Wednesday, November 27, 2013

Executing strategy: the other half of the battle

There is a saying that goes "Getting there is only half the battle". This could apply to strategy development because designing a very good strategic plan does not guarantee you its successful execution. It is likely that you develop an appropriate strategic plan if you follow the methodology studied during the course: planning process, evaluation of the current performance, analysis of the strategic environment, evaluation of the industry and internal analysis. However, there is a chance that you screw up during the execution of your strategic plan if you do not take into account important issues like what are the right people to involve, what are the lessons learned from previous experiences or what are the main obstacles that you will face. Can you even imagine the cost involved if everything fails because of an inadequate execution?

According to the article "The secrets to Successful Strategy Execution" from Harvard Business Review, some companies fails at executing its strategy because they make mistakes like changing the organization chart before even know what the real root of the problem is.  The solution to success seems easy and obvious: make clear who has the decision making power within the company and improve the flow of information across the company. The article lists 17 traits that successful organizations follow while executing its strategy, having as main pillar the fact that all employees know perfectly which their responsibilities are.

According to the result of thousands of interviews made by the authors, around 60% of the companies are weak at execution. Those companies that are successful in executing base their actions and decisions in four broad guidelines:

a)    Clarifying decisions rights
b)    Designing information flows
c)    Aligning motivators
d)    Making changes to structure

Many companies, in order to improve their performance, start by implementing changes to structure but they only get short term benefits and eventually the original problem arise again. Indeed, authors identified that the first two points are by far more effective and have more impact than the other two. At the end, the key to success is to improve how people make decisions and how they assume accountability for their decisions.

Some of the 17 traits are listed below ordered by their importance according to the evaluation of the authors.

-Everyone has a good idea of the decisions and actions for which he or she is responsible.
-Important information about the competitive environment get to headquarters quickly.
-Once made, decisions are rarely second-guessed.
-Information flows freely across organizational boundaries.
-Line managers have access to the metrics they need to measure the key drivers  of their business.
-The individual performance-appraisal process differentiates among high, adequate, and low performers.
-On average, middle managers here have five or more direct reports
-Besides pay, many other things motivate individuals to do a good job.





Definitively, the importance of each trait might vary depending on the type of organization or company. For example, according to my personal experience working at the Central Bank of Mexico, the last trait “Besides pay, many other things motivate individuals to do a good job” is a very important and powerful tool that you can use to encourage people to get involved in the things they have to do and to have a high performance.

Another interesting thing about this article is that it provides a tool to test what is the level of efficiency of your company in some of the traits mentioned. Additionally, the second part of the article shows how and industrial goods company improved their weak execution culture using the framework elaborated by the authors. This example is very illustrative since it shows how to overcome obstacles that you commonly face and how you can improve the flow of information and making decision process of your company without making a big investment neither transforming your organizational structure.

In conclusion it is not enough to develop an efficient strategic plan, you have to spend some time planning and designing what is the best way to execute it. This can be the difference between be in the competitive map for a while or stay there long time.

To see the complete list of traits and learn the details of each of them, besides learn from some real examples of companies that have failed or success in implementing them, you can  read the article in the following link:

http://hbr.org/hbrg-main/resources/pdfs/extras/the-secrets-to-strategy-execution-the-idea-in-practice.pdf

I have explained that you can fail in implementing a strategy plan if its executions is poor, but do you think that the other way around Is also possible? In order words, do you think that a good execution of a deficient strategic plan might become it a successful strategic plan? Can you think in an example of this case?



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