The Strategy Execution Agenda
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Strategic success not only requires an appropriate strategy but also that the strategy is executed successfully. Despite its strategic importance many organizations fail at strategy execution. This article presents the Strategy Execution Agenda – a management model with 9 success factors that allows managers to master one of the greatest management challenges – successfully implementing strategies.
Transcript of The Strategy Execution Agenda
- 1. 2013 STRATEGOS CONSULTING 1 Strategic success not only requires an appropriate strategy but also that the strategy is executed successfully. This article pre- sents nine key success factors for successful strategy execution. The Strategy Execution Agenda Dr. Arnoud van der Maas email@example.com linkedin.com/in/avandermaas February 2013 Strategic success not only requires an appropriate strategy but also that the strategy is executed successfully. Even the best-made strategies are worthless without successful execution. Despite its strategic importance many organiza- tions fail at strategy execution. Fewer than 15 percent of organizations are suc- cessful in strategy execution. Because of its high failure rate, achieving successful execution remains a continuing chal- lenge for managers. This article presents the Strategy Execution Agenda a man- agement model that allows managers and executives to master one of the greatest management challenges suc- cessfully implementing strategies. The Strategy Execution Agenda incorpo- rates 8 key factors for strategy execu- tion. Collectively, these tools help or- ganizations execute their strategy exe- cutions to achieve sustainable organiza- tional success. Strategy without Execution is Worthless The successful execution of strong and robust strategies gives any organization a significant competitive edge. Strategy execution is even more important in cur- rent turbulent organizational environ- ments. The ability to develop and imple- ment new strategies quickly and effec- tively may well mean the difference be- tween success and failure for organiza- tions (Drazin and Howard, 1984; Hauc and Kovac, 2000). However, well-formulated strategies only produce superior perfor- mance for organizations when they are successfully implemented (Bonoma, 1984). The best-made strategies are worthless if they cannot be successfully implemented (Schilit, 1987). Strategic success not only requires an appropriate strategy but also that the strategy is im- plemented successfully (Hussey, 1996), and timely.
- 2. STRATEGY SERIES 2013 STRATEGOS CONSULTING 2 Most Strategy Executions Fail Organizations often fail at strategy exe- cution. Few intended strategies are suc- cessfully realized (Mintzberg, 1990), de- spite its strategic importance to any or- ganization. Fewer than 15 percent of or- ganizations around the world report that they are successful at strategy execution (Harvard Business Review, 2006). Vari- ous studies have reported execution fail- ure rates at 60 to 90 percent (Kaplan & Norton, 2005). As a result, survey after survey reveals that strategy execution is a top priority for executives (Harvard Business Review, 2006). The majority of strategies fail in the strategy execution phase (Noble, 1999). After a comprehensive strategy or single strategic decision has been formulated, significant difficulties are often encoun- tered during the following strategy exe- cution process (Alexander, 1985). Many organizations have a fundamental dis- connect between the formulation of their strategy and the execution of that strat- egy into useful action (Kaplan, 1995). This has been called the strategy implementa- tion problem: the all too frequent failure to create change after seemingly viable plans have been developed (Nutt, 1983). Achieving successful execution remains a continuing challenge for managers re- sponsible for executing strategies (Cra- vens, 1998). The Strategy Execution Agenda To contribute to the understanding of strategy execution at its reasons for suc- cess or failure, we conducted a qualita- tive survey of 55 executives with strategy execution responsibilities within 44 pub- lic and private organizations. From this research nine key factors emerged that positively influence strategy execution success. Together, these nine practices constitute the Strategy Execution Agenda (see Figure). Managers and exec- utives need to take these factors into ac- count in order to overcome the imple- mentation problem and successfully ex- ecute strategies within their organiza- tions. The Strategy Execution Agenda is a comprehensive management model that allows managers and executives to mas- ter one of the greatest management chal- lenges successfully implementing strat- egies. This powerful framework incorpo- Strategy Implementation Success 1 Appoint Competent Management 2 People- oriented Management Style 3 Take Political Interests into Account 4 Develop an Execution Plan 5 Align Structure to Strategy 6 Change the Culture 7 Appoint an Execution Leader 8 Communicate the Strategy 9 Monitor and Learn
