The purpose of this paper is to highlight the key issues in strategy execution, in order to do so we need to understand what is meant by strategy, strategy execution, and strategy implementation and to understand the differences between them. As a result of research into the topic of strategy execution, I have found that both execution and implementation seem to be intertwined, however it must be acknowledged that there is a distinct line between both. Although many of the papers and articles that I have read, link them interchangeably and fail to differentiate between them.
The Oxford English dictionary defines strategy as “a plan of action designed to achieve a long term or overall aim” the definition of strategy implementation is “the process of putting a decision or plan into effect.”, and the definition of strategy execution is “the carrying out of a plan, order or course of action.” As can be seen by the definitions of strategy execution and strategy implementation, both are intertwined.
While there is no single universally accepted definition of strategy there is no best way to create strategy nor is there one best form of organisation. the world is full of contradictions and the effective strategist is one who can live with contradictions, learn to appreciate their causes and effects adbd reconcile them sufficiently for effective actions. No single method or theory can incorporate all the factors that influence major business decisions or all the possible combinations of these factors that could be faced. nor can they anticipate the bizarre changes that occur in real world environments, or even more important, the impacts of your own if other creative innovations.(Quinn, Mintzberg & James (1991) The Strategy process: Concepts, Contexts & Cases)
Strategy is an action that the management of an organisation take to attain one or more of the organisations goals, essentially a general direction set for a company and its various components to achieve a desired state in the future. It looks at the knowledge of goals, the uncertainty events and the need to take into consideration the likely or actual behaviours of others. Strategy within in an organisation is key to show the organisation’s objectives and goals, it defines the future of the organisation, the type of business it wants to continue, and the type of economic and people centric organisation it wants to be, given that the organisation has a responsibility, to both shareholders, customers and society as a whole. the organisation’s strategy is key to maintaining this.
While organisations will develop strategies for their businesses to allow them to gain competitive advantage over organisations within the same sector, there are more steps for the organisation to fully implementing their strategies. It has been found in research that up to 87% of companies fail to execute their strategies.
Michael Porter’s book Competitive Strategy: Techniques for Analyzing Industries and Competitors (Michael E. Porter 1980), published innovated research that almost overnight changed how management perceived their industry’s importance as a factor for their company strategy. Prior to this research, studies of industrial organisations would have focussed on varying levels of profitability between industries based on their structural differences. Porter, however, focussed on private policy rather than public policy, (i.e., how to maximise profits as opposed to how to locate excess profits).
This enabled a change in industry that was now important to a firms strategic decision making process. Porter devised a Five Forces model which is an important tool for understanding the forces that shape competition within an industry. It is also useful for helping you to adjust your strategy to suit your competitive environment, and to improve your potential profit. Porter’s model is now recognised a seminal framework for strategic planning. While Porter’s Five Forces radically changed management thinking, there are key issues in the execution of an organisation’s strategic plan.
Porter’s model is detailed in the following image:
Competitive Rivalry: Large numbers of competitors can threaten a company, should they offer equivalent products and services. If there is little competition the company essentially has greater power to maximise sales and profits.
Threat of New Entrants: New entrants to a market will also affect a company. If however the company has “strong barriers” is an attractive feature, for organisations that would like to operate in a field with fewer competitors.
Supplier Power: Suppliers can drive up prices on goods and services, as it recognises that suppliers may have a monopoly on specific items. That being the case, the suppliers will continue to drive house prices to accommodate this.
Threat of Substitution: Substitution of low cost alternatives of goods and services, can impact significantly on a company by weakening it’s foothold in a market (such as generic medication, as opposed to the branded alternative.
Buyer Power: Customers are key in their ability to drive prices down. It is affected by the number of customers a company has, how significant they are, and the cost on the customers to switch from one company to another.
Any change to the strategy of an organisation requires the complete buy in from staff from the top down to enable full execution of the strategic plan.
