19.07.2023 Human Resources Business strategy Performance Trends

The 5 Pillars of Successful Strategy Execution

Organizations spend enormous time, effort and investment formulating their objectives and strategies, but more than half fail to execute those strategies effectively. For greater success, tackle five issues early on.

Strategy formulation

Eighty-three percent of strategies fail due to faulty assumptions. Test assumptions about the executability of strategy as you formulate it. History is littered with examples of organizations where growth stalled based on flawed assumptions about customers, competitors or internal capabilities. Lack of clarity leads to unwanted surprises during execution and reduces managers’ ability to monitor uncertainties and respond accordingly. To get execution right, clarify and test relevant assumptions. Use mechanisms to both identify and challenge strategic assumptions so your organization can avoid unanticipated issues that derail implementation.

Execution planning

Sixty-seven percent of key functions are not aligned with business unit (BU) and corporate strategies. It’s not unusual for large organizations to conduct strategic planning sessions that cost millions of dollars and hundreds of employee hours each year. Despite these efforts, strategic goals are often unclear or misaligned, creating resourcing challenges that limit successful execution.Focus the planning process on vertical alignment between the corporate center and the BUs and horizontal alignment across BUs and functions. To avoid confusion, clarify objectives and roles for those in the business tasked with execution upfront.

Performance management

Fifty-eight percent of organizations believe their performance management systems are insufficient for monitoring the success of strategy.Markets can shift between a firm’s strategic planning cycles, invalidating assumptions and the strategic plan. Without an effective system to monitor the performance of the strategy, organizations may execute the wrong plan for months — or even years — before correction.For timely course-correction, use performance management systems to hold employees accountable for key goals. Frequent reviews of the plan can determine if underperformance was the result of a bad market assessment, wrong strategy or poor execution. Also consider a more adaptive approach to strategic planning.

Strategy communication

Sixty-seven percent of employees do not understand their role in new growth initiatives. Lack of buy-in only reduces employee commitment and motivation for action, and messages that lack credibility increase organizational resistance to change. Foster a two-way dialogue about the strategy to ensure organizational buy-in with a cohesive communication strategy.Without a playbook to keep employees on board and actively engaged in achieving the company’s objectives, employee motivation goes down and resistance goes up, increasing the cost of execution.

Organizational bandwidth

When organizations can successfully unlock capacity to execute new growth strategies, they increase profitability by 77%.But many organizations fail to allocate the resources (assets, time, people, etc.) necessary for implementing new growth strategies. They rely too heavily on strategy creation, planning, performance metrics and communication.Strategists must locate where the organization loses the ability to execute due to poor coordination, which results in reduced total capacity of the enterprise.To unlock organizational bandwidth:

  • Deploy diagnostics to test organizational capacity before launching growth efforts.
  • Use new tools for clarifying midmanager trade-offs about resourcing growth bets.
  • Construct new frameworks for freeing trapped resources.
  • Create support structures for integrating growth projects into existing businesses.
Source: Gartner