Executing actions directly aligned to an organization’s strategy is fundamental to achieving success. Strategy with no action is just an idea; action with no strategy is anarchy. Neither scenario enables a company to deliver results. This article explores the three essential steps of achieving success (as defined by a given organization).
Successful organizations: 1) define the business strategy, 2) deploy the strategy by linking actions to the strategy and 3) measure progress toward achieving the strategy.
This may sound easy – and it can be – yet few achieve the results they desire. This article explores the pitfalls of these three steps and provides guidance to avoiding the traps. As a team becomes more experienced, they will learn to recognize points of failure early in the process and how to make corrections so that those failure points will have a minimal impact on results.
1. Define the Strategy
A well-defined strategy sets the direction of the organization in the near-, mid- and long-term. The tactics to achieve the strategy must be flexible enough for minor corrections to accommodate the changes in the business environment. The strategy, however, must be carefully derived and then adhered to. To change a strategy, the leadership team must consciously acknowledge that the strategy no longer represents of the company’s vision.
Defining strategy can fail in a myriad of ways. Experience and benchmarking suggest common failure modes include:
- Stating a means to an end rather than a strategy. For example, a strategy may be set as growth by 20 percent within five years. A means to an end, however, may simply state growth through mergers and acquisition.
- Poor alignment within the leadership team. This may be as simple as leadership depending upon misaligned metrics or as complex as depending upon multiple plans to achieve the company’s vision.
- Failure to consider the market. This is possibly the most dangerous strategic failures if the company maintains short-term success with a vision that will fail over the long term. Consider the example of a CEO of a large diversified manufacturer who was leading the company through a fundamental change from a construction-equipment manufacturing focus to a refrigeration-based portfolio. During this transition, the CEO asked his team to consider other industries in which businesses had to evolve to achieve success. The CEO would rhetorically ask: If a successful buggy whip maker refused to change in the late 1800s, would they still be in business today? It is critical that leaders understand where and what they want an organization to be while also understanding the markets.
Avoid Pitfalls Through Research
With potential pitfalls identified, here are a few steps to avoid the potential issues with one thread in common – nothing beats solid research. For most companies, three readily available sources of information include 1) voice of the customer (VOC), market research and input from stakeholders.
- The value of VOC is positioning the business to grow with a customer base. By holding meaningful discussions to learn customers’ pasts, presents and futures, an organization will learn trends, develop growth plans, encounter new markets and develop new products. There are two reasons to begin with VOC: 1) to strengthen the relationship between business and customer by proactively partnering with customers and 2) to gain insight about market trends and better inform market research.
- Market research will lead to a greater understanding of macro trends and industry direction. Typically, it is possible to join benchmarking organizations to gain access to market data and competitor analysis in an ethical manner. This knowledge allows a business to choose to stay focused in an existing market segment, expand to an adjacent segment or exit a segment.
With these efforts undertaken, a company will know its customers, its market and its core competencies. This is enough information for beginning to build a strategy. This is also enough knowledge with which to hold strategy discussions with stakeholders and/or board members to develop a vision for the strategy. The next step is to determine and plan accountability to achieving the strategy.
2. Link Actions to the Strategy
Linking actions to strategy can occur through a variety of common methods. Whatever the method used, there should be a focus on the links needed from the top of an organization to the point of building the product or service.
Organizations not well disciplined in linking actions to the strategy often fail to achieve their goals. It is a false hope to believe that highly talented people inherently know what to do.
Strategy Defined; Actions and Accountability Not Defined
Consider the following scenario that is familiar to many. The leadership team develops a strategy, it is discussed, it is debated, everyone at the table nods their head in agreement with the CEO, everyone agrees to take action and the meeting ends. Everyone returns to work, puts off action for a few days to catch up on important issues and returns to trying to implement the strategy just before budget time.
