How to implement your strategy without losing it?
A strategy must also be put into action, because in order to be number one in your industry, a strategy alone is not enough, says Jeroen de Flander. “That is where strategy implementation enters. It is the bridge between brilliant strategies and superior performance."
Image: © Nationale Beeldbank
Suppose you run a moving company. And every day you lose 60 out of 100 boxes that you move. How long do you think it will take before your company goes bankrupt? Or imagine that you are a tennis player. And during every match you play, you hit one out of every two balls in the net. How many matches do you think you would win? According to research published in The Harvard Business Review, “companies realize only 40 to 60 percent of the potential of their strategy.” The rest is lost in transit or does not get over the net.
The numbers do not look good – and in the last 10 years more and more companies realize that much more is needed than a great strategy to become number one in their industry. You also need to turn that great strategy into great performance. That is where strategy implementation enters. It is the bridge between brilliant strategies and superior performance.
Strategy implementation is a fast-growing dot on the horizon of top managers, also thanks to Kaplan and Norton, the promoters of the Balanced Scorecard, and the success authors Bossidy and Charan. But just appearing on the horizon is not sufficient to turn your strategy into results. Every manager must have the necessary implementation skills to successfully put a strategy into practice.
What can you do about it?
Most managers today are very aware of the importance of proper implementation. But knowing that is not enough. After all, you need the right skills to turn strategy into action. This is where HR plays a crucial role.
In this first article of our series Strategy in Practice, we look at the strategy implementation framework. We will each time highlight a critical implementation skill and you will get practical tips to get started.
A perfect fusion between organization and individual
Strategy implementation is complex. It is a mix of different activities, and the ideal combination is different for each organization. But even with a different combination every good process must include some essential building blocks. Fortunately, many of these building blocks are already present in most companies. Some of them are:
- Techniques to evaluate strategic options, such as scenario planning;
- Tools for cascading strategy, such as the Balanced Scorecard;
- Communication channels;
- Techniques for structuring, implementing, and monitoring strategic projects;
- An approach to establish, monitor, and evaluate individual objectives.
But what is often missing is a simple framework to integrate and align all these different building blocks. That is where “the 8” comes in. The 8 brings the main building blocks together into a coherent whole. The 8 does not cover all aspects of the strategy implementation process. But that is also not the intention. It is not a rigid roadmap. But then what is it? A simple model for strategy implementation.
You can make the model more complex if you want to. There are several comprehensive models especially for the organization cycle. Kaplan and Norton describe one in their latest book The Execution Premium. You can find a second model in Making Strategy Work by Hrebiniak.
I appreciate the insights offered by these conceptual models, but their complexity makes them unsuitable for everyday use in an organization. A model must be basically simple, instantly recognizable, and attractive for everyone, both managers and employees. (Think of a good marketing campaign.) You do lose some nuances that way, but that does not outweigh the disadvantages. Incidentally, this does not mean that you have to simplify your process for strategy implementation. You can use the 8 as a communication steppingstone for everyone and make a more detailed version for top management.
The 8 – crucial building blocks
Below is an overview of the different building blocks:
- 1. Adjust your strategy
Your strategy is your long-term action plan to achieve your vision. Depending on the industry you work in, your strategy shows the way ahead for your business over the next three to ten years. Your strategy should offer your company a competitive advantage over your industry peers.
On a regular basis, usually annually, a company must (and want) to assess the strategy and make adjustments based on changes in the competitive environment and based on feedback from the success of the previous strategy implementation cycle.
The strategy update is an integral part of the 8 – the strategy implementation model – because the adjustments occur at all levels of the company on a regular basis. The real strategy work, that is being taken care of once every three to five years at the top of the company, is not part of that.
- 2. Communicate
Start to communicate once your new strategy (or strategy update) is approved by all parties involved. Transparent and comprehensible communication creates the necessary clarity and commitment to the new (or adapted) strategy.