Without the strategy being communicated effectively to the whole organisation, strategic direction can be lost, and organisations are left with a situation an organisation with different ideas on how to execute the strategy, employees pulling in different directions, as in the image below, when the management would like the entire organisation heading in the same direction, as in the second image.
Source: HBR – Peter Bergman Jan 04 2017
Bergman, in this article makes a valid point that most organisations rely on a communication plans to make that shift. Although strategy communication even if done daily is not the same as, and is not enough to drive strategy execution. He goes on to state that the reason strategy execution is often glossed over by even the most astute strategy consultants is because primarily it is not a strategy challenge it is a human behaviour one. (Bergman 2017)
Kaplan & Nortons studies recognise that 95% of employees fail to understand their company’s strategy, and this is also evident in the research that many companies fail to realise their strategic plan, this is caused by poor communication of the vision and goals of a company.
Hrebiniak (2005); states “When executing strategy, it is absolutely essential that the strategy be clear, focused, and translated logically into short-term objectives or metrics. It is vital, too, that these objectives and measurements be defined consistently to avoid problems of different, competing views of execution outcomes”. Strategy execution is the transition of a chosen strategy from a plan to an action for the organisation to achieve it’s strategic goals and objectives. it can be seen as the manner in which an organisation should develop, utilise and amalgamate organisational structure, control systems that lead to competitive advantage and a better performance. (Management Study Guide)
Strategic execution aims to turn the selected strategy into action. it requires the organisation to deal with:
Required resources: the identification of major tasks to be done, and the assessment of how, and by whom these tasks can be resourced.
Organisational structure changes required: Organisations must judge how they can best organise the business in order to follow through on the strategy.
Systems and work force necessary: the organisation must look at the business procedures and information systems it may need to adjust and the mix of skills may also require adjustment. (Chapter 1-2 “Strategic Management and information Systems” Wendy Robson)
First we must look at strategy execution facts. Strategy execution is linked with performance management in that it is a mix of several processes with the ideal process being different for every organisation. Each strategy execution process should include some basic building blocks, these are readily available in organisations. they may include tried and tested approaches for reversing a strategy such strategy cascade tools i.e. the balanced scorecard being the best known also techniques to structure, execute and monitor strategic projects.
Numerous studies such as (Kaplan & Norton, De Flander & Kotter) paint a gloomy picture of execution management and give statistics of more than 90% of organisations failing to execute their strategy. Strategies may be well researched in terms of market opportunities and resources in the organisation. But to execute well, people need to prioritise and have resources at hand – especially when preconditions and circumstances change. That requires action planning. It also requires organisations to analyse the market opportunities, identify goals and prioritise a few “must win battles”. Do proper action planning for the implementation: Spend a reasonable amount of time to find out how to align, cascade and communicate the plan. Commit enough resources to reach your goal. Inadequate execution is a waste of your company’s time and resources. he states that there are 3 fundamental steps to ensure better execution. these are
1. Got a deadline? How about a starting date?
When it comes to planning, everybody is focused on the goals – on deadlines. 80% of the action plans I have encountered had no agreed starting date on the initiatives. If people are very busy already and you don’t communicate clearly when you expect them to focus on your new initiative, then failure is almost guaranteed. The solution is to schedule the initiatives in a plan with sufficient time & resources.
2. Plan your actions
Take your planning to the next level: Consider which milestones need to be reached by when.
Simply telling an employee “Your target next year is 10% above this year’s performance” without agreeing how & when is the road to frustration. Why not plan it realistically and get real commitment from the people who will do the day-to-day execution?
You only need to repeatedly ask a simple question: What is the most important thing to succeed with first and what is the next step after that?
3. Follow up
To efficiently follow up, managers need to know what is going on and where follow-up is most needed. That requires structured and easy reporting and a well researched plan. (Victor Veloso)
So what are the key issues in strategy execution, poor communication, poor leadership, failure to adequately understand the mission and vision of an organisation.
