This article updates a post originally published on June 30, 2014 by CEB, now Gartner. Current research may include updated and/or alternative positions on these issues.
Only half of all strategy initiatives meet the expectations of business leaders, but you can increase the chances of success by executing the strategy well — which is especially important given how hard it is to create consensus around strategic plans in the first place.
“When we asked a group of strategy leaders why strategy fails, 60% pointed to poor execution rather than problems with the strategy itself,” says Ben Seesel, practice leader at Gartner.
Two factors contribute to this widening gap between strategy and execution:
- Increasing pressure to grow. As the global economic climate improves, companies expect a near-40% increase in new growth initiatives across their portfolios
- Heavier workload. As a result of staff cuts during the recession, employees have had to perform extra tasks, which in turn reduced the time available for growth initiatives.
Read more: How to Jump-Start Strategic Planning
Corporate strategists can bridge the strategy-to-execution gap and make the most of their firm’s next big bet in five ways.
Corporate 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 about strategic assumptions can lead to unwanted surprises during execution and reduce managers’ ability to monitor uncertainties and respond accordingly.
If they want to get execution right, strategists must clarify and test relevant assumptions. This includes mechanisms to both identify and challenge strategic assumptions so organizations can avoid unanticipated issues that derail implementation.
Large organizations typically 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 creates resourcing challenges that limit execution success.
The planning process should focus on vertical alignment between the corporate center and the business units (BUs), and horizontal alignment across BUs and functions. To avoid confusion, strategists should first clarify objectives and roles for those in the business tasked with execution.
Markets can shift between a firm’s strategic planning cycles, invalidating assumptions and the strategic plan. Without an effective system to monitor the performance of the strategy, organizations might execute the wrong plan for months or even years before correction.
For timely course-correction, performance management systems have to hold employees accountable for key metric goals and review dashboards regularly. Strategy teams can even schedule reviews of the strategic plan itself to determine whether underperformance was the result of a bad market assessment, wrong strategy or poor execution.
For effective implementation, employees must understand and support the new strategy. However, more than 65% of employees do not understand their roles when new initiatives are launched, according to our research. The lack of a cohesive communication strategy can reduce motivation and increase resistance to change, both of which increase the cost of execution.
It’s important to engage crucial employees with targeted communications to win support for the strategy. Strategy planners should start a two-way dialogue or take a page from their organization’s PR playbook to keep employees on board and engaged with achieving the company’s objectives.
Although strategy creation, planning, performance metrics and communication are all critical for execution, many organizations rely solely on these methods for effective implementation. Often, they fail to allocate resources for the actual implementation of new growth strategies in terms of assets, time, people, etc. Almost 80% of strategists we interviewed said they were ineffective at identifying capacity, which is critical for effective strategy implementation.