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Why Organizations Fail to Execute on Strategy

In a recent interview with Harvard Business Review, strategy expert Paul Leinwand described an under-appreciated yet ultimately critical gap that persists in many organizations today. This is the gap between where strategy is developed and where strategy is executed. Take the following scenario: the Chief Strategy Officer (CSO) of an organization identifies and articulates strategic objectives. The objectives are based on sound information from a rigorous assessment of the organization’s internal capabilities and external opportunities. However, the CSO’s involvement stops there, and functional managers become responsible for executing those objectives. In turn, managers delegate and supervise much of the real work done by staff. The gap between the CSO’s objectives and employee tasks is wide and open to misinterpretation at multiple stages. The result is misalignment between employees’ day-to-day work and the organization’s strategic direction.

Effective Strategy

To avoid scenarios like the one described above, Leinwand describes two characteristics that help organizations implement their strategies: Executing Strategy

  1. Strategy must be defined in terms of execution – it is developed and implemented with execution in mind.
  2. Strategy must live in an organization’s day-to-day operations – it should not sit in a binder collecting dust in the corner of management’s bookshelf.

When developing strategy, Leinwald notes that it should be defined in what a company and its people do. For example, IKEA’s strategy to make affordable furniture guided almost all of their cost-cutting decisions, from product design and supply-chain management (i.e., empowering designers and using flat packaging) to the layout of their stores (i.e., using customers to do some of the functions that staff would normally do). Companies that do poorly with their strategy often shift their focus toward comparing themselves against benchmarks and best practices.  Although external benchmarks and best practices can be helpful, they should never be a substitute for good strategy.

Effective Execution

When it comes to execution, Leinwand notes that “capabilities are the glue that connect strategy to execution.” Some organizations have dozens of capabilities and competencies. The danger is that they spread their resources too thin, get little return on investment, and lose opportunities to differentiate themselves from their competitors. Instead, organizations should focus on the few capabilities that really matter, and focus talent and resources towards strengthening those capabilities. Culture is also an important factor in executing strategy. Culture enables an organization’s capabilities to work across functions. But be wary of spending too much energy trying to change culture. Focus instead on leveraging those attributes of culture that align with strategy.

Taking Action

In summary, organizations would be well-served by bridging the gap between those who identify strategic objectives and those who implement them. To narrow the gap, organizations can take the following actions:

  • Ensure that strategic plans and objectives are developed and conveyed in terms of execution (think SMART goals). In other words, it should describe what the company and employees do.
  • Take a narrow view when it comes to competencies. This means identifying the few core competencies that are critical for executing strategy and using those as a compass for workforce planning and talent management activities. This “lean and mean” focus can help organizations excel in the areas that are most relevant for the company’s overall mission.
  • Make strategy a day-to-day experience.   Every employee, team, supervisor, and manager should have a clear understanding of the organization’s strategy and specific objectives. Not only that, they should also understand how their work contributes to those objectives.
  • Assess alignment. Executing on strategy requires strong alignment between an organization’s processes (e.g., metrics, development, management, structure, etc.) and its strategy. This can be a challenging exercise, but fortunately there are valid tools like the Line-of-Sight assessment that can help organizations get back on track by assessing whether or not specific processes and practices support the execution of strategy.

Scontrino-Powell, Inc.

Resources:

  • To learn more about cross-functional alignment, read our article here.
  • Listen to the HBR interview with Paul Leinwand here.
  • Great article on the Five Keys to Strategy Execution by Paul Niven here.
  • If you are interested in conducting a Line-of-Sight assessment in your team or organization, Contact Us for a conversation.

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