For top leaders, it’s not enough to dream up brilliant business strategies. They’ve got to be able to execute those plans as well, and they know it. A global survey of more than 650 CEOs by The Conference Board (2005) showed that the execution of strategy was ranked third out of 91 issues facing business leaders. And it’s going to remain a top priority for at least another decade, suggests a study by strategy+business
magazine (Kleiner 2005).
So, what are the factors that will influence organizations’ ability to execute strategy in the future? In trying to answer that question, the Human Resource Institute (HRI) put together a research team as part of a larger project commissioned by AMA team arrived at five broad assumptions about the future.
First, globalization will make the execution of strategy more complex even as it provides organizations with dazzling new opportunities. The complexity will stem from the fact that large-scale strategic plans must be implemented across multiple time zones, locations, cultures, and legal/regulatory environments. At the same time, globalization allows organizations many more choices about how and where to execute strategies. Companies can, for example, increasingly delve into new global markets, take advantage of labor cost differentials, establish new supply chains and global partnerships, and tap into pools of global talent.
Research on global retailers indicates that implementing successful global strategies depends on an organization’s ability and willingness to learn through experience. Fadi Farra, a principal at consultancy firm A.T. Kearney, and Prof. David Bell (2006) of the Harvard Business School, recommend, “First, enter a country a few years before you wish to rely on sales growth from it.... Second, be prepared to experiment with the format, which means giving local managers substantial authority.” Long-term success often requires patience and humility as companies learn to deal with global complexities.
The second broad assumption established by the HRI/AMA team is that changes in organizational structures will have a significant impact on the execution of strategy over the next decade. To manage at a global level, of course, many organizations rely on global supply chains, strategic alliances, contractors, and vendors. In this open-boundary environment, execution will require excellent information and logistics coordination (“Survey,” 2006). Organizations must ensure that their partners are fully capable of executing well on their behalf.
Organizational structures will also shift to accommodate a workforce that is increasingly made up of knowledge workers who are organized into real and virtual teams. More plans will be executed via networks of knowledgeable collaborators who are largely self-managed.
The third broad assumption made by the HRI/AMA team is that execution will depend on excellent practices in the areas of talent and human capital management. It’s already true, of course, that execution requires companies to align their workforces with strategic goals. Employees must have the right skills, the right understanding of strategic goals, and the motivation to attain such goals. The future will bring about a more diverse workforce not only in terms of ethnicity, age, gender, and nationality but also in terms of employer relationships; that is, there will be more free agents, contractors, vendors, part-timers, and working retirees.
This will require powerful and yet adaptable performance management and communication systems. It will also likely require a renewed emphasis on evidence-based management, where the people-management techniques are based less on fads and more on empirical and scientific findings from the fields of cognitive sciences and psychology as well as management.
The fourth broad assumption is that technologies, which are already so critical to strategy execution in many organizations, will become more important over time. It almost goes without saying that information technology will give leaders more just-in-time information about how the company is faring, allowing them to continuously review plans, make course corrections, and quickly establish other complementary strategies as new opportunities emerge. The conventional once-a-year strategic planning process is likely to become much less common. Execution is also likely to be aided by refinements in technologies such as mobile computing, radio-frequency identification, robotics, artificial intelligence, and an array of other efficiency-enhancing innovations.
New technologies will also ramp up the speed of change and result in a more turbulent, hard-to-predict business environment. This will make it harder for some organizations to execute well while allowing others to gain definite strategic advantages via nimble strategy development and execution.
Wide-ranging changes are, in fact, the fifth and last broad assumption made by the HRI/AMA team. This refers not only to pressures such as new competition, economic vicissitudes, shifting customer demand, and innovations but also to changing geopolitical, environmental, and cultural conditions. International environmental agreements, for example, could influence how certain industries—such as energy or transportation—execute their long-term strategies. Likewise, major global conflicts, pandemics, or terrorist events could have a dramatic influence on execution as they disrupt supply chains or labor forces.
As business leaders make future strategic plans, they should consider how aspects of these five broad assumptions will influence their ability to execute. If they’re going to depend on global supply chains, for example, then they should ask how they might make those chains as resilient as possible in a world fraught with change. Or, if they’re establishing new talent management systems, they might make sure those systems can accommodate an increasingly diverse global workforce. In short, how successfully companies implement future strategies is likely to depend on how successfully they anticipate the factors that will help or hinder strategy execution.
Read the results of the AMA/HRI study “The Keys to Strategy Execution.”
For much more information on related issues, please visit www.hrinstitute.info
Documents used in the preparation of this article include the following:
The Conference Board. CEO Challenge 2006: Top 10 Challenges (2005).
Farra, Fadi, and David Bell. “Globalisation Strategies: How to Crack New Markets.” European Business Forum. ProQuest (Summer 2006).
Kleiner, Art. “Our 10 Most Enduring Ideas.” strategy+business (Winter 2005): 36–41.
“Survey: Shining Examples.” The Economist, June 17, 2006.