When companies introduce new strategies, it requires the buy in from all employees and stakeholders from the top down to ensure the strategy will be executed completely and in a timely manner. the following is based on a list from the Asian School of Management, from the blog Breath of Joy, it is complied from a debate held with students in relation to strategy execution.
An organisation bases it’s strategy on assumptions, however as the environment may have changed at some point of time during implementation, any assumptions made will need to be revisited and amended or updated accordingly.
The vision, value statements and trust are mainly emphasised during the formulation of the strategy but during implementation these can be forgotten. when an organisation takes an ‘End justifies the means’ approach this can result in a compromise of values and eroding of the trust and the shared values. Organisations must be transparent and have clear communication and must admit their mistakes.
Overconfidence in leaders can lead to complacency in the execution of the strategy. this can occur if management and organisational members believe that their brand is stronger than that of their competitors. An issue would arise if forecasts are based on events that may happen in the future, often optimistically estimating uncertainties. Companies need to be realistic in their strategic planning, and execution.
It is easy for companies to fall into an organisational trap, whereby they focus excessively on efficiency, and are not flexible to adapt to any changes that may need to be addressed. This leads to a lack of questioning of challenging of the current strategy, which again will have implications in the execution of the strategy.
Management must ensure that an entrepreneurial spirit becomes built into the culture of the organisation to avoid the status quo bias and risk aversion. The leaders can foster this culture through encouragement.
It must be recognised that if a strategy is not aligned to the culture of the organisation, it will meet with resistance and opposition from the front line staff that are key to the execution of the strategy. Communication that is meaningful is the key for the management and leaders. Essentially, organisations cannot put strategy before it’s people.
It must be acknowledged that if the strategy and the structure of the organisation are not in sync, a strategy made need to be diversified to have a better fit with a particular divisional structure.
Failure of an effective leadership occurs as a result of weak empowerment and a lack of perseverance. Leaders at times can focus on knowing rather than doing. Things can tend to get worse before they get better, and this is why, inspiring your team with your organisations vision and mission is so important.
Leaders that have high emotional intelligence, will eradicate negative emotions from developing in the workplace. Leaders that have positive energy and that are calm are needed to deal with the situations that may arise.
10. A well known issue with strategy execution, is the sunk cost effect, this can also be known as “throwing good money after bad” If a company overruns on their budgets, the original case for funding will no longer apply, companies still however continue to invest to in order to have the strategy implemented.
There are several root causes to the failure of strategy execution, as can be seen above, these can also include the following, these can be fatal flaws in any strategic plan, and can ultimately lead to poor execution of the strategy.
Lack of detail planning to support plan goal achievement
Poor communication and coordination
Strategy and culture misalignment
Accountability missing from plan goals
Poor planning governance
Ill-defined strategic goals
As evidenced above, there are many issues in the execution of a strategy, the lists are not exhaustive, and essentially the issues that lead to the comprehensive execution of a strategy, are the responsibility of the management and leadership of the organisation, and how they deliver the message of the vision incorporated within the strategy, to the company as a whole.
If there is any ambiguity surrounding the strategic plan goals, it will lead to confusion, and the failure to execute. The language used to deliver the goals is fundamental to the execution of the plan. Strategic Plans have to be constructed in a clear and concise manner, so that they are not misunderstood. By definition goals will need to be measurable and be able to quantify any increase or decrease, as a percentage change, if controlled vocabulary is used it will remove the variability of the language and as a result will facilitate execution of the plan.
It must also be noted that every goal cannot be everyone’s top priority, we can however, be set up for failure if we treat them as all being equal. Priorities must be set, as no organisation can focus on too many goals at the one time. Priorities must be set, that will critically address each goal relative to others and think of these as key goals to select from. Bear in mind that strategic plan has several underlying layers to them, that will all lead to the execution of that plan. Additionally, many elements of the plan may be foundational components that need to be in place before other goals can be put into execution. Some work must be deferred while other goals and the projects associated with it are fast-tracked to pave the way, therefore that is why detailed planning is so important.
