Print Posted by Rana Lahiri on 19/06/17

On the move to strateghós : PART III

On the move to strateghós : PART III

In the previous article following aspects were discussed:

  • Real Life examples of Ansoff Matrix developed in 1958, Bottom of the Pyramid developed in 2004, Transient Competitive Advantage developed in 2013 and an example from World War II on influencing and Collaboration.
  • Making innovation a routine capability
  • An examples of serendipity
  • Carlson’s Law
  • The role of managers and leaders

Mentioned below is the previous article:

https://www.itbirbal.com/blog/on-the-move-to-strateghos-ii-106

Allow me to share some more thoughts:

In this section we will look at a very important aspect which helps or hinders to get strategy connected with reality, it’s called “Execution” which many consider bigger than innovation. All of us have heard of this – Vision without action is merely a dream, action without vision just passes the time but vision with action can change the world! Hence, nothing happens without action, no matter how much one aspires for something or how much deep thinking has been done. Wonder if any organization or any person has achieved anything purely on the basis of belief without any action. 

Strategy and tactics are two separate continuums; ultimately we need to turn that great strategy into great performance or the art of getting things done. The biggest difference between strategic planning and strategic implementation is a shift in focus to the day-to-day business operations necessary to move the organization toward its planned direction. Implementation failure is the main reason why an organizations fall short of their promises. Strategic planning can be a strenuous and resource draining exercise. Sure, one can create an “all-inclusive” plan that covers every scenario that can crop up in the future. But what good is it if one has spent all time and financial resources on creating a plan rather than executing it?

Factors that lead to failure in execution

Failure to execute has several root causes. Let’s look at some of the reasons why companies fail to execute their strategic initiatives: 

  • Poor prioritization across the organization on implementing strategic initiatives
  • Misalignment between corporate, product, marketing and sales strategy
  • Ineffective employee and customer engagement
  • leadership team spending less than adequate time on strategy planning and implementation
  • Poor cooperation and coordination between employees and business units
  • Inadequate management and measurement of implementation
  • Lack of adequate process to communicate strategy across the organization
  • Lack of detail planning to support achievement of planned goals
  • Strategy and culture misalignment
  • Accountability missing from planned goals
  • Insufficient funding of strategic initiatives

Strategy execution plays a critical role; it bridges the gap between brilliant strategies and superior performance or simply put the mechanism of getting strategy connected with reality. Strategy implementation is a way to link the three core processes of a business – the people process, the strategy and the operating plan together with the objective of getting things done on time. However hard it is to devise a smart strategy, it’s ten times harder to get people to execute on that strategy. 

Following should be noted with regards to implementation of strategic initiatives:

  • Strategy, execution and people all have to move together for the organization to become successful.
  • An effective mix of strategic planning, program and project management is required for success - Organizations must place appropriate value on both strategic planning and operational planning to be successful. Yes, strategy is important, but the rubber will meet the road with a good operational execution. The combination of the two is where strategic implementation lives.
  • If the organization’s planning process was long, arduous, and time-consuming, then it might have burned all the gas in the tank before executing it, i.e. it is important to ensure that the team is not completely drained out in making the perfect plan. Rather, it’s better to start with a good plan then light the fire during execution. Even if the plan isn’t perfect, it’s better to have energy around execution than around a plan that will just sit and collect dust.
  • Managers and leaders must demonstrate their own willingness and ability to change before asking it of others.
  • Creating function/department wise strategy implementation team – involving the right people (may not be the senior most people) is the key to success.
  • Organization-wise communicating the strategy rollout plan along with time lines and the role of all members’ part of the implementation team.
  • Creation of review schedules, mode of update and update frequencies.
  • A clear understanding of roles and goals of all employees in an organization is essential in making execution a success.
  • Post implementation - how the strategy should reflect in the performance plan of teams and individuals and creating those performance plans.
  • Arrange required changes in organization structure and process (if required) for smooth implementation of the strategy; changes should be made in the organization structure for proper alignment of the strategy and not the other way.
  • Documenting the post implantation results in terms of what was planned and what was achieved.

As much as managers may want their intended strategy to succeed, they still find it difficult to accept that the fate of their best-laid plans depends on the emotional allegiance of employees, customers, communities, and investors. Over time, emotionally ignorant leadership gives rise to a change-averse corporate culture. While profits are high and the economic climate remains promising, the problem stays under the radar—much like the early stage of cancer. But when a change in course becomes necessary, senior leaders find that no matter how hard they try, transformation never takes root.

