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Transcript of The Strategy Execution Agenda
© 2013 STRATEGOS CONSULTING Λ 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 protected] 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.
STRATEGY SERIES
© 2013 STRATEGOS CONSULTING Λ
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-
StrategyImplementation
Success
1Appoint
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
8Communicatethe Strategy
9 Monitor and
Learn
STRATEGY SERIES
© 2013 STRATEGOS CONSULTING Λ
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 person’s
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-
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© 2013 STRATEGOS CONSULTING Λ
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
is a final aspect of people-oriented man-
agement. Organizational members can
be empowered by making them inde-
pendent, delegating responsibilities, al-
lowing participation, giving them more
control over their work, giving them infor-
mation about the strategy and its execu-
tion, and organizing training and leader-
ship courses. Self-responsibility and self-
empowerment of organizational partici-
pants makes them more motivated, more
self-confident and more willing to take in-
itiative, which is beneficial to the strategy
execution effort. In addition, empower-
ment or delegation has potential benefits
such as improves speed and quality of
decisions, reduced managerial overload,
enrichment of subordinates’ job, in-
creased motivation of subordinates and
provides opportunities for the develop-
ment of leadership skills of subordinates
(Yukl & Fu, 1999). In addition, empower-
ment increases work performance (Cot-
ton et al., 1988; Leana, 1986) and innova-
tive behavior (Kanter, 1983). This in turn
increases the motivation of organiza-
tional members by making them feel
more powerful (Conger & Kanungo,
1988).
Moreover, empowerment increases
self-determination, which increases the
self-confidence of employees. Further-
more, by giving employees more control
over their work they feel more proud, im-
portant, and involved. A final reason for
the delegation of authority to employees
is that they are the ones who encounter
the problems during their work and are
thus the ones who are most suited to
solve these problems.
3. Take Political Interests into
Account Politics and struggles over power and
leadership are just a few obstacles that
may undermine an execution effort (De
Kluyver and Pearce, 2003). Strategy for-
mulation and execution inevitably raise
questions of power within an organiza-
tion (Pettigrew and Whipp, 1991). The ex-
istence of conflicts, and the use of indi-
vidual and group power needs to be
taken into consideration (Bergadaà,
1999). The very prospect of change con-
fronts established positions (ibid), which
may lead to resistance to change. Re-
sistance to change may lead to passivity
toward the strategy or even sabotage.
Managers can overcome resistance to
change by involving potential opponents
in decision-making, taking their interests
seriously and clearly communicating the
new strategy and its advantages to them.
4. Develop an Execution Plan After the strategy is developed, it needs
to be translated into a concrete and well
worked out strategy execution plan. Even
the best strategy is worthless when man-
agers cannot translate the strategy into
operational reality. The strategy execu-
tion plan specifies the processes, activi-
ties and operational objectives that are
required to achieve the goals of the strat-
egy. The strategic objectives need to be
translated into measurable operational
execution sub-objectives (Reid, 1989)
and linked to departmental and individual
goals (Kaplan, 1995). In addition, progress
measurement points or ‘milestones’ need
to be established (Owen, 1982). Measura-
ble objective provide an effective basis
for management control of the execution
(ibid).
Without concrete objectives and mile-
stones, it is impossible to measure the
progress of the strategy execution. This
makes managing and improving the
strategy execution impossible. Therefore,
the execution plan needs to contain a
clear set of concrete and measurable ob-
jectives or targets. Clear and specific
tasks need to be defined which are re-
quired to achieve these targets. Everyone
with strategy execution responsibilities
needs to know what to do in order to im-
plement the strategy and what concrete
objectives they have to attain. Unclear
objectives leave room for differential in-
terpretation and discretion and may thus
contribute to execution failure (Barrett,
2004).
Effective strategy execution requires
clear execution tasks, activities and re-
sponsibilities. Execution can only be suc-
cessful when there is a clear and shared
understanding of who does what, when,
at what cost (Allio, 2005). Not only
should the necessary actions to imple-
ment the strategy be identified and
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© 2013 STRATEGOS CONSULTING Λ
5
planned, responsibility for these actions
should be allocated as well (Owen, 1982).
