Common errors in strategy development and execution
There are some fairly common, general errors many organization’s make when developing and executing strategy that with awareness, can be addressed:
Ownership of strategy doesn’t sit with the CEO.
One of the key responsibilities of the CEO or leader of an organization is to take ownership and accountability for developing and executing strategy. This should ensure a consistency of what the CEO does and the decisions they make is absolutely aligned to the strategy.
Too often the strategy team is seen as the owners of the strategy (or no one is) and the major decisions that are then made by the leadership team are not consistent with the execution of this strategy.
It is absolutely the CEO’s responsibility to ensure the organization is pursuing the right strategy and is executing this effectively.
Strategy development is a one time event.
Strategy development has to be a dynamic process, not a static one time event. The annual process to review strategy can be too long a gap to make those critical course corrections which might be required to achieve an organization’s objectives.
Those course corrections could be required due to a rapidly changing external environment or the feedback loop on the success or otherwise of the execution of the current strategy.
In extemis, even the original strategic objectives may no longer be the right ones for the organization and need to be reviewed in light of a changing context.
Ongoing monitoring of the external environment and feedback from execution of the strategy is then required to assess the strategy for how it might need to evolve to remain relevant.
Don’t hold back from making changes if your strategy requires it.
Strategy comes after the financial plan.
It has been known for the financial plan to be developed in absence of any rationale beyond some assumptions on growth rates across key metrics that appear to deliver a sensible “shape” for the next few years trading. The strategy is then developed to justify this financial plan and set out a rationalization of why it can be achieved.
This approach clearly has a number of issues. Not least that an assessment of the company’s strategic advantages and the external environment it will deploy these advantages in is critical to developing a rationale for what financial / market share / growth assumptions are more practically realistic.
Using these to then develop the financial plan should provide a more informed view of the potential opportunity and the resources required to access this.
While financial forecasting over a longer period will often be close to guesswork anyway, at least developing the strategy in advance will force an informed discussion/rationalization of the major assumptions.
A close working relationship between the financial planning and strategy teams to facilitate this and a clear process or linking strategy with financial planning is crucial.
Strategy is not translated into actionable plans and tracked.
Developing an inspiring strategy presentation that has impressed the Board and aligned the Exec team is a good start. But even more critical is to work out exactly how this strategy will be executed into practice.
What are the key actions, who is responsible for carrying them out, over what time frame and with what resources?
Ability to execute a strategy is such a critical capability in an organization and sufficient time should be spent on this aspect of strategy development.
Execution of the strategy should then be clearly tracked based on a set of agreed metrics and the action plan. This reporting should form the basis of key Exec team sessions to support course correcting decision making if delivery goes off track.
Strategy is not communicated and embedded in the organization.
It is great if the exec team and Board are aligned behind the strategy and know what the major actions are to deliver. But how then to mobilise the whole organization to achieve these objectives?
First off is to communicate the objectives and strategy to achieve across the organization in a memorable and clear way. Face to face presentations, one page takeouts, internal communication events are all important in ensuring people are aware of what the strategy is.
Cascading key objectives / actions down through performance plans from the CEO’s balanced scorecard throughout the organization, in a connected whole will help align what people are focused and assessed on with the overall organization aims.
Ongoing progress of overall strategy execution should then be shared across the organization to create a shared understanding of how things are going.