Beyond the discussion around strategy and execution, it is clear that improved execution capabilities will put organizations in a much better position to succeed. Distinct skills are required for both phases, and there is a need for continuous feedback and adaptation in the modern digital landscape.
Strategy execution involves specialized processes, capabilities, and skills, requiring senior leadership commitment to ensure consistency and success. Ultimately, effective strategy execution is a cross-functional, deliberate effort that organizations should prioritize for realizing the full potential of their strategies.
There is an old and, at times, heated debate in the strategy community around strategy vs. execution. Some experts suggest that there is no difference between strategy and execution, whereas others consider execution a critical capability for organizations to succeed (see my suggested reading list at the end of this post to read more about the different schools of thought).
In this article, I am sharing a practical point of view based on my experience and lessons learned from many strategy engagements that, beyond conceptual discussions, will help your organization get the most out of your strategy endeavours.
Let’s start by defining what strategy is. There are a zillion definitions, ranging from considering it a plan all the way up to exceptional ideas from the organization’s top minds and everything in between. As a matter of fact, there are many types of strategies. Dr. Henry Mintzberg provides an excellent overview of different schools of strategy in his seminal book, “The Strategy Safari,” which I highly recommend if you are interested in knowing more about this topic.
For this article, I will define strategy as the integrated set of choices that an organization makes to position itself in an ecosystem to generate value over the long term. Strategy is a hypothesis about how an organization will create and sustain value.
Let’s focus on strategy formulation and making strategic choices. Modern business strategies are formulated using input from various sources, including internal and external factors impacting the organization.
The old idea that strategies are developed at the top by the most brilliant minds in the organization or the HiPPO (Highest Paid Person’s Opinion) and then handed over to lower levels to execute is a recipe for disaster. Many practitioners who advocate against strategy execution have this model in mind when they critique strategy execution.
In the formulation phase, the organization makes the strategic choices that support its value creation hypothesis. In a few cases, the strategic choices include execution components; however, in most organizations, that is different. The capabilities and skills required for strategy formulation and execution are very distinct. That would explain why, even today, separate teams are responsible for formulating and executing the strategy in many organizations.
For any strategy to have a chance to succeed, it needs to be implemented. You would agree that a strategic plan inside a drawer in an executive’s office waiting for the next strategy planning cycle to happen provides limited value (if any).
Numerous studies indicate that much value is lost due to the organization’s execution capabilities (or the lack thereof). In some cases, it is estimated that 60% of well-formulated strategies fail due to poor execution.
There are no laboratories to test business strategies; the only way to see if a strategic hypothesis is right or wrong is to implement it and observe the results. Hence, the strategic hypothesis can only be proven once the strategy is implemented and the results obtained are compared with the expected results (pilot projects or small-scale, incremental tests using a design thinking approach are helpful tools to get valuable insights without full implementation).
That brings us to a critical execution component. If strategies are tested by comparing actual vs expected results, there must be some feedback mechanism to inform if the organization is on track to achieve its ambitions.
In the modern digital world, strategy formulation and execution have become more and more a continual process where the feedback provided by the execution informs the formulation.
For that reason, the strategy management system must be capable of providing information to executive teams promptly so that they can monitor results from the execution and allow course corrections if there are deviations or if the environmental conditions have changed. In summary, executives need to understand what works well and what does not with their strategy.
It is often assumed that good strategies have execution components built in, and in that regard, it would be foolish to consider execution as a separate component of strategy. However, the reality shows that, on many occasions, the opposite is true.
The most common issues include poor communication of strategic priorities, lack of organizational alignment, lack of integration with other management processes (budgeting, HR, process improvement, etc.), misalignment of incentives, lack of capabilities or resources to execute, lack of mechanism and processes to monitor strategy execution, unclear accountabilities and responsibilities, inability to identify and respond to changes in the external and internal environment just to mention a few.
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Strategy execution is more than managing strategic initiativesAs discussed above, strategy execution requires specialized processes, capabilities and skills that are not always considered and integrated when making strategic choices, as would ideally happen. Management Schools teach a lot about strategy planning but very little about strategy execution. According to a Harvard Business Review article, there are ten times more books and articles on strategy than on execution. The processes, capabilities and skills required for execution are particular, and they are much more than executing the portfolio of strategic projects. Organizations need to build the right management systems and processes (like systems to manage and monitor the strategy), leverage the use of technology (use of data to not only measure results but to get strategic insights), advance organizational agility (to be able to respond to changing conditions rapidly), develop integration mechanisms with other business processes (PMO, Finance, HR Operations, IT, etc., to ensure, for instance, the availability of financial resources needed to execute strategy; or the availability of the competencies required to make strategy happen), create organizational alignment (across the organization -functions and business units, and at all organizational levels), develop two ways communication internal and external, improve leadership skills, align performance management with strategic priorities, etc., and even foster the right culture to enable execution. Strategy execution is by nature cross-functional; it requires the coordination of many moving parts across the organization. It also requires that someone with direct access to the most senior level of the organization is accountable for the coordination and strategic oversight of all the strategy execution processes and interactions to ensure consistency with the strategic hypothesis. |
None of the above happens by chance or automatically. It is a crucial role and responsibility of the senior leadership team to develop the organization’s execution capabilities.
Strategy execution is a critical competency that organizations require to materialize the value of their strategy. Unfortunately, it is often overlooked or neglected, like the little swan in the Ugly Duckling tale, resulting in lost opportunities for value creation.
If your strategy is not producing the expected results, it could be an execution problem. We will be happy to discuss how we can help you implement the changes required to bring your strategy back on track. Our multidisciplinary team of experts will identify the areas that need attention and design custom-made solutions for your organization based on leading practices and many years of experience in the field.
Carlos Duran is a senior professional with over twenty-five years of experience in strategy formulation and execution. He helps organizations globally to design and implement strategies and business transformation initiatives across various industry sectors. His areas of expertise include digital transformation and the integration of ESG considerations into core business strategies. Carlos also possesses in-depth experience in business process improvement, quality management systems, and project and business performance management. He holds an MBA from Newcastle University in the UK, a Master in Quality Management and Process Improvement from Cologne University of Applied Sciences, Germany, a Civil Engineering degree from UNT, Argentina, and a specialization in Digital Strategy from MIT, USA. As senior Advisor at Stratford, Carlos helps organizations create and sustain long-lasting value