Kotter (2012) states that less than 10% of time is spent on developing strategy and more than 90% on executing it. According to Kotter’s research approximately 5% of all organizational strategies are implemented successfully, and 70% of strategic initiatives fail to meet their objectives. The remaining 25% have some level of success but do not meet the full potential of the strategy devised.
Strategy implementation is where competitive advantage is won or lost. The statistics on organizational ability to execute new strategies are very poor, whether the strategy involves acquisitions, new geographic markets, new product innovation, or supply chain improvements. Various studies support this conclusion.
To some this is the indictment of modern management – basically taking the argument that managers do not manage and when they do – they should not manage.
The slow process of strategic drift sets in and competitors move in a take over your markets, customers and profits. Neilson, Martin and Powers (2008) noted that 3 out of 5 respondents said that their organisations did not quickly translate important strategic and operational issues into action. A specific phenomenon that came up in their study is that companies that promoted people too quickly – tended to not through on strategic initiatives as the initiatives were abandoned when people became more senior.
Is this due to a lack of skill, or are we missing the point of strategy? A better question is what would be the elements to effectively execute on so that strategies are successful more often.
The top six items in strategy execution noted is the following
Transfer decision-making power
In organisations where execution is effective, everyone has a good idea of the decisions and actions they are responsible for. An example is when business lines are given responsibility for revenue, costs and profit targets – its tends to lead to higher performance than in organisations where there is a blurring of responsibilities and high definition of functional or task related objectives. When task oriented objectives are pursued – this leads to overspecialisation and decreased unit profitability.
In your own life – it is also important to give yourself power. Understand what you need to make decision about and make them. You must care about the things that affect your daily existence and seek to improve them.
Understand and act on your external environment
Execution-oriented firms have a strong grasp on competitors and information is acted on swiftly. Information about what competitors are doing is centralised and used actively in decision-making. This “external focus” defines successful organisations. Competitive environment is relevant in terms of customers, products, and talent and sets the non-performers apart from the performers. A key observation is that pricing should be based on what the market can support and a keen understanding of who is attracted, rather than on cost or purely what your competitors are doing. Companies that are internally focused miss the market, the opportunity and only spend time creating inertia.
As an individual it is also important to look at what is going on around you. Read the news, listen to opinion and have opinions on different aspects of what is going on around us. By being aware, active and optimistic you take forward new perspectives and add value to people around you.
Stick to decisions
Organisations that are noted for strong execution ability, rarely – if ever second-guess themselves. Linked to this, there is generally a consensus that the organisation will back-up the decisions of their employees that were made within the limits of decision-making powers. This also speaks to the strength of boards, governance and strategy alignment. If people understand what needs to get done, they have a tendency to do it. If they need to figure out if what they have done is okay, and constantly look to cover themselves – then it leads to stifled potential and cynicism.
On a personal level – if you decided to quit smoking, or drink less coffee, study a course or read a new book every month – don’t second-guess yourself. Stick to your decisions – else you are basically saying that you don’t trust yourself. If something is important enough to make a decision about it – keep focused and get to done!
Information is shared openly and honestly
In organisations that are effective, there is an open sharing of information and no “organisational boundaries”. Open sharing of information leads to a diffusion of best practices, a more concerted response to the external environment, skills development of managers and staff in order to deal with issues and situations and generally aids in making people happier and more content with their work situation. A company where people can contribute freely and their contribution is correctly placed has higher level of staff productivity and retention. Goals are clear, common and where they are at risk, everyone pulls in and shares in pulling the organisation up.
As an individual – this observation translates into honesty. If you are honest with yourself and those around you – in time you will be a more effective communicator, build strong trust and relationships. Honesty and truth is a way of life that people with effective execution skills value more than most. When an effective manager detects even the smallest bit of deceit – they know that their execution is at risk. The second aspect is communication – always communicate where you are in a process and give honest feedback to others. Then at least everyone knows where he or she stands.
Directors don’t execute strategy – employees do
Organisations that are good at strategy execution do not only rely on directors and top managers to execute strategy and actively seeks to find strategy execution in all aspects of the organisation. These organisations often described as flat, leaderless or octopus companies have a strong central ethos that is enforced constantly and that motivates capable employees to execute. Neilson, Martin and Powers (2008) noted that employees need the information at their fingertips to determine how their actions will impact the bottom line. It goes further than that with Jim Stengel in Grow: How Ideals Power Growth and Profit at the World’s Greatest Companies (2012) stating that people without ideals that are linked to the values and culture of an organisation will only ever perform at mediocre levels and that organisations that effectively tap into the ideals of people have effectively outperformed organisations with any other measure. Managers (and directors) should thus look at the organisation and promote the zeal, passion and commitment required to link individual performance to the organisational outcome. Only in invoking the ideals of people, do organisations thrive.
As an individual, it reminds us to never give up on our ideals and to work for organisations in which our ideals are served. Do not tolerate people that stand in the way of your ideals and be clear on what you want. As long as you can see that the environment you are in is moving you closer to your ideal – you are moving forward. Your spiritual power is stronger than your emotions and your strength. Work on enabling yourself to understand who you really are and being all that you can be.
Managing for execution
Managers must thus focus on the decision rights, information, structure and the correct motivators to ensure that strategy execution is improved. Without this, decision-making is paralyzed, rewards and performance become meaningless and formal reporting lines are avoided. Decisions become blocked and organisations start slowing down. People defend their silos and tomorrow is another day.
It requires energy to execute – and energy gets consumed when managers do not focus on the right actions. Managers must enable others, support the organisation in execution challenges and create and manager structures with appropriate performance and rewards to ensure that desirable outcomes are achieved. The actions recommended above create energy and fuels the fires of organisational success.
Is this not maybe what is happening, or needs to happen to your new years resolutions and your plans to study this year. Through focusing on getting it done, keeping the end in mind and rising above the situation – you become excellent. As you focus on enhancing your ability to execute ideas and actions, you elevate yourself and your organisation to the next level. It is time to get real.
Kotter, J. (2012) Failed Strategy Execution Oversight by Corporate Boards, Forbes.com
Neilson, G., Martin, K. and Powers, E. (2008), The Secrets to Successful Strategy Execution, Harvard Business Review
Stengel, J. (2012) Grow: How Ideals Power Growth and Profit at the World’s Greatest Companies, Crown Business