Good Strategies Often Unravel – Why Does Yours?

Excellent article in the most recent Harvard Business Review on a problem that most businesses face more often than they will admit to: why has my strategy that we put so much time into just started to unravel? We spent the time, the effort, the planning; we produced the multi-slide deck and gave the staff presentations; we had Board buy-in; yet it still unravelled… Why? The authors put it down to these common myths: Myth 1: Execution Equals Alignment. While most strategies translate into execution paths that need to be followed at all levels, coupled with rewards for successful execution, what is missing is the ability for executives to rely on colleagues and peers in other functions and units all of the time. Indeed, the authors quote the figure of only 9% of executives feel they can do this all of the time, and just half say they can rely on them most of the time. There is a host of dysfunctional behaviours that undermine execution: duplication of effort, promises slip, delays and opportunities are passed up. Myth 2: Execution Means Sticking to the Plan. Plans change. They do. Every startup will tell you that plans are changing on a daily basis. The authors’ research indicates that organisations react so slowly to change that they can’t seize fleeting opportunities or mitigate emerging threats (29%), or react quickly but lose sight of the company strategy (24%). According to a study by McKinsey, firms that actively reallocated capital expenditures across business units achieved an average shareholder return 30% higher than the average return of companies that were slow to shift funds. Myth 3: Communication Equals Understanding. In the author’s work they found that not only are strategic objectives poorly understood, but they often seem unrelated to one another and disconnected from the overall strategy. Just over half of all top team members say they have a clear sense of how major priorities and initiatives fit together. It’s pretty dire when half the C-suite cannot connect the dots between strategic priorities, but matters are even worse elsewhere. Fewer than one-third of senior executives’ direct reports clearly understand the connections between corporate priorities, and the share plummets to 16% for frontline supervisors and team leaders. Part of the problem is that executives measure communication in terms of inputs (the number of e-mails sent or town halls hosted) rather than by the only metric that actually counts—how well key leaders understand what’s communicated. Myth 4: A Performance Culture Drives Execution. When the authors asked about factors that influence who gets hired, praised, promoted, and fired, they saw that most companies do a good job of recognizing and rewarding performance. Past performance is by far the most frequently named factor in promotion decisions, cited by two-thirds of all managers. The answer is that a culture that supports execution must recognize and reward other things as well, such as agility, teamwork, and ambition. Many companies fall short in this respect. When making hiring or promotion decisions, for example, they place much less value on a manager’s ability to adapt to changing circumstances—an indication of the agility needed to execute strategy—than on whether she has hit her numbers in the past. Agility requires a willingness to experiment, and many managers avoid experimentation because they fear the consequences of failure. Half the managers we have surveyed believe that their careers would suffer if they pursued but failed at novel opportunities or innovations. Myth 5: Execution Should be driven from the top. Concentrating power at the top may boost performance in the short term, but it degrades an organization’s capacity to execute over the long run. Frequent and direct intervention from on high encourages middle managers to escalate conflicts rather than resolve them, and over time they lose the ability to work things out with colleagues in other units. Moreover, if top executives insist on making the important calls themselves, they diminish middle managers’ decision-making skills, initiative, and ownership of results. The authors conclude with the view that the starting point is a fundamental redefinition of execution as the ability to seize opportunities aligned with strategy while coordinating with other parts of the organization on an ongoing basis. Reframing execution in those terms can help managers pinpoint why it is stalling. Armed with a more comprehensive understanding, they can avoid pitfalls such as the alignment trap and focus on the factors that matter most for translating strategy into results. Read the full article here.