its people’s imagination and energies. This gap is a hindrance to business performance, and the solution is additional learning.
Seventy one percent of respondents in a recent survey conducted by BTS and business association The Conference Board considered the biggest threats to strategy execution to be lack of understanding, commitment and skills.
According to BTS’ Adl, the way to build these skills is through learning initiatives that allow leaders to test the strategy implementation via hands-on experience.
“Through immersion in a risk-free environment, leaders can practice executing the company’s new strategy, make mistakes and gain firsthand experience in what superior execution looks and feels like,” Adl said. “The outcome is powerful alignment, ownership, motivation and confidence to make the strategy happen back on the job. Traditional event-based learning programs do not provide the opportunity to practice strategy execution, especially compared with applied experiential learning programs, but there may be an opportunity among learning and development practitioners to improve their business acumen and become better partners to senior executives in the strategy execution process.”
Ladan Nikravan is an associate editor of Chief Learning Officer magazine. She can be reached at lnikravan@CLOmedia.com.