- 3. STRATEGY SERIES 2013 STRATEGOS CONSULTING 3 rates nine success factors for strategy ex- ecution. Collectively, these tools help or- ganizations implement their strategies to achieve sustainable organizational suc- cess. 1. Appoint Competent Management The presence of competent employees and especially management is the most important success factor for strategy ex- ecution. Inadequate capabilities of man- agers are a common cause of strategy ex- ecution failure (e.g. Beer & Eisenstat, 2000; Pinto & Slevin, 1987; Alexander, 1985). Without competent organizational members, implementing a strategy suc- cessfully becomes very difficult if not im- possible. Organizational members with execution responsibilities need to have sufficient skills and knowledge to imple- ment the strategy. Eventually organiza- tional members are the ones who have to perform the execution activities to make the strategy a success. Especially, having competent manage- ment is important. When top manage- ment is incompetent, the whole organiza- tion is affected and thus the strategy ex- ecution effort as well. Furthermore, when employees have little confidence in the ability of management to execute the strategy then their commitment to the strategy will be low. Having incompetent members within a team has a negative influence on the per- formance of other organizational mem- bers. Well-performing organizational members have their motivation reduced when they have to work with or are de- pendent on poor performing colleagues. Especially the presence of incompetent managers has a very negative influence on the performance of subordinates. If a person is competent and that persons manager is not, this is likely to have a neg- ative influence on the level of motivation and execution performance. Successful organizational members tend to leave an organization where they have to work for incompetent managers and feel that their performance is not appreciated or often even worked against. To increase the level of competence of organizational members several prac- tices can be used such as training and ed- ucation, coaching and counseling, in- creasing self-efficacy of organizational members, giving feedback about perfor- mance, giving compliments for good per- formance, addressing poor performance, hiring and firing of organizational mem- bers and bringing in external expertise. 2. Use a People-oriented Management Style Having a people-oriented management style is a key practice for successful exe- cution. As individuals go to work for both instrumental and social reasons, manag- ers need to pay attention to both task performance and social relationships (Henderson & Argyle, 1986). Better social relations increase the cooperation, moti- vation, and effectiveness of organiza- tional members (ibid). Organizational members have the need to be treated with the dignity of a human being one with knowledge and free will (Guillen & Gonzalez, 2001). A people-oriented manager listens, provides support and encouragement, coaching and counseling, develops social relations with subordinates, celebrates social activities and empowers organiza- tional members during a strategy execu- tion effort. People-oriented management consists of four main aspects. A first aspect is coaching and counsel- ing employees during the strategy execu- tion effort. Employees eventually have to internalize the new activities, which are required to implement the strategy. Therefore, management must guide and coach the employees but they have to perform the execution tasks themselves. Moreover, organizational members are often quite capable of performing certain execution tasks but need help doing it. By coaching employees, they can become more confident of their abilities and can become more involved and less passive. In addition, managers can reduce re- sistance to change by being facilitative and supportive (Kotter and Schlesinger, 1979). This may involve giving employees time off after a demanding period and providing emotional support (ibid). A second part of people-oriented man- agement is to develop and maintain per- sonal relationships with subordinates. Better social relations have a positive in- fluence on the cooperation, motivation and effectiveness of organizational mem- bers (Henderson & Argyle, 1986). Celebrating social activities with or- ganizational members is a third aspect of people-oriented management. Organiz-
- 4. STRATEGY SERIES 2013 STRATEGOS CONSULTING 4 ing social activities are a good way to de- velop close and personal relationships among organizational members, can cre- ate a positive atmosphere within the or- ganization, create more unity within the organization, reduce the distance be- tween management and subordinates, and increase organizational commitment. Empowering organizational members