Use all available communication platforms. This is essential. One major annual strategy event and a single mail from the boss are not enough. Also use meetings, discussion groups, informal and formal meetings, the intranet, bulletin boards, business theater, screensavers, posters, and other creative ideas to communicate your strategy. You can never over-communicate your strategy and vision!
Also pay attention to the quality of your communication strategy. Especially managers – the strategy ambassadors – should pay sufficient attention to the way they communicate the strategy. In addition to the content itself the tone and nonverbal communication are also essential elements in generating the necessary enthusiasm. There is nothing worse than a boss who puts everyone to sleep by reading out a deadly dull PowerPoint presentation.
- 3. Cascade
Rolling out a strategy is nothing more than cutting your business objectives into smaller pieces for the next, hierarchically lower, level in your organization. The process stops at the level of the smallest organizational unit. Typically these are the teams. Ultimately, the size of your organization determines the extent of the cascade. It is essential to harmonize all the objectives – horizontally and vertically. In order to comply with objectives you must choose the right performance indicators – often called Key Performance Indicators or simply KPIs.
- 4. Compare and learn
Your strategy is a hypothesis. It is – at some point – your best estimate of the road to success, the route that you think offers the greatest chances of success for the realization of your vision. But it remains an estimate. It is, therefore, a good idea to take a brief moment at the end of each implementation cycle and verify your hypothesis. Compare your initial assumptions with what you learned from the reality of the past implementation round. Also look at external factors, these may have changed in the meantime.
When you take this step – compare and learn, you distinguish yourself from the crowd. Research shows that this reflection is only done in a systematic way in 15 percent of all companies. And while you are at it, make sure that you critically examine your strategy implementation process at the same time.
All too often companies change their strategy because they do not achieve the proposed performance. On closer examination, however, there appears to be nothing wrong with their strategy. The problem was in its implementation. Therefore, do not forget to closely examine your implementation process!
The “compare and learn” step helps you to verify hypotheses (i.e. evaluate your strategy), adjust your strategy and then align your implementation efforts and process.
- 5. Managing initiatives
Initiative management is the step where your dreams are confronted with the reality, where people and resources are added to your strategy recipe. It is, therefore, probably the most difficult step in the process of implementing a strategy – and this is also where it often goes wrong. Initiative management includes selecting, prioritizing, and following up the right strategic projects.
- 6. Determine individual objectives
Setting individual performance targets is one of the best actions you can take to improve performance – whether it is your own performance, that of your team, or even that of the entire organization.
The positive impact of personal objectives is a very commonly researched and scientifically-based element of contemporary organization theory. The pioneers of the goal setting theory are Edwin Locke of the University of Maryland and Gary Latham of Toronto University.
Link all individual performance targets to the overall strategy. If you do not do this, you will end up with great personal targets ... that are of no use to the company!
Pay sufficient attention to the way you agree on objectives. It is the quality of the objectives – including the link with the overall business strategy – and the acceptance of these objectives that ensure success.
- 7. Follow up and coach
Regular coaching motivates people and greatly increases their chances of success. It also simplifies the final performance assessment. In fact, regular coaching is far more important than the formal mid-year evaluation conversation.
Giving feedback is an important skill of a good coach. Getting feedback is a must to improve performance.
Performance coaching is a relatively new but rapidly growing field of knowledge. One of the main pioneers is Sir John Whitmore, author of Coaching for Performance.
- 8. Assess performance Most organizations formally evaluate the performance of employees at the end of the year. Ideally, the evaluation answers the question: Have the individual performance objectives been met? Make sure you can make an honest assessment. There are several techniques to help you in this. Many companies link a financial reward to whether or not achieving objectives. However, this is not a prerequisite to professionally deal with individual objectives.
Do you also want to successfully implement your strategy? The next edition of the Strategy Implementation master class with Jeroen De Flander will take place from November 30 to December 2, 2015.
More information about this master class