Strategy without Strategy Execution is Just Wishful Thinking

A business woman is drawing graphs on a white board that show strategy execution

Strategy Execution Needs Strategic Clarity
Our organizational alignment research found that strategic clarity account for 31% of the difference between high and low performing organizations in terms of revenue growth, profitability, customer satisfaction, leadership effectiveness and employee engagement.

A Strategy Can Only Succeed if it is Executed
You can spend all the time you like creating a clear strategy designed to improve and grow your business but, if you don’t execute against that plan, what good is it?

Some Frightening Strategy Execution Data
Here are some numbers that shock even those of us in the field of strategic clarity and execution. There is a 90% failure rate. That’s right. According to IBM, only one out of ten organizations is able to successfully implement their strategies on a consistent basis. And a study conducted by Booz & Company found that 60% of employees rated their companies weak at strategy execution.

Four Strategy Execution Mistakes to Avoid
Here are four factors that we find get in the way of effectively executing even the best of strategic plans:

#1.  Poor Communication
Many companies feel that simply by repeating their business strategy clearly and often, employees will get it. But repetition does not equal understanding or strategic clarity. Though your employees may say they understand where and how the company is headed, you should test them.Do they really know what the words mean?

Do they fully comprehend what the strategy means vis-s-vis the way they need to behave and make decisions day to day? Do they believe it is implementable at your company? Do they see other teams following through on their plans?

Ask employees to describe the strategy and how they and their team fit in using their own words. If you are like most of our clients, you may be surprised how few have translated your strategic intentions into the way they handle their jobs. It is not the number of times you communicate the strategy but the quality of those communications.

Our organizational alignment research found that 81% of high growth companies agreed or strongly agreed that information flow was timely while only 6% agreed for unaligned and less profitable organizations.

#2.  Overly Rigid Adherence To The Plan
Yes, it’s important to stick to your plan. However, there are times when flexibility is needed in order to adjust to new and changing market demands. Sometimes a detour gets you back on the right path faster than persevering through a washed-out and heavily rutted path.

No strategy can anticipate every future event. Companies need to adjust to the facts on the ground.

Those who are best at strategy execution and strategic clarity know when to seize opportunities that support the plan at the same time as they coordinate with other parts of the organization.

Our organizational alignment research found that 92% of high growth companies agreed or strongly agreed that their leaders were highly responsive to relevant market and industry changes. Make sure your leaders are inspiring others to creatively translate problems into opportunities and asking people to challenge assumptions and look at things in new ways.

#3.  Lack of Accountability and Decision Making at All Levels
Ultimately the CEO is responsible for strategy execution; it is the CEO who bears the brunt of business failure or reaps the rewards of business success. But the CEO cannot be solely responsible for driving the strategy forward. It is the decisions made at all levels throughout the organization that will, in the final analysis, determine if the strategy is properly executed.

Our organizational alignment research found that 88% of high growth companies agreed or strongly agreed that company decisions demonstrated a healthy balance of short- and long-term focus.

Top-down implementation can have a positive effect initially but an organization’s capacity to adjust to changing circumstances can be diminished over the long-term. Too much oversight from top leaders can deteriorate into micromanagement and suppress the agility and cross-functional coordination needed for success.

#4.  Over-reliance On Unrealistic Targets
Effective performance measurement is the heart of a high performance culture. But make sure you are measuring the right activities, outcomes and behaviors in the right way. We have seen some organizations pay too much attention, for instance, to making the numbers – e.g. Wells Fargo’s sales scandal driven by impossible sales quotas.

If outcomes are all employees are rewarded for, they will tend to either cheat or to lower their projections and avoid experimentation. They may “make their numbers” but in a downward spiral of productivity and potentially toxic behavior that discourages growth and innovation. Think of balancing performance measurement between “Doing (the results)” and “Being (how things get done)” to create the healthy and aligned culture to execute your strategic priorities.

The Bottom Line
To be among the 10% of companies that consistently succeed at strategy execution, avoid the four strategy pitfalls above.

To learn more about how strategy execution often fails as it gets cascaded through an organization, please download 3 Big Mistakes to Avoid When Cascading Your Corporate Strategy

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Kim Silva, CFO

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