By allocating clear responsibilities for the
execution of the execution activities, pro-
gress can be measured and controlled
(Reid, 1989).
Specific and ambitious but realistic
goals, which are accepted by organiza-
tional members lead to the best task per-
formance (Erez & Kanfer, 1983). People
need realistic challenges to perform well.
When organizational members have de-
cided that it is impossible to reach a goal
they will stop trying to reach that goal
(ibid).
5. Align the Organization
Structure During a strategy execution effort, a clear
organization structure needs to be
aligned to the strategy. It needs to be
clear whom the authority has to make de-
cisions. When possible, management
must ensure that the organization struc-
ture is clear, relatively decentralized and
relatively formalized. When the existing
organization structure does not meet
these requirements, it may represent a
hindrance to strategy execution and
needs to be changed.
The main advantage of a decentralized
organization structure is that it increases
the commitment of organizational mem-
bers to decision-making; decisions can be
made more quickly, and may improve the
quality of decisions as it makes more use
of specialized knowledge of organiza-
tional members at lower levels in the or-
ganization.
Centralized decision-making, one-way
top-down communication and lack of in-
put from lower levels of the organization
may inhibit strategy formulation and exe-
cution (Kiggundu, 1996). A centralized
organizational structure with rigid organ-
izational policies combined with a per-
ceived lack of control is related to mala-
daptive behavior in organizations (Mar-
tinko & Garnder, 1982). Individuals work-
ing in centralized organizations, tend to
feel that management does not trust their
skills and abilities resulting in a sense of
incompetence (Lawler, 1992). Centralized
control reduces self-determination
(Spreitzer, 1996), which in turn reduces
the intrinsic motivation of organizational
members (Conger and Kanungo, 1988;
Lawler, 1992). An explanation for this is
that individuals tend to have a desire for
personal control (Greenberger and
Strasser, 1986). In addition, an authoritar-
ian management style can remove con-
trol and discretion from employees,
which increases their sense of powerless-
ness (Conger and Kanungo, 1988). Con-
trary, decentralized control helps organi-
zational members feel that they are con-
tributing to the operations of the organi-
zation, which promotes their sense of
having impact (Martinko and Gardner,
1982). Furthermore, it may increase the
motivation of organizational members.
A moderately formalized organization
structure has the advantage that it cre-
ates clarity for organizational members.
Clear procedures, rules and responsibili-
ties may give organizational members
certainty during an execution effort.
When problems arise and responsibilities
are not clear, organizational members
may blame each other.
A highly level of formalization reduces
the propensity to change (e.g. Hage & Ai-
ken, 1970; Bonoma & Zaltman, 1981). The
greater the number of rules and regula-
tions, the greater the rigidity and inflexi-
bility an organization. A high level of for-
malization discourages new ways of do-
ing things and reinforces the status quo
(Hage and Aiken, 1970). However, when
formalization is low, organizational mem-
bers have few rules or procedures to fall
back on during the strategy execution.
Thus, organizations must not be too for-
malized and become rigid but also not
become too informal and become chaotic
and uncontrollable (Volberda, 1996).
6. Change the Culture A new strategy may require changes in
the way of thinking and habits of organi-
zational members. Old habits and ways of
thinking can prove to be an obstacle to
strategy execution. Fundamental organi-
zational change often involves major un-
certainty and can trigger intense emo-
tions, such as anxiety (Huy, 2002) and a
fear for job security. As a new strategy
can be accompanied by layoffs it, organ-
izational members may perceive it as a
threat to job security. Job insecurity is re-
lated to a variety of negative responses
such as lower job satisfaction, lower or-
ganizational commitment, lower job in-
volvement, increased psychological with-
drawal, greater resistance to change,
greater propensity to leave the organiza-
tion, lower trust in management (Borg &
Dov, 1992) and withdrawal cognitions
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6
and behaviors including reduced work ef-
fort, increased absenteeism, and theft
(Davy et al., 1997).
