”Leadership is the art of getting someone else to do something you want done because he wants to do it.” – Dwight Eisenhower
Delivering the promises of a strategy is about having the discipline of getting things done effectively. Yet, research shows that a large number of companies are unable to answer the pivotal question of strategy execution: “Are we doing what we said we should be doing?”
Once a strategy is decided upon, there is often surprisingly little follow-through to ensure that it actually gets executed. All businesses are different and, thus, face distinct execution issues, from those related to people and culture to corporate structures. However, a common challenge is the ability to bridge strategy, as a theoretical exercise, to practical matters, such as operational complexity and budget constraints.
So how can businesses ensure that the five or six key objectives critical to generate superior performance become the driving force behind everything the company does? How can they create the right conditions to succeed, measuring, adjusting and reallocating resources as necessary along the way?
1. Stop expecting without inspecting
For much of the last 40 years, the focus has been on how to create the right strategy. Most leaders still believe that, once this has been done, execution becomes a fait accompli – less than 15% of companies actually track how they perform over what they planned to achieve.
The odds of successfully executing a strategy that is not translated into regularly reviewed action programmes are slim to none. In addition, whatever has been decided in the boardroom rarely goes according to plan -adjustments and continual challenge of assumptions, while keeping the ultimate goal(s) in mind, are necessary.
A business must identify what it needs to do differently, or to value more than in the past, in addition to acquiring the skills it does not have and doing the right thing faster, better and more often, and more productively than its competitors. Frequent dialogue is an essential, if plans are to be executed well. To achieve this, senior executives need to reduce the time spent discussing operations (currently estimated at 85% per month) to benefit strategy and achieve a more equal time allocation. Only then can they focus on solving strategic problems, not desired outcomes or expectations: ultimately you get what you inspect; not what you expect.
2. Choose the right metrics or Key Performance Indicators (KPIs)
Many of the measures used to track strategy are often either obsolete, or the wrong type. Although a change in strategy would automatically trigger a change in KPIs, the tendency is to keep using the old measures. Implementing new measures is often perceived as a risk that can create resistance on the part of staff. Many companies also still focus exclusively on metrics that help them evaluate their financial performance such as sales and market share, but forgo metrics that help them assess if a plan is actually succeeding.
Without the right measures in place to guide the implementation, the latter will fail. The vital few must be identified and tracked, not the trivial many. When selecting the right KPI, three questions should be addressed I/ what outcomes are we looking for i.e. the measure of success? ii/ what activities or actions drive this outcome i.e. the link? iii/ what measures let us know how well these activities are being performed i.e. which one is the most effective?
It is also essential to anticipate:
– Unintended effects e.g. is success in one area of the company undermining results elsewhere in the organisation? What are the delays, both positive and negative, that could result in outcomes we may have to wait months or years to fully understand?
– Correlations e.g. a company whose speed at which it penetrates a new market correlates directly with the number of service representatives in the field might want to begin tracking the progress of how quickly representatives are added.
– Inconsistencies e.g. where a new strategic focus of customer value is reflected the salesperson metrics but the salesperson is not allowed to make a pricing decision without sign-off from finance staff.
– Future performance e.g. if the levels of sales are dependent on the level of interest rates, monitoring interest rates might be a good way to anticipate any sales declines.
3. Give a rhythm to your monitoring activities
We only know if a strategy is good or bad through constantly reviewing its implementation; yet too many are only reviewed once or twice a year. Strategy execution may sometimes make it to the top of senior executives’ “to do” list, but, within six months of launch, it usually vanishes.
Instead of an annual event, it should become an ongoing process. By shortening the performance monitoring cycle – from quarter-by-quarter to month-by-month, or week-by-week in some industries such as retail – businesses can get more “real-time” feedback on the quality of execution down the line.
The execution challenge of is mostly about synchronisation and rhythm. Effective companies review their results and evaluate their progress every 90 days. They ask questions such as: Did we achieve our KPI goals this quarter? Did we execute our strategic projects effectively and achieve the milestones we set by the due date? What did we learn this quarter? What will we do better next quarter? Answering these help define any necessary corrective actions to improve the strategy, and identify the top business execution priorities for the next quarter. This disciplined process is repeated each and every quarter. The cadence is further kept through weekly “execution meetings”, whose output is to define what can get done this week to help move the strategic priorities.
4. Performance Management Systems aligned with the Company Strategic Projects
Executing a strategy comes down to people who hold themselves accountable, and who are willing to be held accountable for delivering projects, tasks and numbers. Any new strategy usually spells change and change does not take place without positive reinforcement i.e. individuals being rewarded and recognised for taking the right actions. Leaders must first create strategic clarity and closely identify which parts of the old strategy are no longer important to the business. This translates into the identification of the actions they no longer want their staff members to perform, as well as the ones that need to be done differently, or indeed, new ones they should start doing.
Ultimately, people respect what you inspect. Setting strategic-level KPIs aligned with corporate priorities and cascading through our daily work ensures that everyone is accountable for effective activities that clearly contribute to these strategic priorities. It clarifies conversations around how all staff can influence the business results. If staff incentives are not aligned with the strategy, people will continue to focus on what they believe is in their own best interests (which may or may not be aligned the execution of your strategy).
When people connect their day-to-day work to a few key strategic numbers, work becomes meaningful and valuable i.e. people understand how they are contributing to team success and their accountability soars. Having clear KPIs in place allows them the freedom to act in line with the strategy, as they are encouraged to have the right behaviour and actions to implement it. Focus on performance does shape behaviour on a day-to-day basis.
Missing on any of those execution must-haves can have serious consequences. Research shows that only 63% of senior executives achieve the expected results of their strategic plans. This is a scary statistic when we think about the amount of time and effort any organisation puts into strategy.