Detailed planning will mean the separation of the overall task into smaller parts, to make them easier to solve. This helps in an organisational setting as various teams can work on the plane in order to execute it efficiently. Communication at this point is crucial, as everyone on the various teams must not be left in any doubt as to what is expected of them, and the ultimate outcome of the plan. Communication is also a way to educate the workforce to enable the smooth execution of the plan, or goal.
There must be due consideration taken of the organisation’s culture, and the implementation of the strategic plan can be seen as a change management initiative. Strategy implementation is not only affected by the structure of the organisation, but it also takes into account the values and the effect the company has on society in general.
Strategic execution cannot be planned without consideration of the organisation’s culture. Strategic goal implementation is a form of organisational change management. The methods of strategy implementation are affected not only by organisational structure, but also the values and social mores of the organisation’s culture.
Experience tells us that to achieve a strategic plan and management goals requires an actionable plan that considers the people required to bring the plan to fruition. While this may be easy in theory, in practice, as plans and people are surrounded with uncertainties, and these must be managed carefully. All employees and management from the CEO down are accountable in accomplishing the individual tasks that are set to fulfil the execution of the strategic plan, the CEO has a responsibility to reinforce the tasks.
The governance of the plan will enable organisations to manage the interrelationships of all the underlying initiatives comprising a strategic goal. Governance also provides the boundaries and check points needed to keep programs in alignment with plan goals.
Execution can go wrong in many ways over time and plan governance is the foundation that oversees strategic implementation from an objective point of view. More than that, proper governance becomes an integral part of the planning process itself. The plan office serves as a coordinating body when considering dependency relationships among programs and constraints on resources. Organisations that have established an effective strategic governance model can ensure that all the programs and their underlying projects are managed and harvested for necessary metrics and progress reporting. Metrics harvested from the tactical layer provide historical acceleration data to offer continual improvement to the planning cycle. (Joe Evans – Strategy Execution:WhyWe Fail At Strategic Implementation)
We have seen that there are multiple papers and articles discussing the issues in strategy execution. The main issue in strategy execution that I have found during my research is that lack of communication is the most significant block to successful execution of a strategy. Unless there complete buy in from all in the organisation the execution of the strategy can fail at the last minute. Communication must be clear, unambiguous, and there can be no opportunity for dissent among the staff. While the vision and mission of the organisation may be clear to senior management and the board of directors, this may not be championed at the “coal face” of the organisation. Once the vision of the company is accepted by all, it will be driven with enthusiasm by all.
1. The Definitive Guide To Boost your Strategy Execution Skills By Jeroen De Flander – Last updated June 26th, 2017 (https://jeroen-de-flander.com/strategy-execution/ )
2. Cotton, B. 2008, “Kaplan and Norton’s six-stage strategy execution approach”, Chartered Accountants Journal of New Zealand, Online, vol. 87, no. 6, pp. 66.
3. Quinn, Mintzberg & James (1991) The Strategy process: Concepts, Contexts & Cases).
4. Michael Porter – Competitive Strategy: Techniques for Analyzing Industries and Competitors (Michael E. Porter 1980)
5. Porter’s 5 Forces | Investopedia https://www.investopedia.com/terms/p/porter.asp#ixzz516ICPnny
6. Victor Veloso- https://www.actionplanner.com/strategy-execution-how-to-escape-the-80-failure-rate/
7. Management Study Guide. http://www.managementstudyguide.com/strategy-implementation.htm
8. Breath of Joy : https://dilipnaidu.wordpress.com/2010/10/06/top-ten-challenges-in-strategy-execution-2/
9. Joe Evans – Strategy Execution:WhyWe Fail At Strategic Implementation. http://www.methodframeworks.com