Why Strategy Execution Unravels

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Why Strategy Execution Unravels

Strategy execution can be a real headache. Have you ever spent countless hours meeting and planning, only to see your best efforts left undone? You’re not alone.

Heading a list of over 80 issues, executional excellence placed number one as the greatest challenge for corporate leaders in Asia, Europe, and the United States. It is estimated that two-thirds to three-quarters of large organizations have executional dysfunction.

Leadership and management continuously equate their execution failures to a couple of myths:

Myth 1: Execution Equals Alignment 

84% of managers say they can rely on their boss and direct reports, which is exceptional. However, only 9% of managers say they can rely on colleagues all the time, and about 50% say they can rely on them most of the time. These low percentages carry about the same reliability scores as third-party partners.

The poor reliance between colleagues results in undermined execution: They duplicate effort, let promises to customers slip, delay their deliverables, or pass up attractive opportunities.

Although alignment is marked as the greatest failure to executing a company’s strategy, the inability to coordinate across units comes in as the second greatest struggle for management.

Whereas companies have effective processes for cascading goals downward in the organization, their systems for managing horizontal performance commitments lack teeth. More than 80% of the companies we have studied have at least one formal system for managing commitments across silos, including cross-functional committees, service-level agreements, and centralized project-management offices—but only 20% of managers believe that these systems work well all or most of the time.

More than half want more structure in the processes to coordinate activities across units—twice the number who want more structure in the management-by-objectives system.

Remedy to Myth 1: KPI Fire Departmental Project Management and Goal Dashboards)

Myth 2: Execution Means Sticking to the Plan 

Bain & Company finds that strategic planning heads the list of management tools. Executives also share this same view. In fact, executives see any deviation from the great amount of effort and energy associated with the strategic plan as a lack of discipline that undercuts execution.

Unfortunately, no plan can anticipate every event that might help or hinder a company trying to achieve its strategic objective. Managers and employees at every level need to adapt to facts on the ground, surmount unexpected obstacles, and take advantage of fleeting opportunities. Strategy execution, as we define the term, consists of seizing opportunities that support the strategy while coordinating with other parts of the organization on an ongoing basis.

When managers come up with creative solutions to unforeseen problems or run with unexpected opportunities, they are not undermining systematic implementation; they are demonstrating execution at its best.

The greatest reported problem is not that companies fail to adapt to new challenges, but fail to adapt to them well. The majority of organizations move too slowly to recognize opportunities, fail to mitigate emerging threats (29%), or lose sight of their company’s strategy (24%).

Researchers found that one of the greatest pain points for companies is to shift resources and people across the company. McKinsey found that “firms that actively reallocated capital expenditures across business units achieved an average shareholder return 30% higher than the average return of companies that were slow to shift funds.”

Only 20% of managers say their organizations do well for shifting people and only 30% say capital allocation supports strategy. Nine out of ten managers “expect some of their organizations’ major initiatives to fail for a lack of resources.

Unless managers screen opportunities against company strategy, they will waste time and effort on peripheral initiatives and deprive the most promising ones of the resources they need to win big. Agility is critical to execution, but it must fit within strategic boundaries. In other words, agility must be balanced with alignment.”

Remedy to Myth 2: KPI Fire Idea Management and Project Management

2018-10-05T14:56:58+00:00 April 27th, 2015|Tips and Articles|

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