Consider what happened internally at Microsoft in the year or two just before the iPhone came out. Having gotten wind of Apple’s impending game changer, Bill Gates tasked then-CEO Steve Ballmer with creating a similar device to forestall Cupertino’s market dominance. Ballmer passed the word to his senior vice-presidents, each of whom had at his disposal thousands of engineers and an R&D budget running into the hundreds of millions of dollars. Their combined failure to produce an acceptable iPhone equivalent is the stuff of tech legend.

What went wrong? Despite their shared mandate, the departments didn’t cooperate fully with one another. A big part of the problem, experts agree, was Microsoft’s infamously cutthroat “stack ranking” system, which forced managers to grade employee performance on the curve.

“If Mr X is on a team of 10 people, Mr X walked in the first day knowing that, no matter how good everyone was, two people were going to get a great review, seven were going to get mediocre reviews, and one was going to get a terrible review.” “It leads to employees focusing on competing with each other rather than competing with other companies.”

As a result of stack ranking, Microsoft’s top talents were seeking to surround themselves with employees who would make them look better by comparison. Any collaboration between them was stifled by the dehumanizing corporate culture.

In November 2013, reports surfaced that Microsoft had abandoned stack ranking. Three months later, Ballmer stepped down as CEO.

Managers and Leaders do spend a lot of time and energy in making a solid strategy, as they should. But without a corresponding effort to engage emotions and a culture that supports that effort, the spirit of change will quickly fade away. To execute a strategy successfully, organization requires a good plan and an even better culture.

Let’s look at some of the findings based on a survey conducted in 2016 on strategy execution (for more details please refer http://www.implementation-hub.com/resources/implementation-surveys):

Strategic planning and execution

1 68% believe their organization is good at developing strategy

2 98% of leaders think strategy implementation takes more time than strategy formulation

3 61% of respondents acknowledge that their firms often struggle to bridge the gap between strategy formulation and its day-to-day implementation

4 80% of leaders feel their company is good at crafting strategy but only 44% at its implementation

10% of organizations achieve at least two-thirds of their strategy objectives, with 36% achieving between 50%-67% and 54% achieving less than 50%

6 2% of leaders are confident that they will achieve 80-100% of their strategy’s objectives

Formal systems and processes

1 70% of organizations that used a formal process to manage strategy out-performed their peers

2 77% of successful companies have an established mechanism to translate their strategy into operative terms and evaluate it on a day to day basis

3 75% of successful companies have a formal and pre-established system to inform on and manage their strategy.

Budgeting and business priorities

1 60% of organizations do not link their strategic priorities to their budget

2 70% of middle managers and more than 90% of front-line employees have compensation that is not linked to the strategy

3 63% of successful companies have all their business units aligned to their overall corporate strategy

4 24% say one of the main reasons strategic initiatives succeed is the initiative receives sufficient funding

5 35% of companies are ‘somewhat ineffective’ or worse at strategic initiative prioritization

Alignment

1 30% cite failure to coordinate across units as the single greatest challenge to executing their company’s strategy

2 25% say measuring implementation is the toughest challenge

3 88% say successfully executing initiatives/projects in order to deliver strategic results is very important or essential for competitiveness

4 33% of leaders rate their organization as poor or very poor at implementing strategy

5 72% say feeding lessons from successful strategy implementation back into strategy formulation is very important or essential for competitiveness

6 77% say feeding lessons from failed strategy implementation back into strategy formulation is very important or essential for competitiveness

Leadership and governance

1 70% of leaders spend less than a day a month on reviewing strategy

2 85% of leadership teams spend less than 1 hour per month discussing strategy

3 96% think leaders’ bonuses should be linked to successful strategy implementation

4 93% think that senior leaders’ scorecards should be linked to the implementation efforts, and that leaders need to report on the ongoing progress and show their support among everyone involved

38% of companies are ‘somewhat ineffective’ or worse at strategic initiative governance

6 49% of companies are ‘somewhat ineffective’ or worse at strategic initiative resource allocation

Agility and change

1 29% of organizations react so slowly that they can’t seize fleeting opportunities or mitigate emerging threats

