Although senior executives recognize that strategy delivery is important, many leaders today say their organizations struggle with designing and guiding implementations that truly deliver on their business strategy goals.
In a new survey of 500 global leaders by the Economist Intelligence Unit (EIU), most executives reported that their companies have a hard time delivering the strategies they’ve designed — with significant consequences.
The average organization in the survey, supported by the Brightline Initiative, reported failing to hit 20 percent of its strategic objectives due to poor or incomplete strategy implementation over the past few years, and more than half (53 percent) admitted that their weakness in delivering their strategy puts them at a competitive disadvantage.
Fifty-nine percent agreed with the following statement: “We often struggle to bridge the gap between strategy development and its practical, day-to-day implementation.”
“A strategy might look good on a PowerPoint slide, but it is only as good as its execution,” says Peter Toth, global head of strategy at Rio Tinto, a UK-headquartered global mining company. “That’s where the rubber hits the road.”
The survey found that despite the crucial contribution of implementation to organizational success, senior executives frequently don’t see its inherent strategic value. Sixty-two percent of survey respondents said that implementation is seen as an operational task as opposed to a strategic one.
“There is often an assumption that if we design a great strategy, employees should execute it,” says Michael Hitt, university distinguished professor emeritus at Texas A&M University and distinguished research fellow at Texas Christian University.
Part of the problem is that there is a gap between the C-suite and operations in understanding delivery challenges, which is a disconnect that can have real consequences. Two-thirds (65 percent) of the companies surveyed said that their strategy falls short because of a failure to understand the company, its market environment, and its ability to execute. The single improvement the executives most often cited that would make strategy delivery more effective is coordinating those who design strategy and those who deliver it.
There was one group in the survey that emerged as Leaders: companies that delivered on 80 percent or more of their strategic goals and saw significant financial impact. These Leaders reported they were much better at delivery and operated with a clear plan that coordinated the work of designers and deliverers of strategy.
While these Leaders design for delivery, they were much better than their peers at ensuring there is collaboration throughout the process. They are much more likely than the worst performers in the survey to agree strongly that those who develop and those who deliver strategy collaborate effectively and are aware of the changing challenges in implementation.
Executives at the top of organizations must be clear on the importance of tight interaction between designers and deliverers. “The CEO must participate in [strategy] execution, not just preside over it,” says Joe Jimenez, CEO of the Swiss-based drug company Novartis.
Such insight is fundamental for success, according to Prabhakar Ghatage, general manager of the Strategy Deployment Practice in the Tata Business Excellence Group. “Some businesses continuously do exceptionally well on strategy. Their secret sauce is that they have thought through ‘How will we get there?’” he says.
The rewards for companies that follow the actions of Leaders in bridging strategy design and delivery are clear in the financial results. Forty-two percent of the Leaders report results well above financial performance relative to peers, compared with those companies that said they had missed more than 20 percent of their strategic goals.
The Leaders in strategy delivery also are clear about the importance of culture and communication as implementation unfolds. They are more likely to report a very effective flow of information, both vertically and horizontally throughout the organization.
These Leaders also know how to bring evolving information about customers and competitors into the organization and use it effectively while strategy is being implemented. Unlike many organizations that struggle to use new information about changing market conditions, the Leaders report their delivery systems are designed to quickly use intelligence from the outside to reallocate people and resources and make adjustments to both strategy and implementation.
For more information on the Brightline Initiative, go to Brightline.org.
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