What is strategy execution? Strategy execution is a hot topic in management
today. In fact, the Conference Board’s recent Survey of CEOs revealed that chief executives are so concerned about strategy execution that they rated it as both their number one and number two most challenging issue. For anyone who’s tried to execute strategy, this finding should come as no surprise: it’s estimated that more than 60% of strategies are not successfully implemented.
When asked to define strategy execution, most managers respond with statements like, “It’s the successful implementation of a strategic plan” or “It’s getting your strategy done.” While these perspectives are certainly valid, they aren’t very helpful in terms of understanding what needs to be done to actually drive business results.
Here’s a look at some mainstream approaches to strategy execution:
- Strategy execution as a process. The most notable book to date on strategy execution is Execution: The Discipline of Getting Things Done, by Larry Bossidy and Ram Charan. Bossidy, a retired CEO, and Charan, a renowned management consultant, make the case for execution as a discipline or “systematic way of exposing reality and acting on it.” They explain that “the heart of execution lies in three core processes":
They explain the processes and descriptions managers use to successfully drive business results.
- Strategy execution as a system. The information presented in Execution is certainly useful, but the authors don’t fully explain how an organization can implement their three core processes to achieve strategy success. There have been significant advancements in this area since Execution was published in 2002. In 2008, Harvard Business School Professor Robert S. Kaplan and his Palladium Group colleague David P. Norton wrote The Execution Premium: Linking Strategy to Operations for Competitive Advantage. In it they present their management system, which houses six sequential stages intended to help organizations capture what they call an “execution premium”—a measurable increase in value derived from successful strategy execution. They outline six stages in this system:
1. Develop the strategy
2. Plan the strategy
3. Align the organization
4. Plan operations
5. Monitor and learn
6. Test and adapt
Through detailed subactivities—26 in total— Kaplan and Norton explain how organizations have successfully executed strategy via application of their management system.
Strategy execution as a step-by-step process. Both of the models outlined above are important and anyone serious about the practice of strategy execution should be familiar with them, but they suffer from what might be called the “Goldilocks Problem.” The process view doesn’t contain enough detail to help managers construct the three processes within an organization (i.e., too cold). Conversely, the systems view contains so many sub steps that it can be overwhelming to managers (i.e., too hot).
So, how can we find a solution that is “just right"? While there is no easy answer, the best of both approaches can be synthesized into 10 steps outlined below. These steps provide both high level direction as well as the detail necessary to capture the lion’s share of strategy execution success.
Step 1: Visualize the strategy. One of the most pressing challenges in all of strategy is simply understanding what a strategy is. An effective way to improve this understanding is to visualize the strategy via an illustration that shows both the important elements of the strategy and how each relates to one another. Frameworks such as the Strategy Map by Kaplan and Norton, the Activity Map by Michael Porter, or the Success Map by Andy Neely help in this regard.
Step 2: Measure the strategy. Key elements of the visualized strategy should be assigned an easily understood performance measure. The full set of strategic performance measures can be organized into a dashboard, a Balanced Scorecard, or some other framework so the reader can determine that progress is being made toward completion of the strategy.
Step 3: Report progress. In the same way that a budget is reviewed monthly to ensure financial commitments are being kept, the strategy should be reviewed regularly, but with more of an eye toward determining if the strategy is producing results, versus controlling performance.
Step 4: Make decisions. Strategy execution is much like sailing a boat toward a planned destination. A defined course and a full complement of navigational charts will never eliminate the need to remain vigilant, to assess the environment, and to make corrections as conditions change. As part of the regular reporting process leaders must make ongoing strategic decisions to keep the strategy current and on course.
Step 5: Identify strategy projects. Organizations may have scores, if not hundreds, of projects ongoing at any point, but they rarely have a firm grasp on the type and range of these projects. The first step in improving project-oriented strategy execution is to capture and organize all projects—strategy projects in particular—that are underway in throughout an organization.
Step 6: Align strategy projects. Once projects are captured they must then be aligned to the strategies or goals for the organization. This step entails comparing each project, either proposed or ongoing, to the strategic goals to determine if alignment exists. Only those projects that directly impact the strategy should be resourced and continued.
Step 7: Manage projects. Organizations must develop a capability in project management if they are to execute strategy effectively. In some settings, projects receive very little management. In others, projects persist well beyond their scheduled completion. The full complement of projects in any organization should be coordinated and controlled by a central project office or officer with the responsibility for monitoring both progress and performance.
Step 8: Communicate strategy. It is difficult to execute strategy when the strategy itself isn’t well understood, or performance relative to it is not communicated. Leaders must communicate their visualized strategy to the workforce in a way that will help them understand not only what needs to be done, but why.
Step 9: Align individual roles. Employees want to know they are making a meaningful contribution to their organization’s success. It’s up to senior leaders to ensure that employees at all levels can articulate and evaluate their personal roles toward achievement of specific strategic goals. This is perhaps one of the most critical aspects of the execution process.
Step 10: Reward performance. In strategy execution, as in any other area of management, what gets measured gets done. Taking this one step further, what get measured and rewarded gets done faster. After explaining the strategy and aligning the workforce to it, senior managers institute the incentives that drive behaviors consistent with the strategy.
Strategy execution is difficult in practice for many reasons, but a key impediment to success is that many leaders don’t know what is strategy execution or how they should approach it. Home-grown approaches may be incomplete if they fail to incorporate many of the basic activities highlighted above.
While the 10-step approach outlined here won’t guarantee strategy execution success, it will greatly improve the odds, perhaps pushing the topic down a notch on the list of CEO concerns.
Strategy execution may be difficult to apply, especially for new managers. Register for our crash course on how to get your management career off on the right foot.
Conference Board Survey of CEOs, Conference Board, 2008.
Franken, A., Edwards, C., Lambert, R., Executing Strategic Change: Understanding the Critical Management Elements That Lead to Success. California Management Review, Vol. 41, No. 3, Spring 2009
Bossidy, L., Charan, R., Execution: The Discipline of Getting Things Done, Crown Business, 2002.
Kaplan, R., Norton, D., The Execution Premium: Linking Strategy to Operations for Competitive Advantage, Harvard Business Press, 2008.
Kaplan, R., Norton, D., Strategy Maps. Converting Intangible Assets Into Tangible Business Outcomes Advantage, Harvard Business Press, 2004.
Porter, M. What Is Strategy? Harvard Business Review (November-December) 1996.
Neely, A., et al., The Performance Prism, Financial Times, 2002.