2 24% of organizations react to opportunities quickly but lose sight of company strategy

3 20% of managers say their organizations do a good job of shifting people across units to support strategic priorities

4 89% say formulating strategy appropriate for changing market conditions is very important or essential for competitiveness

Communication and culture

1 42% of managers and 27% of employees get access to the strategic plan

2 95% of employees do not understand their organization's strategy

3 44% rank aligning the implementation of strategy to company culture as toughest challenge

4 73% of successful companies have a formal mechanism to communicate their strategy

5 20% of staff members resist implementation initiatives. The group showing the most resistance (51%) is middle management

Managing and measuring the strategy implementation

It is often found that executives may introduce new strategies and innovative operating processes intended to achieve breakthrough performance, then continue to use the same short-term financial indicators they have used for decades, measures like return-on-investment, sales growth, and operating income. These short-term financial indicators fail to measure and monitor new goals and processes but also to question whether or not their old measures are relevant to the new initiatives.

Effective measurement, however, must be an integral part of the management process. The balanced scorecard revolutionized conventional thinking about performance metrics. When Kaplan and Norton first introduced the concept, in 1992, companies were busy transforming themselves to compete in the world of information; their ability to exploit intangible assets was becoming more decisive than their ability to manage physical assets. The scorecard allowed companies to track financial results while monitoring progress in building the capabilities needed for growth. Using their research with hundreds of balanced-scorecard adopters worldwide, Kaplan and Norton have created the "strategy map," a tool that enables companies to precisely describe the links between intangible assets and value creation. They argue that the most critical aspect of strategy—implementation that ensures sustained value creation—depends on managing four internal processes: operations, customer relationships, innovation, and regulatory and social processes. The tool was not intended to be a replacement for financial measures but rather a complement. This score card provides executives with a comprehensive framework that translates a company’s strategic objectives into a coherent set of performance measures. The balanced scorecard approach examines performance from four perspectives.

  • Financial analysis, which includes measures such as operating income, sales growth and return on investment
  • Customer analysis, which looks at customer satisfaction and retention
  • Internal analysis, which looks at how business processes are linked to strategic goals
  • Learning and growth analysis, which assesses employee satisfaction and retention, as well as information system performance

Kaplan and Norton cited two main advantages to the four-pronged balanced scorecard approach. First, the scorecard brings together disparate elements of a company's competitive agenda in a single report. Second, by having all of the important operational metrics together, managers are forced to consider whether one improvement has been achieved at the expense of another.

A real Life example of balanced scorecard

According to the authors, Apple developed a balanced scorecard to expand the focus of senior management beyond metrics such as gross margin, return on equity and market share. A small steering committee, versed in the strategic thinking of executive management, chose to include all four scorecard categories and to develop measurements within each category. For the financial category of the scorecard, Apple emphasized shareholder value; for customer perspective, it emphasized market share and customer satisfaction; for internal processes, it emphasized core competencies; and for the innovation and improvement category, it stressed employee attitudes.

Among the highlights of Apple's balanced scorecard planning are the following:

  • Apple wanted to shift its classification from a technology and product-focused company to a customer-centric company. Recognizing that it had a diverse customer base, Apple decided to go beyond the standard customer satisfaction metrics that were available at the time and develop its own independent surveys that tracked key market segments around the world.
  • Apple executives wanted employees to focus deeply on a few key competencies, including user-friendly interfaces, powerful software architectures and effective distribution systems.
  • Apple wanted to measure employee commitment and alignment with the strategic goals. The company deployed comprehensive employee surveys, as well as more frequent, small surveys of employees selected randomly, in order to measure how well employees understood the company's strategy and whether or not the results they were asked to deliver by managers were consistent with it.
  • Market share was important to senior management, not only for sales growth, but also as a factor in attracting and retaining top software developers.
  • Apple also included shareholder value as a performance indicator, even though this measure is a result and not a driver of performance. The emphasis on shareholder value was intended to offset the previous emphasis on such short-term metrics as gross margin and sales growth, with a focus on investments that could impact long-term performance.

