About 40% of executive leaders say their enterprise accountability and leadership are not aligned on strategy execution, according to the 2020 Gartner Execution Gap Survey. This isn't a new concern.
Gartner polls of strategy leaders in prior years have shown slow strategy execution to be a top challenge, often because of insufficient visibility and control, a short-term ‘firefighting’ mentality and employee change fatigue.
Sometimes the problem starts with strategy setting. Many executive leaders don't have a documented three- to five-year business strategy because CEOs haven't produced, updated or shared the latest iteration. Sometimes, the enterprise exists, but it hasn’t been shared effectively with business and functional leaders. In yet other cases, the strategy has changed without many business leaders realizing it.
The risk that strategy won't be effectively executed only increases in volatile and disrupted conditions like those experienced during and since the COVID-19 pandemic.
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5 key pillars for effective strategy execution
Corporate strategists can bridge the strategy-to-execution gap and drive aligned execution in five ways.
Pillar No. 1: Strategy formulation
83% of strategies can fail due to faulty assumptions. Test assumptions about the executability of strategy during formulation.
History is littered with examples of organizations that hit severe growth stalls because of strategies based on flawed assumptions about customers, competitors or internal capabilities. A lack of clarity leads to unwanted surprises during execution and reduces managers’ ability to monitor uncertainties and respond accordingly. To get execution right, clarify and test relevant assumptions. This includes using mechanisms to both identify and challenge strategic assumptions so your organization can avoid unanticipated issues that derail implementation.
Pillar No. 2: Planning
67% of key functions are not aligned with business unit and corporate strategies. Align objectives to strategy by clarifying the objectives for those tasked with execution.
It's not unusual for large organizations to conduct strategic planning sessions that cost millions of dollars and hundreds of employee hours each year. Despite these efforts, strategic goals are often unclear or misaligned, which then creates resourcing challenges that limit execution success.
Focus the planning process on vertical alignment between the corporate center and the business units (BUs), and horizontal alignment across BUs and functions. To avoid confusion, begin by clarifying objectives and roles for those in the business tasked with execution.
Pillar No. 3: Performance management
58% of organizations believe their performance management systems are insufficient for monitoring the performance of strategy. Ensure accountability for actions critical to strategy execution and monitor performance.
Markets can shift between a firm’s strategic planning cycles, thus invalidating assumptions and the strategic plan. Without an effective system to monitor the performance of the strategy, organizations may execute the wrong plan for months — or even years — before correction.
For timely course-correction, use performance management systems to hold employees accountable for key metric goals. Frequent reviews of the plan can determine if underperformance was the result of a bad market assessment, wrong strategy or poor execution.
Also consider a more adaptive approach to strategic planning.
Pillar No. 4: Strategy communication
67% of employees do not understand their role when new growth initiatives are launched. Foster a two-way dialogue about the strategy to ensure organizational buy-in.
To effectively implement a new strategy, employees must understand and support it — both before and during execution. Lack of buy-in only reduces employee commitment and motivation for action and messages that lack credibility increase organizational resistance to change.
What’s needed is a cohesive communication strategy. Without it, employee motivation goes down and resistance goes up, increasing the cost of execution.
Engage critical employees with targeted communications to win support for the strategy. Start a two-way dialogue or take a page from your organization’s PR playbook to keep employees on board and actively engaged in achieving the company’s objectives.
Pillar No. 5: Organizational capacity
Organizations that are able to successfully unlock capacity to execute new growth strategies increase profitability by 77%. Strategists must focus on unlocking capacity to ensure strategy execution success.
Many organizations fail to allocate resources (assets, time, people, etc.) for the actual implementation of new growth strategies. They rely too heavily on strategy creation, planning, performance metrics and communication.
Strategists must locate areas where the organization loses the ability to execute due to poor coordination. The net result of poor coordination is a reduction in the total capacity of the enterprise.
Practices for unlocking organizational capacity:
- Deploy diagnostics to test organizational capacity before launching growth efforts.
- Use new tools for clarifying mid-manager trade-offs about resourcing growth bets.
- Construct new frameworks for freeing trapped resources.
- Create support structures for integrating growth projects into existing businesses.