In the middle of Advent 2020 – the corona pandemic still has us fully under control, Christmas shopping is mainly at Amazon – the review of the year that is ending also begins. In this post I look back on projects in large and medium-sized companies, industry experiences – mainly services, energy, industry, as well as transport & traffic, publications, discussions, etc. on the subject of strategy execution.

It is probably part of human nature that the first question is often: What could have gone better? In terms of strategy implementation, I’m thinking of

Three major Challenges

I consciously focus on three; these occur across all sectors and can be found regardless of the size of the company. The lifecycle of the company plays a role insofar as comparatively young companies with usually a smaller number of employees, faster growth and often owner-managed are easier to find than others.

Target cascading down to team level

Almost exactly 20 years ago Kaplan and Norton put it in their book “Strategy-Focused Organization: How Balanced Scorecard Companies Thrive in the New Business” as follows: Translate the Strategy in Operational Terms (key principle 1/5). Once managers identify specific performance measures and develop an implementation strategy, it is important to describe the new performance measures to employees. In a strategy-focused organization everyone understands the performance measures and the goals and objectives of the organization.

Hoshin Kanri provides a transparent, measurable and coordinated strategy plan, which translates strategic breakthrough goals into annual goals at the lower levels and ensures that the company goals are achieved in an agile manner through appropriate improvement measures.

Communication and involvement of employees

Back to Kaplan and Norton. Its key principle 3/5 is: Make Strategy Everyone’s Everyday Job. This means: In a strategy-focused organization, executives and managers use the balanced scorecard to communicate with and educate their employees about the new business strategy. Everyone understands the strategy and understands how they impact the goals and objectives of the organization.

The direction of communication is always company-specific and also depends on various organizational factors such as size, hierarchy, corporate culture and access to management decisions.

With the help of the Communication Value Circle (CVC for short), communication goals can be aligned with the overarching corporate strategy. The CVC can also be used as an evaluation tool to check that the goals have been achieved.

Commitment / buy-in and trust – both components of the CVC – are the basic requirements for successful strategy implementation. They should be encouraged from the start and ensured throughout the strategy process.

Systematically integrated strategy process

Kaplan and Norton put it this way: Make Strategy a Continual Process. By this key principle, they mean: In a strategy-focused organization, the strategy is linked to the budgeting process, thus protecting long-term initiatives. Managers meet regularly to discuss and review the strategy; they use the strategy to learn of new issues and goals and to adopt new processes for change. As a result, the managers gain new ideas and knowledge that they immediately use to improve organizational performance.

In March of this year, I presented a detailed practical guide to strategy execution. I was inspired by 4DX and the management cycle of Kaplan and Norton when it came to the procedural anchoring, the St. Gallen management approach for the structural anchoring, and a long-term study by The Conference Board when it came to the main topics. I regularly refer to these guidelines myself and use the associated checklists and templates.

With the help of such a guideline, implementation can be ensured along a clearly defined process. The progress is always transparent for everyone involved. This in turn generates commitment and, above all, understanding for ongoing activities – also for any necessary cost reductions.

Factors for Successful Strategy Execution

Numerous scientists, practitioners and authors have examined such factors in detail. Probably the most comprehensive study of relevant factors comes from Saunders, Mann and Smith, the results of which are summarized in their article “Implementing strategic initiatives: a framework of leading practices” (Saunders, Mann, Smith, 2008). The authors differentiate between constructs that deal with “hard skills” (implementation infrastructure, drivers / success factors, implementation options) and “soft skills” (communication, buy-in / commitment, alignment with strategic goals). They come to the conclusion that seven constructs and their interdependencies are essential for the successful implementation of strategies and initiatives.

In view of these factors or constructs, the following structural levers are important in summary:

  • Measures – which involve all employees across functions and departments and provide them with clear tasks and deadlines,
  • Programs – which ensure a learning organization and continuous improvement,
  • Systems – that support strategy implementation, such as IT systems, CRM systems, MbO systems, X-matrices, etc. and
  • Guidelines – to help you implement your strategy.

The leadership qualities of the executives have a major influence on the successful implementation of strategies. These affect the entire process of strategy formulation, systematic implementation and strategic control or the follow-through of a strategic initiative and therefore have a direct influence on the implementation of a strategy.

Kaplan and Norton cited above refer to it in one of their key principles as follows: Mobilize Change Through Executive Leadership. In a strategy-focused organization, executives instill in their employees how important the change is to the organization and provide leadership and support for the change. The authors note that executives use the balanced scorecard as a vehicle to communicate a vision for future performance that is better than the present.

In summary, the following management-related levers are important:

  • Influence – the exercise of strategic management responsibility,
  • Allocate – allocate resources correctly (knowing who needs what),
  • Pursue – link a reward to the achievement of goals and
  • Align – the strategic design of the corporate culture.

Conclusion

Many companies that do not generate satisfactory sales growth or substantial profitability usually have a deficit in the implementation of their strategies, concepts and initiatives. The strategy process therefore does not end with a strategy paper and the measures and projects derived from it; Now the decisive and often more difficult part begins: Translating Strategy Into Action.

Although a number of frameworks are used for strategic analysis and strategy development, such as SWOT, PESTEL, CX, Five Competitive Forces and Value Chain Analysis, relatively few models for strategy implementation have been developed and widely accepted by practitioners. A generally recognized or dominant approach to the implementation of strategies has so far not emerged at the corporate or at the business / operational level.

Noteworthy management approaches to strategy implementation can be placed on a continuum with prescriptive planning (“hard”) at one end and process approaches (“soft”) at the other end. Prescriptive planning involves moving from strategies to action planning through the process of setting goals and performance reviews, allocating resources, and motivating employees. In contrast, the process approach emphasizes that successful implementation depends on people changing their behavior. This involves changing the assumptions and routines of people in the organization, including executives. Many organizational behavioral studies support the process view, which focuses on managing the interpersonal and internal company conflicts that can result from defensive behaviors, personality differences and poor communication.

In strategy execution projects, we therefore orientate ourselves along this continuum to contingency factors or variables that influence the outcome of the strategy execution.

In conclusion, several questions now arise: Have we been able to increase the success rate of strategy execution projects in 2020? Have we incorporated the possibilities of digitization? Do we live a value-based culture? What are we doing in the New Year to ensure that the success rate improves?
What are your answers? I look forward to your comments here on the blog.