Converting decisions into a working business process
Creating strategy is an uplifting thing to do. It clarifies who you are, what you want, where you want to go and how you are going to get there. However, implementing strategy is hard – often messy and unpredictable and successful strategy execution is often impeded by budgeting practices that are too short term focused. Yet, effectively implementing strategy is critical to success.
Indeed success in today’s competitive, increasingly connected, complex global business environment calls for constant innovation and execution of new strategies.
For example, to drive growth, companies may modify business models, design new product and service offerings, acquire new lines of business, or cultivate new channel strategies. All the while, they are usually maintaining an awareness of the level of aggregated risk this strategy entails. To increase efficiency, companies may focus positively on optimizing their supply chain, automating processes or outsourcing business processes.
The paradox however is that most organizations – even those with streamlined operations and compelling strategies, struggle to follow through on their strategic objectives
In fact: “Less than 10% strategies effectively formulated are effectively executed” (Fortune Magazine)
So in nearly every case, failures are not for lack of a well-defined strategy but due to the absence of a well-orchestrated implementation plan bridging the gap to execution and making the strategy measurable.
Only what you can measure you can manage!
This is what we call the “Execution Gap” and where the close link of the strategy to the planning and budget process is the key to success.
Reasons for the Execution Gap
In the past 10 years many organisations could operate in a stable environment with continuous economic growth, products with long lead times, loyal customers and well-defined competitors. The standard processes and procedures in place where sufficient to successfully drive the business. Consequently executives had adequate time to plan and as long as they made some periodic corrections to maintain course, they achieved their set goals. The main thing they needed was experience.
In the last three years this has changed. The environmental conditions have gotten unpredictable with uncertain and changing conditions, shorter product cycles, price and margin pressure, powerful multichannel customers and new competitors. This makes rapid decision essential to successfully drive a company. Standard procedures are no longer enough but employees are needed who take responsibility and make decisions aligned with business goals. What is needed most is alertness and agility to constantly make decisions and corrections with every changing condition. This can be achieved with an execution process systematically built into the organization’s performance management processes.
Let us show you how IncQ Consulting can help you to get control of your strategic implementation program, link it effectively to your planning and budget process to consistently deliver strategy execution success.
A Pragmatic Approach How to Close the Execution Gap and Successfully Link Strategy and Planning Processes
The best practice way is to ensure alignment between strategy, risk, planning process and execution in a systemic holistic way.
Research highlights that having a formal strategy execution system that bridges the execution gap makes success 2 to 3 times as likely compared to that don’t use a formal system.
The two key massages when setting up a formal system, which successfully links the strategy to the planning process, are:
- Set priorities outside the budget process!
Only if strategic planning proceeds budgeting executives can look at the “big picture”. Otherwise the strategic initiatives needing budgets will not be identified.
- Ensure the right KPI mix is incorporated in the budget!
In order to make the strategy measurable and with this executable the right KPIs (financial and non-financial, short and medium term) need to be reflected in the budget. Furthermore the budget process needs additional funding for strategic initiatives that are cross-functional and not owned by a single department.
IncQ can Support you Implementing a Formal Strategy Execution System
IncQ Consulting can help with your strategy implementation challenges with the implementation of a formal strategy system. This is a holistic consulting approach taking your people, processes and technology support into consideration.
Concerning people and processes the following five categories necessary for a successful strategy execution will be analyzed:
- Strategic definition and alignment: Ensure alignment of projects/initiatives, metrics, risks, people, and tasks to corporate goals
- Communication: Implementation of a stakeholder communication making sure employees, partners, customers and the financial community clearly understand the organization’s long, medium and short-term goals
- Accountabilities: Link individual employee objectives to overall goals by designing proper incentives to get all employees personally invested in driving business success
- Collaborate and manage: Identify the right KPIs, link them to the planning and budget process and install a monitoring mechanism to make success measurable and strategy execution possible
- Analyze: Implement an analysis and visualization tool using scorecards and dashboards to enable proactive problem identification
Talk to us for more and detailed information on our approach and on which technology to choose to support your people and processes.