The biggest challenge facing any executive is failing to execute strategy — especially those with a strong strategic orientation. Most are terrible at it as they are too internally focused. Also, they do not align every resource to increasingly contribute to the execution of their strategy . Your company’s success rests on its ability actually to implement its strategy.

“Strategy execution is the responsibility that makes or breaks executives.” — Alan Branche and Sam Bodley-Scott, Implementation

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Experts have said for decades on the reasons behind the spectacular failure rates of strategy execution. Two-thirds of well-formulated strategies failed due to inferior performance.

Executive Not Prepared to Execute Strategy

“Execution is a specific set of behaviours and techniques that companies need to master to have a competitive advantage. It’s a discipline of its own.” —Ram Charan and Larry Bossidy, Execution

There are many explanations for this poor failure rate. Navalent conducted a 10-year longitudinal study on executive leadership. It showed one apparent reason — sixty-one percent of executives lack the preparation upon being appointed to a senior leadership role that is necessary to face the strategic challenges they face.

It is no surprise, then, that over 50 percent of executives fail within the first 18 months of being promoted or hired.

Indicators of impending failure

Appointing that many unprepared leaders into roles responsible for crafting and executing strategy only fuels the risk of execution failure. Here are five indications that an executive is likely to fail when trying to bring the organization’s strategy to life.

1. Complacency – When confronted with the effort and risk of strategic change, the organization believes the status quo is good enough. Why do the arduous work to change it?
2. Mistrust and lack of sharing of useful information – A “politics first” mentality that prizes appearance management above action. This mindset causes a situation where no one wants to be the bearer of unwelcome news.
3. Low receptivity to effortful change – The term “effortful change” is easy to say. However, it is difficult to do. Leaders must prove their willingness and ability to change before asking it of others.
4. Misaligned action – Communication for intellectual understanding fails to elicit emotional engagement to implement the new strategy. When leaders do not inspire the collective toward a common goal, each team will tend to veer off and become silos. It is impossible to integrate all the silos.
5. Mechanistic action – When under time and performance pressure, employees become creatures of habit rather than taking risks to become innovative.

Read more at https://knowledge.insead.edu/blog/insead-blog/five-reasons-most-companies-fail-at-strategy-execution-4441#jOep13hQtm7uSAVi.99

We offer the ladder for leadership, a behavioural competency model for driving the highest level of performance at three corporate leadership levels. Ensure your next generation of leaders are prepared — even if you were not and had to struggle.

Executive lack depth in their competitive context

Often taking on a leadership role results in the executive focusing on internal challenges. The issues include,

• reconciling budgets
• managing cash flow
• resolving conflicts
• managing performance
• office politics

Consequently, they pay a lesser amount of attention to external strategic issues like competitor moves, customer needs, technology trends, and stewardship.

“The result of bad communication is a disconnection between strategy and execution.” —Chuck Martin, former vice president, IBM

One study reports that

• seventy percent of leaders spend on average one day a month reviewing strategy
• eighty-five percent of leadership teams spend less than an hour per month discussing strategy

More anecdotal evidence cited by industry experts includes:

• ninety percent of all companies do not implement strategy successfully
• eighty-six percent of executive teams spend one hour per month discussing strategy
• sixty percent of organizations do not link budgets to strategy
• twenty-six percent of managers have their incentives related to strategy
• only five percent of employees understand their organization’s strategy

Executives often hide behind unrealistic goals when they fail to comprehend the competitive context of their business.

“Vision without action is a daydream. Action with without vision is a nightmare.” —Japanese proverb

Glossy Plan — But Not the Capabilities to Execute

When I ask an executive to see their strategy, they often hand me a glossy document that has the mission and values statement with some lofty comments on one page. Some include product quotas and market share growth targets. However, they rarely show me:

• where the organization is going to play (i.e., geographically, segment, category) — a clear market identity that articulates whom they will serve and whom they will not
• how the organization is going to win again the competition in that segment — why their target customers would choose them over competitors
• the capabilities that are needed to win, what capabilities they will be disproportionately better at than their competitors, and how they will get these required capabilities
• the management systems that are necessary to build, operate and maintain the key capabilities

To Execute Strategy Align the Big Picture With the Day-to-Day

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A company’s success is incumbent upon effective strategy execution although it is still elusive in most situations. Moreover, organizations invest an enormous amount of resources and time creating strategic plans to gain market leadership. Yet the best crafted strategic plans are rarely executed.