An existing organization culture can be
characterized by fear for making mis-
takes, responsibility, participation, and
change. When managers act in authori-
tarian and punitive ways, subordinates
may become reluctant to make mistakes
and engage in learning behaviors (Ed-
mondson, 1999). Employees may become
shaped by organizations with high levels
of centralization, formalization, and rigid
rules and may become passive and una-
ble to be creative or exercise initiative on
the rare occasions that it is encouraged
and rewarded (Martinko & Gardner, 1982).
However, to implement a strategy suc-
cessfully, proactive organizational mem-
bers are often needed who participate in
strategy formulation and execution. In or-
der to participate, organizational mem-
bers need to dare to take initiative, voice
their opinion, and not be afraid to make
mistakes. Therefore, an empowered and
fearless organization culture needs to be
created in which organizational members
are able to make mistakes without being
punished for it. When organizational
member believe that well-intentioned in-
terpersonal risks will not be punished, this
fosters learning behavior (Edmondson,
1999).
To change an existing organizational
culture several strategies and tactics can
be used. First, a clear vision of the new
organizational culture is needed. The vi-
sion needs to clearly describe the new
culture and how it differs from the old
culture what its advantages are. This
needs to be communicated very clearly
to the employees. Cultural change in-
volves a lot of communication. Another
tactic is to individually coach and council
employees. This includes having open
conversations with employees. Involve
employees and give them feedback
about their performance and the new cul-
ture. Providing training and education,
especially motivational courses, can also
be used to change the culture. Visible
changes, such as new uniforms and a new
corporate logo can be used to make the
culture change more visible and tangible
to organizational members. In addition,
hiring employees who have a better fit
with the new culture and demoting or let-
ting go of employees who not able to fit
in the new culture are another tactic that
can be used. Finally, leadership from top
management is crucial in culture change.
Top management need to serve as an ex-
ample of the norms and values it wishes
to convey to organization.
However, changing the culture of an
organization is a difficult and time-con-
suming process. It may take years to suc-
cessfully change an existing organiza-
tional culture. Changing habits, which
have been the same for a very long time
is not easy.
7. Appoint a Strategy
Execution Leader During the strategy execution effort
there needs to be one clear leader who is
responsible for the outcome of the strat-
egy execution. The strategy execution
leader serves as project managers and
problem owner of the strategy execution.
The execution leader needs to be board
member, especially for strategic execu-
tions. The execution leader is responsible
for articulating and communicating an at-
tractive strategic vision that guides the
strategy execution. A successful leader
inspires followers through the communi-
cation of a captivating vision designed to
motivate followers to ambitious goals
(Huy, 1999). Effective leaders have the
ability to inspire confidence and enthusi-
asm of the new direction (Tushman et al.,
1986).
Execution leaders need to be decisive
during the strategy execution effort. Tak-
ing decisions may be considered to be is
the primary task of management. When
taking these decisions a manager needs
to be steadfast, resolved and not allow
him or her to be influenced by others.
Managers who want to execute ambitious
and innovative plans need to be persis-
tent in sticking the course through thick
and thin (Gersick, 1994). During reorgani-
zations in which employees can lose their
job or when established power positions
are threatened, considerable resistance
to change can arise. In such instances of
considerable resistance to change, man-
agement has to be decisive and steadfast
in taking decisions. Managers need to be
able to take tough decisions when organ-
izational members are not performing
well.
Strategy execution leaders need to
take decisions, which are perceived by
organizational members to be fair. Re-
search has found that organizational
members are more committed to deci-
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© 2013 STRATEGOS CONSULTING Λ
7
sions, decision-makers and the organiza-
tion when the procedures, which were
used to arrive at the decision, are per-
ceived as fair (Brockner et al., 2000). As
Brockner et al state: ‘It’s not only what
you do, but how you do it’.
