There is a well-known anecdotal business statistic that 90% of organisations fail to execute on their strategies. In reality the source of this statistic is not clear, my own research into its origin suggests that it may have come from the Kaplan and Norton book: “The Execution Premium” (see footnote). Whether the actual figure is 60% or 90% really does not matter, it is still very clear that the biggest inhibitor to business success is the inability to execute on strategy.
Further analysis suggests that while a huge effort is often put into the definition of strategic imperatives, hardly any effort is put into strategic execution and measurement. In other words, we all get excited about great ideas, but few of us want to actually get down to the business of implementation.
We recently launched “SEVEN” into the UK market. A seven step process to help organisations develop and manage successful strategic objectives and key performance indicators.
The process makes the assumption that a business strategy has already been defined. Most company and organisation leaderships are actually very good at defining strategy. They know the marketplace, what their competitors are doing and in broad terms what is required to be successful. Leaders are usually very good at setting the general direction and initially motivating staff. It is when the time comes to roll up the sleeves and implement the strategy that things tend to slow down and fall apart.
The key is to be really clear about what you are trying to achieve. Strategy, by its very nature is broad, for it to be successful very clear objectives and measurements need to be put in place, be given ownership and managed effectively year on year.
This may all seem a bit business 101, but the reality is companies and organisations rarely take the time to do this.
Through seven simple steps you can break a strategy down to a set of clearly defined objectives and measurements as follows:
· Create Objectives
· Describe Results
· Identify Measures
· Define Thresholds
· Upload Structure/Data
· Interpret Results
· Take Action
The process ensures performance measures are designed in such a way that they can provide evidence that objectives are being met (or not!). Once the performance measures have been defined, they can be presented in a way that will allow quick and easy interpretation. Finally, the information can be acted upon so that it will move a company closer to its objectives and ultimately its strategy.
With clearly defined business objectives and metrics, organisations can then take advantage of specialist corporate performance management (CPM) software for the all-important task of implementation and management. The process uses the market leading QuickScore product to illustrate how this can be done. However the same principles can apply to other CPM products as well.
For more information on the process download the “Developing Successful Performance Measures” starter document.
Intrafocus is still conducting a world-wide Business Scorecard Survey which will remain open until the end of November.
Footnote: The Execution Premium by Kaplan and Norton (2006) states: “We conducted a survey in 1996 about the state of strategy execution. We learned that most organisations did not have formal systems to help them execute their strategies. Only 40% of organisations linked their budgets to their strategies, and only 30% linked incentive compensation to strategy. In the great majority of surveyed companies, fewer than 10% of employees reported that they understood their company’s strategy. Clearly, employees who do not understand the strategy cannot link their daily activities to its successful execution”. A little further on in the same section they state: “We conducted a follow-up survey in 2006, receiving responses from 143 performance management specialists”.
Although the survey is six years old, our own survey and practical experience suggests that these statistics have not significantly changed.
Read more: Is Your Company an Idea Factory?
That is true. Most strategies do not work because the business does not know how to execute it. Strategies should be studied in order to deliver what is expected.
I have actually had clients who I coached to create execution steps, but they struggle to implement the actions they developed! Sometimes I think many business people think that the job is done when the plan has been signed of.
This has some merit with respect to strategic plans. However, in most cases if the group does not buy in to new direction than the result is confusion and mixed message to the market.
Through my experience in implementing new direction the MAJOR requirement is to have ONE person track the progress. One the direction goes sideways then it is the champion’s respnsibility to bring back on course.
Transperancy is the foundation for new strategic plan from top to bottom
check out: “Corporate Strategists under Fire” (Fortune, 27 December 1982). Kiechel.W.
This is cited by Kaplan and Norton (2001) in “The Strategy Focused Organization (on page 1).