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Why do good strategies fail? Execution, Execution, Execution
17-Jun-2010
MBA trained managers know about planning, but they know very little about how
to execute a plan - according to the book “Making Strategy Work: Leading Effective Execution and Change.”
A survey of senior executives at 197 companies showed that firms achieve only
63% of the expected results of their strategic plans. The key reason is
they don’t know how to execute effectively.
Here is our take on some of the causes of execution failure:
Lack of strategic focus.
Many companies do not understand the importance of clarifying their
generic strategy (value discipline). They try to compete on
efficiencies, personal service, and innovation simultaneously - showing
the lack of a disciplined strategic planning and decision making
process. If you don’t know what strategic game you are playing, you are
destined to never win.
Resistance to change.
If your key people don’t agree with strategic decisions, they are
unlikely to carry them out effectively. They may have a valid point if
the strategy was poorly conceived in the boardroom, without a broad
understanding of the long-term implications for your brand. Ideally,
involve people from different functional areas and levels in your
planning process. As one of my colleagues likes to say, “Those who plan
the fight - don’t fight the plan.”
Poor communication.
Most plans fail simply because they are not well communicated to the
people at the coalface, and their execution progress is not being
closely managed. If your people can’t answer the question, “What are
your team’s top 3 action priorities for the quarter – and how are you
progressing?” - it is the leadership who is not doing an effective job.
Incentives not aligned with strategy.
If your performance management systems (i.e. the scorecards for each
role) are not updated each quarter and aligned to the company strategic
priorities – your people will continue to focus on what they believe is
in their own best interests (which may not be aligned the execution of
your strategy).
Not paying attention.
Less than 15% of companies track how they actually perform vs. what they
planned to achieve in terms of strategy execution. That's an appalling
statistic. You get what you inspect – not what you expect. Effective
companies use execution software tools to track and drive strategic
execution progress – every week.
No cadence.
Firstly: Strategic planning should be an ongoing process - not an annual
event. Your strategic plan should be updated every 90 Days to ensure
relevance with the competitive environment and to align all staff at the
beginning of every quarter.
Secondly: You need to conduct well-structured "execution meetings" every
week with your team members to hold them accountable for execution
progress.
Thirdly: At the end of every quarter you review and debrief the actual
results, “bank the learnings”, and take the necessary corrective actions
to improve your strategy setting and execution the following quarter.
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Every year I ask the executives in in a class I teach at the Wharton School of Business: “What percentage of the time do you think companies that have a solid strategic plan – actually effectively execute that plan?” The answer I typically get is: 10-15% - YIKES!
Everybody knows that even a brilliant plan that is poorly executed is almost worthless (actually it is very, very costly!). And there can be no denying that every strategic planner in the world will jump up and down about how important it is to "execute to plan" - but then it struck me – that maybe the reason this number was so incredibly low was that almost no one makes planning for effective execution part of the actual strategic planning process. Ah-ha!
It has been my experience that most organizations spend very little time doing any real strategic thinking before they begin planning… then spend a lot of time, energy and money on an elaborate "planning retreat" that focuses heavily on process… and then walk away from the planning retreat and simply expect that they can pass out the plan and it will be dutifully implemented by their people. I say NO, not unless just as much energy, time and effort goes into creating a system and a process for ensuring effective execution as well.