Finally, when leaders practice moral
virtues such as fairness, integrity, hon-
esty, loyalty, determination, courage and
responsibility increases the willingness of
followers to follow a leader (Guillén &
González, 2001).
8. Communicate the Strategy After the strategy is formulated, it needs
to be communicated to the rest of the or-
ganization, and especially to organiza-
tional participants who are directly influ-
enced by it. However, no less than 95 per-
cent of organizational members do not
understand the strategy of their own or-
ganization (Kaplan & Norton, 2000). The
objective is to make organizational mem-
bers understand what the strategy is all
about and what its goals are. Further-
more, employees need to know how the
strategy influences their daily work. Com-
municating the strategy in a very simple
way makes it easier to understand for or-
ganizational participants.
An important part of the communica-
tion of the strategy is the explaining and
convincing of the strategy to employees.
Not only needs the content of strategy to
be clearly communicated, it also needs to
be clearly explained in a way that em-
ployees understand and may become
convinced that the strategy is sound and
effective. This can be done by explaining
the advantages of the new strategy in a
clear and practical way. Organizational
members are more willing to accept un-
desirable decisions when they have re-
ceived clear and adequate explanations
for those decisions (Brockner et al., 1990).
Organizational members need to un-
derstand why the execution or the new
strategy is necessary. It is especially ben-
eficial if organizational members see in
their daily activities that something needs
to be changed. Furthermore, a perceived
crisis may also be beneficial in establish-
ing the need for change to organizational
members. When organizational partici-
pants understand the need for the strat-
egy execution, they are more likely to be
supportive of it.
Communication of the strategy can be
done through a wide range of communi-
cation means, such as magazines, email,
leaflets, information, and publicity meet-
ings. However, two-way communication
sessions with organizational members are
most effective. In these sessions, the
strategy is explained and employees get
the opportunity to voice their views on
the strategy and its execution. It is not
only important to communicate the strat-
egy to the people but it is also important
to listen to their reactions to the strategy.
Extensive listening to comments from
employees takes considerable time but
builds commitment to the strategy.
9. Monitor and Adapt the
Strategy During the strategy execution, it is im-
portant to monitor whether the goals of
the execution are being met and whether
adjustments need to be made. During the
strategy execution, the strategic goals
translated into operational goals with
performance indicators need to be moni-
tored to assess whether the objectives
are being achieved. As strategy execu-
tion plans are destined to change, execu-
tion teams need to regularly meet in well-
structured, punctuated sessions to share
information, reconfirm priorities (Allio,
2005) and make decisions. This way,
management can make adjustments
when needed and thus control the strat-
egy execution effort. To make these ad-
justments it is required to assign clear re-
sponsibilities for the achievement of
those targets. When objectives are not
being met, the person or persons respon-
sible need to be held accountable.
When objectives are not being it is possible that the assumptions underlying the strategy are flawed or obsolete. When this happens it needs to be decided whether incremental improvements will suffice or that a fundamentally new strat-egy is required. Many organizations have accountabil-
ity problems, which are the result of a lack
of planning, the absence of a functional
management information system, or the
existence of cultural values which do not
encourage holding persons, especially in
high positions, accountable (Kiggundu,
1996).
Finally, when a strategy execution is
finished it needs to be evaluated. This
way, an organization may learn from the
execution, which can benefit future strat-
egy executions. Furthermore, it is im-
portant to conclude and evaluate a pro-
ject so that employees see what they
worked for, creating a sense of closure.
STRATEGY SERIES
© 2013 STRATEGOS CONSULTING Λ
8
Dr. Arnoud van der Maas (a.vandermaas@
strategos.nl) is a consultant in strategy & fi-
nance to public and private organizations.
Arnoud received a PhD in Strategic Man-
agement from Rotterdam School of Man-
agement, Erasmus University. One of the
top business schools in Europe. This article
is based on this PhD thesis on strategy im-
plementation in an international context,
which can be found here.
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