Making Strategy Work

1. Strategy execution is more challenging than strategy formulation

Execution is a key to success, but it is no easy task.

Execution complexity: Strategy execution involves implementing plans across an entire organization, requiring coordination of numerous people, departments, and resources. This process is often more time-consuming and complex than the initial strategy formulation.

Common obstacles: Several factors contribute to execution difficulties:

• Lack of clear communication
• Insufficient resources
• Resistance to change
• Misalignment between strategy and organizational structure
• Inadequate performance measurement systems

Leadership focus: Successful execution demands strong leadership that can navigate these challenges, maintain focus on long-term goals, and adapt to changing circumstances. Leaders must be skilled in both strategic thinking and operational management to effectively bridge the gap between planning and implementation.

2. A structured approach is essential for successful strategy implementation

A logical model or guidelines for execution decisions or actions is needed to make strategy work.

Execution framework: Developing a comprehensive framework for strategy execution helps organizations systematically address key implementation challenges. This framework should include:

• Clear definition of strategic objectives
• Identification of key success factors
• Allocation of resources
• Assignment of responsibilities
• Establishment of timelines and milestones
• Creation of performance metrics

Integrated approach: An effective execution framework integrates various organizational elements, including:

• Structure
• Systems
• Processes
• Culture
• Leadership

Adaptability: While a structured approach provides guidance, it's crucial to maintain flexibility. The execution framework should allow for adjustments based on feedback, changing market conditions, and emerging opportunities or threats.

3. Effective execution requires clear strategy and short-term objectives

Strategy must be translated into short-term operational metrics that (a) are related to long-term needs, (b) can be used to assess strategic performance, and help the organization achieve long-term strategic goals.

Strategy clarity: A well-defined strategy serves as the foundation for successful execution. It should clearly articulate:

• Organizational vision and mission
• Key strategic priorities
• Competitive positioning
• Target markets and customer segments

Short-term objectives: Translating long-term strategy into actionable short-term objectives helps:

• Provide clear direction for day-to-day activities
• Create a sense of urgency and focus
• Enable regular performance tracking and adjustment

Alignment: Ensuring alignment between short-term objectives and long-term strategy is critical. This can be achieved through:

• Regular strategy review sessions
• Cascading goals throughout the organization
• Implementing balanced scorecard or similar performance management systems

4. Organizational structure must align with strategy for successful execution

Structure serves an important function, given the problems or dependencies created by strategy.

Structure-strategy fit: The organizational structure should support and enable the chosen strategy. Key considerations include:

• Centralization vs. decentralization
• Functional vs. divisional structure
• Matrix or hybrid structures

Structural implications: Different strategies may require different structural approaches:

• Cost leadership strategy: May benefit from centralized, functional structure
• Differentiation strategy: May require more decentralized, customer-focused structure
• Global strategy: May necessitate a matrix structure balancing global and local needs

Flexibility: As strategies evolve, organizations must be prepared to adapt their structures accordingly. This may involve:

• Restructuring departments or divisions
• Creating new roles or teams
• Adjusting reporting relationships
• Implementing cross-functional project teams

5. Integration and coordination are critical for strategy implementation

Lateral communication and managing across organizational boundaries are important to successful strategy execution.

Cross-functional collaboration: Effective execution often requires coordination across different departments, functions, and business units. Key elements include:

• Clear communication channels
• Shared goals and objectives
• Cross-functional teams or task forces
• Integrated information systems

Knowledge sharing: Facilitating the flow of information and best practices throughout the organization is crucial for execution success. This can be achieved through:

• Regular cross-functional meetings
• Internal knowledge management systems
• Job rotation programs
• Communities of practice

Overcoming silos: Breaking down organizational silos is essential for effective integration. Strategies may include:

• Implementing matrix reporting structures
• Encouraging cross-functional career paths
• Developing shared performance metrics
• Fostering a culture of collaboration and teamwork

6. Incentives and controls play a vital role in execution success

Incentives must support the key aspects of the strategy-execution model. They must reinforce the "right" things if execution is to succeed.

Aligning incentives: Reward systems should be designed to motivate behaviors that support strategy execution. Key considerations include:

• Linking individual and team performance to strategic objectives
• Balancing short-term and long-term incentives
• Recognizing both financial and non-financial contributions

Effective controls: Implementing appropriate control mechanisms helps ensure strategy execution stays on track. Important elements include:

• Regular performance reviews
• Key performance indicators (KPIs) aligned with strategic objectives
• Balanced scorecard approach
• Feedback loops for continuous improvement

Accountability: Establishing clear accountability for execution outcomes is crucial. This involves:

• Defining roles and responsibilities
• Setting specific, measurable targets
• Implementing consequences for both success and failure
• Fostering a culture of ownership and commitment

7. Managing change is crucial for effective strategy execution

Managing change effectively, including culture change, is vital to the success of any approach to making strategy work.