The budgets are completed, six months go by, teams take a few steps before the mid-year review, and a key leader realizes he needs to hire three people and purchase new software before engaging his team in strategic actions again. Human resources (HR) and information technology (IT) teams have been working on other priorities. This leader is left trying to build a case to justify his actions as to why his piece of strategic work is not fully underway. The strategy failed.
What happened? The problem here is not a lack of effort, but rather a lack of alignment to a common goal. This often results from the false assumption that if everyone walks away knowing the goal and everyone is top talent, then everyone will naturally know what to do, when to do it and coordinate between functions appropriately.
Goal deployment is designed to ensure that each functional leader accepts accountability for their actions to achieve the strategy. In this example, the overall strategy for the company is the same, but HR would be accountable to lead the process of hiring three qualified resources by a specific date, IT would be accountable to evaluate and implement the proper IT solution and so on. With this simple step, an organization can begin to align resources, but the key is taking this those first steps all the way to the point of execution.
For example, for HR to fill its responsibility, it will need to work with the hiring manager to build the proper job descriptions, work with organizational design to be sure that the job is structured correctly, etc. The task assigned to IT would be similarly divided into smaller tasks.
The pattern remains this simple – at each level of management the president aligns the functional leaders to specific accountabilities. At each lower level of management, the alignment must occur in a matrixed approach to the president as well as to the dotted-line functional leaders as shown in the figure below.
The pattern shown above continues to the level at which the accountable individual has clarity and can take action. This enables individual contributors to focus on meaningful actions and understand how their work impacts others.
As shown, the president would align the VPs to specific and accountable initiatives. As in most organizations, each VP has a team. For this example, the breakdown is shown for the VP of operations. The VP of operations would then work with each plant (1 through N) to split the accountability relative to the involvement and opportunities for each plant. The general managers of each plant would then work with their functional leaders to drive action. Each plant functional leader is accountable to align to the direction of the plant general manager as well as their functional leader at the VP level. This pattern of accountability assures alignment of resources of resources including people, money and time.
3. Measure Progress Toward Realizing the Strategy
This step is frequently dismissed and often assumed to be easily achieved. It is, however, less intuitive than it appears. It is common to see leadership completely misalign the measurement system to the stated strategy. For example, if a strategy is based upon growth, but the metrics are based upon controlling costs, realizing the strategy is likely to be a challenge.
Developing metrics is nearly impossible if an attempt is made to build the metrics from the top down for all levels of the organization. It is easier to focus on one to three metrics per strategic plan at the highest level. These metrics paired with the strategy deployment method from the sample organizational chart above will effectively communicate the strategic priorities to each subsequent level. Aligning the strategy and metric at each level is essential. This enables a bottom-up development of metrics at the point of action that directly aligns to the top-level metrics.
Timing is critical when it comes to measuring strategic progress. Typically, organizations measure themselves monthly, quarterly and annually. This is sufficient for the higher-level metrics. As metrics approach the level of individual contributors, metrics should be reviewed per each time period (e.g., shift or day). This makes achieving the strategy everyone’s daily job. This is the basis of continual improvement and better positions the organization to react at the speed of business.
The advantage to measuring monthly is the cycle of learning speeds up, which better prepares a team. Each month, measure performance against goals and take counter actions when not achieving the desired and expected performance levels. Reflect more deeply upon the strategy and the direction of the strategy quarterly or biannually – not to second-guess the strategy but rather to reflect on the markets to see if changes external to a team warrant any changes in strategy to maintain relevancy.
In Summary
Leadership teams struggle to ensure strategies are perfect. A good strategy is one which provides a clear direction for the organization and is also actionable. Strategy with no action is just words and action with no strategy is much like releasing a balloon in a room – anyone watching sees movement and activity, but nothing is accomplished. Results only occur if actions are clearly linked to the strategy. A reasonable strategy with meaningful actions is better than a perfect strategy and no action. The same can be said in comparison to no strategy with constant action. The final piece to this puzzle is an effective measurement system or feedback loops. Regardless of the strategy, ensure that metrics represent the progress toward achieving the strategy.