Role of middle management is critical to the success of strategy execution

When discussing the challenges large organizations face in executing strategy, many a times focus has been on the middle management of the organization. It has often been remarked as the “frozen middle,” an impenetrable layer where feedback from the front lines stops. However, Middle leaders are a critical resource in large organizations, with high leverage to strategy execution, operational business performance, and human productivity. Research has shown that middle management is often overlooked, undervalued, and under-invested within the enterprise. Middle managers are challenged to lead in all directions at once; managing up with their direct leader and other executive sponsors, collaborating and influencing across a complex matrix of functions and business units, and leading a broad array of managers and teams to execute the strategies that they have translated from above. Moreover, it appears that few are actually fully relieved of their operational duties, with many still tasked with some direct business performance areas that they are supposed to deliver as an individual contributor. Thus, organizations in order to successfully drive strategic initiatives and improved performance may find high value returns on clarifying and simplifying roles for middle leaders.

Business strategic planning and implementation will be successful when everyone within the business understands the strategy and accepts the change. Obviously management and executive buy-in and approval are important but so is buy-in from the front-line users who will deal with the implementation. Everyone involved should understand the goals and should feel comfortable providing feedback during planning and implementation. Educating and communicating is critical - some may be put off because it threatens the status quo. Organizations need to unearth those concerns and clarify the advantages of the anticipated change. The three stages of a strategic planning and implementation process are Discover, Design & Document and implement & measure. A strategic plan needs to be adaptive to survive changing or unanticipated conditions. Over the life of a strategic plan, an organization may discover that some of the underlying assumptions are flawed or incomplete. Often organization’s mission and vision may remain the same while objectives and goals will need to be revised or updated. Some organizations can maintain a strategic plan for a year or longer, while others have to respond to market changes more frequently.

It is thus strategy execution which separates the men from the boys!

It’s time to conclude this discussion on strategy by briefly talking about my core beliefs and areas where I can contribute:

Following are my core beliefs:

  • No matter what effort is put in to improve sales, sales may not improve without a correct alignment between corporate, product, marketing and sales strategy. Unless these strategies are well formulated, implemented and aligned sales might continue to struggle.
  • Successful strategy execution results in creation of required employee and customer engagements by an effective synchronization of its culture, cause and its core values.
  • Organizations must constantly innovate and make it a routine capability through a process of structured administration of innovation. Front line workers encounter many problems and come across opportunities than their managers do. Statistics show that the ideas that an organization needs, 80% of them are in the heads of their front line workers, hence, ideas should come in bottoms up approach. Organizations should try to implement small ideas rather than going after the big ones because small ides are easy to implement and also at a lower risk to implement. Also, unlike major innovations most small ideas remain proprietary and create sustainable competitive advantage.
  • It doesn’t matter whether or not manager or leader has charismatic personality but that person definitely has to be a magnanimous person. Humility and Selflessness are two most important character traits that the organization should look for in managers and leaders, other than skills, knowledge and experience.

Can develop the following for start-up organizations

  • Recommendations and action plans to create Organization culture based on the founder/leader’s personal perspective or the belief system
  • Recommendations and action plans to create innovation driven culture
  • Recommendations and action plans to build the required ecosystem
  • Development of Business Plan
  • Development of Corporate , Product / service , Marketing and Sales strategies and implementation plans

Can develop or redevelop the following for existing organizations:

  • Review of existing Mission, Vision , Value Proposition and core values and recommend improvements/modifications
  • Review of existing Corporate , Product / service , Marketing and Sales strategies and recommend improvements along with creation of implementation plans
  • Recommendations and creation of action plans to develop transformation initiatives
  • Recommendations and creation of action plans to develop innovation driven culture
  • Product/Service positioning and differentiation strategy
  • Identification of target market segments including identification of uncontested market place
  • Development of Go To Market strategy
  • Development of Sales Playbooks
  • Competency assessment
  • Creation of Sales profiles, Job Description and KRA based on Competency assessment
  • Sales Enablement and Sales Operations procedures……..and many more

Also, in a position to counsel and couch the sales teams with the use of strategy frameworks:

  •  To create their individual Go To Market plans based on the organization’s Go-To-Market Strategy
  • On specific deal

Will be happy to discuss if you are considering enrichment of current offerings with business advisory services e.g. inclusion of business advisory services along with your existing sales automation , business analytics services or sales training…..etc.

Strategy has to evolve in a systematic and planned manner to decide what not to do and for success organization must not only act on strategic initiatives but act with a sense of urgency!

Here is the link to my earlier article :

https://www.itbirbal.com/blog/on-the-move-to-strateghos-100

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