Change management process: Implementing a structured change management approach helps organizations navigate the challenges of strategy execution. Key steps include:

• Creating a sense of urgency
• Building a guiding coalition
• Developing a clear vision for change
• Communicating the vision effectively
• Empowering employees to act
• Generating short-term wins
• Consolidating gains and producing more change
• Anchoring new approaches in the culture

Overcoming resistance: Addressing resistance to change is critical for successful execution. Strategies may include:

• Involving stakeholders in the change process
• Providing clear explanations for the need for change
• Offering training and support
• Addressing concerns and fears openly
• Celebrating successes and progress

Sustaining change: Ensuring long-term success requires ongoing effort to embed new practices and behaviors. This may involve:

• Reinforcing new norms through leadership behavior
• Adjusting systems and processes to support the change
• Continuously communicating the benefits of the change
• Monitoring progress and making adjustments as needed

8. Organizational culture significantly impacts strategy implementation

Culture elicits and reinforces certain behaviors within organizations. These behaviors, in turn, affect organizational performance in vital ways.

Culture-strategy alignment: Ensuring that organizational culture supports the chosen strategy is crucial for successful execution. Key considerations include:

• Identifying cultural elements that enable or hinder strategy implementation
• Assessing the gap between current and desired culture
• Developing a plan to shape culture in support of strategy

Cultural levers: Organizations can influence culture through various means:

• Leadership behavior and communication
• Organizational structure and systems
• Hiring and promotion practices
• Training and development programs
• Reward and recognition systems

Cultural change challenges: Transforming organizational culture is often a lengthy and complex process. Common challenges include:

• Deeply ingrained habits and beliefs
• Resistance from long-tenured employees
• Subcultures within the organization
• External factors influencing culture (e.g., industry norms, national culture)

9. Power and influence are key factors in execution success

Power or social influence both affects, and is affected by, strategy formulation and execution in organizations.

Power dynamics: Understanding and managing organizational power dynamics is crucial for effective strategy execution. Key aspects include:

• Formal authority (positional power)
• Informal influence (personal power)
• Coalitions and alliances
• Resource control

Influence strategies: Leaders can employ various influence tactics to support execution efforts:

• Rational persuasion
• Consultation and participation
• Inspirational appeals
• Exchange and reciprocity
• Personal appeals
• Coalition building

Political skills: Developing political acumen is essential for navigating organizational complexities during execution. Important skills include:

• Networking ability
• Interpersonal influence
• Social astuteness
• Apparent sincerity

10. Global strategy execution demands unique considerations

To execute a coordinated global strategy successfully methods directed to coordinating, sharing, and integrating knowledge and capabilities worldwide are critical for success.

Global-local balance: Executing global strategies requires balancing global standardization with local responsiveness. Key considerations include:

• Degree of centralization vs. decentralization
• Adaptation of products/services to local markets
• Cultural sensitivity in management practices
• Global vs. local supply chain management

Cross-border coordination: Effective execution of global strategies demands strong coordination across countries and regions. Important elements include:

• Global communication systems
• Cross-cultural teams
• Knowledge sharing platforms
• Global talent management

Global leadership: Developing leaders with global mindsets and competencies is crucial for successful execution. Key skills include:

• Cultural intelligence
• Global business acumen
• Ability to manage diverse teams
• Adaptability and flexibility

11. Service organizations face distinct challenges in strategy implementation

The indisputable point is that service organizations must do most, if not all, of the things product companies do to formulate and execute business strategies successfully.

Service characteristics: Unique aspects of services affect strategy execution:

• Intangibility
• Inseparability of production and consumption
• Variability
• Perishability

Customer focus: Service organizations must place heightened emphasis on customer experience in execution:

• Service quality measurement and improvement
• Employee-customer interaction management
• Service recovery processes
• Customer feedback integration

People management: Given the importance of human capital in services, execution efforts must prioritize:

• Recruitment and selection of customer-oriented employees
• Extensive training and development programs
• Empowerment of front-line staff
• Performance management aligned with service quality goals

12. Project management can enhance strategy execution efforts

Project management focuses on coordination. It is action oriented and concerned with making everything work and performing efficiently and effectively.

Strategic project alignment: Integrating project management with strategy execution helps:

• Break down strategic initiatives into manageable projects
• Allocate resources effectively
• Monitor progress and identify issues early
• Ensure consistent execution across the organization

Project portfolio management: Implementing a portfolio approach to projects supports strategy execution by:

• Prioritizing projects based on strategic importance
• Balancing resources across multiple initiatives
• Identifying synergies and dependencies between projects
• Providing a holistic view of execution progress

Agile methodologies: Adopting agile project management approaches can enhance execution flexibility:

• Iterative planning and execution
• Rapid response to changes
• Continuous stakeholder engagement
• Focus on delivering value incrementally

Last updated: August 18, 2024