Strategy execution: an essential step to make a good strategy great
STRATEGY and strategic planning are buzzwords often used in organisations, and most of the time without understanding what they really mean or why they are so important to a company.
Every company should have a strategy but it has to be implemented and executed in a meaningful way. If it is not, it will end up being just another beautiful word on a poster on an office wall.
It is expected that organisations with a good strategy should be able to perform well and reap a competitive advantage in the market. But in reality, there seems to be no relevancy between a good strategy and outstanding business results without good execution.
According to Fortune magazine, 70 per cent of CEO failures come not as a result of a poor strategy, but from poor execution. Research from Harvard Business Review found that a high-performing company is one that continuously rectifies the alignment between a strategy and its execution.
Phanish Puranam, INSEAD Roland Berger chair professor of strategy and organisation design, nicely touched on this in an article. He said a business strategy was worth doing wel even when it was flawed – that “good implementation of even a poor strategy can lead to the discovery of better ones”. So, the question is: What factors constitute good strategy execution? Here are the two differentiators.
Constant communication. Unfortunately, it is common in most family businesses that their employees have very limited ideas and a very limited understanding on the company’s strategy. This is partly because after the strategy is kicked off, leaders often go astray by focusing on the day-to-day operations as they are held more accountable for short-term performance and they simply forget to or don’t have enough time to communicate the strategy to their subordinates. Thus, discussions on the implementation of the strategy dissipates easily.
Set the right key performance indicators – the link between performance and rewards with constant checks. Having too many or too little KPIs are not beneficial for companies. Instead, setting the right KPIs aligned with the company’s predetermined strategy will bring you success as it will define areas of responsibility regarding the leading and lagging indicators as well as identifying those accountable for achieving targets.
When the company designs the KPIs that establish who is accountable for what and makes the connection between performance and reward, those who can achieve the KPIs will get a bonus and/or promotion. So it will naturally encourage employees to implement the strategy effectively.
Moreover, it is highly recommended to continuously evaluate performance to ensure that the objectives are met before it’s too late.
Simply put, a strategic plan is good on paper but to make it great it requires good execution, which requires constant communication and the right KPIs that link performance and rewards to let people truly understand what they are responsible for and who makes which decisions. With these building blocks in place, strategy execution will be achieved to ensure that a good strategy can become a great one.
Thanaratana Phoonpirom is the Principal Consultant at APMGroup. She can be reached at [email protected] https://www.facebook.com/apmgroupthai