A strategy that is not communicated effectively and linked to the person will fail to give enough guidance to the business. As a result, organizations are constantly setting and resetting their business plans. With the ever-changing economic climate and competitive pressures weighing on the organization, enterprises are choosing not only to plan more often (Table 1) but also keep track of their performance with a growing number of Key Performance Indicators. (Table 2)

Table 1 – Planning Frequency

Planning FrequencyUp to $100M$100M to $1BOver $1BAnnually19%25%34%Semi-annually9%15%21%Quarterly40%32%23%Monthly27%19%20%Other5%9%2%

Table 2 – Key Performance Indicators

KPIsUp to $100M$100M to $1BOver $1BFewer than 552%31%31%5 to 926%29%21%10 to 1410%12%19%15 or more5%18%19%Unknown7%10%11%

Keeping track of this expanding set of performance expectations and making sure everyone in the organization focuses on only those activities, which drive successful completion of targets. It is a daunting task. Thus, companies increase their frequency of planning to watch the performance and communicate improvement recommendations, which affects productivity.

Naive about trade-offs

“However beautiful the strategy, you should occasionally look at the results.” — Sir Winston Churchill

A strategy is a set of choices and trade-offs about where an organization will invest, compete, and win. That means every “yes” to an idea or initiative requires a “no” to several others to secure the success of the first initiative.

Limiting the number of commitments means focusing all resources on a narrowed set of priorities, intentionally deprioritizing other efforts. Despite this, most executives struggle to comprehend the implications of not making effective trade-offs.

In companies that poorly execute strategy, an astounding 60 percent do not even link their strategy to their budgets. This guarantees that there will be a disconnect between commitments and resources. However, by contrast, in companies that successfully execute strategy,

• seventy-six percent limit the number of strategic initiatives they focus on
• sixty-four percent builds their budgets to align with their strategy

Overcommitting resources dilutes the focus of an organization. More importantly, it institutionalizes mediocrity and cynicism. Executives are setting their people up to fail. Saying no is one of the most significant gifts leaders can give their organization.

Many executives overestimate the ability of their organizations. They to justify their denial of the organization’s real limitations by proceeding under the deception of “challenge assignments” and “stretch goals.” Failure to make thoughtful, hard trade-offs when executing your strategy ensures that all efforts will fall short of expected results.

Solution Requirements

As a company embarks on its mission to meet its stated goals, it must align and manage its vast resources. The organization’s critical assets include:

Employees – The very essence of the organization, its human capital upon which it relies on delivering its value proposition. Without proper management of one’s employees and the development of their skills, the job cannot be completed.

Processes – The step-by-step instructions that ensure a company can successfully deliver its product or service. Procedures are defined and documented for several key reasons:

• Enable repeatable delivery of service quality
• Enable predictable product outcomes
• Compliance with mandated regulations
• Ensure pre-determined financial performance

Resources – All organizational resources without exclusion. This includes; technology resources, products, brands, distribution channels, value chain components and members, partners, geographic locations, employees, and processes.

Without proper identification, alignment and management of these assets, organizations limit their ability to manage all the elements within their control to meet their goals. Real competitive advantage can only be derived from using all the corporate resources in a focused and effective way.

Complete Goal Alignment Solution

“Building a visionary company requires one percent vision and 99 percent alignment.” —Jim Collins and Jerry Porras, Built to Last

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Once the company’s strategic goals are set, GAP™ assists executives and managers to align seamlessly, integrate, track, monitor and report on their dependent goals set at the associate, group and company level. The interdependent modules take the user through a step-by-step process. These include:

• Align Resources Assign Goals Assess Performance Achieve Result
• Alignment module helps in the identification of team members through the eyes of an associate, finding roles, responsibilities, and reciprocal relationships for each team member.
• Assignment module guides the user to define the Key Performance Indicators that will be measured.
• Weighted goal metrics are then assigned to each associate and to groups to set up goal dependency for each team member along with expected behaviours.
• Assess module supplies feedback in the form of notes from a manager to an associate. These can be sent on a subject, goal setting, category, or a specific goal to alert the associate of corrective actions or positive reinforcement. The module also serves as a repository to help in the review process.
• Achieve module offers an executive dashboard summary and detailed trend analysis view of business metrics for the company, business unit and individual. With underperformance alarmed and over performance highlighted, this real-time view gives executives a tool to watch and drive their business

The structure needs to be adjusted to match the priorities

Most organizations leave old organizational designs in place when they embark on a plan. They are embedding the status quote in their organization.

Your organizational model is the living embodiment of the company’s strategy. The structure of the organization needs to reflect what it is trying to do. For many CEOs, the only organizational lever they know to pull is the organization chart. They shift pieces of the hierarchy around as if that may change performance.

However, great executives become organization architects. They build an organizational machine expressly designed for the strategy. The executives take a systemic look at capabilities — processes, governance, culture, competencies, and technologies. The research confirms the importance of this activity.

In successfully executing companies, 77 percent effectively translate their strategy into operational mechanisms and monitor day-to-day progress.

Some CEOs naively impose standardized core processes or dynamic incentive systems over the holding company design to force cohesion and would have failed. The only way to successfully execute the audacious strategy was to overhaul and align the organizational model.

Can you handle the emotional toll?

“Good business leaders create a vision, articulate the vision, passionately own the vision, and relentlessly drive it to completion.” —Jack Welch

For many executives, the taxing nature of enterprise-level leadership is too high. Being sufficiently knowledgeable about context needs a considerable tolerance for ambiguity and the acceptance of a continuous learning curve. Making hard trade-offs means saying no to people. Executives must face the many dysfunctional ways people deal with being disappointed by their leader and inspire them to get behind the new strategy.

Shifting organizational designs means having to address the stark realities of instigating meaningful change. Prepare to deal with organization-wide anxiety, intensified political dynamics, moving people up and parting ways with those folks who not willing for the new world you are creating.

C-Levels are the starters, the innovators, the drivers of the organization. They define and set ambitious goals, identify opportunities, and launch initiatives to turn them into a reality. They are the external outward-facing representative of the interests of the organization and must manage the complicated affairs of different stakeholders within the organization.

Here are the ten behavioural competencies from our ladder of leadership for those who excel in the C-Suite.

Stress-Related Illness

It is no surprise that mental and physical stress-related illnesses are high among executives. While some executives thrive on the challenges fundamental in the trailblazing work of strategy, many leaders collapse under the emotional toll it takes.

Research shows that

• thirty-eight percent of executives said they did not expect the loneliness and isolation that went with their jobs
• fifty-four percent said they felt they were being held accountable for problems outside their control

Given the ruthlessly unforgiving nature of executive employment, you need to have a team of professionals around you. I act as a soundboard for executives, while others prefer an executive coach, a licensed therapist, a personal trainer, and a nutritionist. The support helps leaders bear the harsh realities of strategic leadership.

The work needed to craft and execute a company strategy effectively is extraordinarily tricky. It is no surprise that many try to oversimplify it or dilute it to match whatever level of competence they have. However, if organizations invested in preparing executives for the real requirements of these roles, the failure rates decline. More importantly, these companies consistently adapt and thrive in the marketplace.

Concluding thoughts

Problems caused by misalignment include confusion; waste of time, money and opportunity; diminished productivity; demotivation of individuals and teams; internal conflicts, power struggles and ultimately project failure as well as resulting in time and energy spent doubting, conspiring, guessing or gossiping when that same energy could be deployed in moving an organization forward.” — S. Box, & K. Platts

You are seeking a competitive advantage. You need to execute strategy and monitor, in real-time, the progress against success targets.

Good governance focuses on optimized alignment of its structures to your overall strategies. We view these structures collectively as “governance chains.” Good governance means that you ensure that all resources increasingly contribute to achieving your mission and vision. Our analytics enables you to align your goals and set priorities for success objectively.

Source: https://t-tees.com
Category: WHY