The Challenge of Strategy Implementation
Which would you choose: a brilliant strategy poorly executed or an unspectacular one brilliantly implemented?
Granted, it is not an especially attractive choice, but based on our consulting experience we would recommend the latter. The number of bad strategies that are well implemented is dwarfed by the number of good strategies that are poorly implemented. Consider the following:
- Former Sony CEO Nobuyuki Idei was among the first executives to see the potential in the convergence of media and electronics. He forged a vision of a Sony that would offer an entertainment package containing both content and the hardware for its delivery. Maybe it was the wrong strategy, but we will never know because Idei was not able to put into place the processes and structure to implement it. Concerns over piracy slowed down development.
- Lynne Camp, the vice president and general manager of Agilent Technologies’ Systems Generation and Delivery Unit, wanted to forge a single global company. Few people questioned the degree to which accomplishing that goal would create a strong competitive advantage. However, that vision crumbled under the weight of interfunctional squabbles, slow executive decision making (out of fear of taking their eyes off their ongoing responsibilities), failure to involve the “best and the brightest” in strategy implementation, and communication that was limited to behind-closed-doors sessions.
- The European Union created the “Lisbon strategy,” which established an ambitious mission: building the most competitive economy in the world by instituting business-friendly policies that would invigorate the economies of all countries. That lofty goal was not achieved because it died of asphyxiation after its translation into 28 “objectives,” 120 “targets,” and 117 “indicators.”
Make no mistake about it; your ability to implement strategy can be a career booster—or buster. Leadership experts estimate that 70 percent of CEOs who fail are ineffective not because their vision is flawed, but because they are unable to implement that vision. Not surprisingly, “execution” has become a mantra on mahogany row.
What Is Strategy?
Strategy is the framework of choices that determines the nature and direction of an organization. For example: What products or services will you offer? What markets or customer groups will you target? And what emphasis will you place on both? What future capabilities do you need? What are your future financial, size, and growth expectations? And the big payoff question: What’s your future competitive advantage?
A strategy says, “We have finite financial resources, and here is where we’re going to spend our hard-earned money. We have finite human resources, and here is where we’re going to dedicate the precious time of our talented people.”
Strategic Initiatives: Key to Strategic Success
Once you have made decisions about the fundamental strategic questions, the less glamorous but just as important question emerges: How do you transform your vision into reality? The “how-to” question is the mother lode of strategy implementation. From it flows the initiatives or projects that will move vision from the mountaintop to the marketplace. For example:
- We facilitated the deliberations of the top team of a small, closely held industrial component manufacturer as its members considered a number of growth alternatives. After healthy debate on the merits of international expansion and entering new domestic markets, the team members had forged a growth strategy that centered on new products. While they had defined a product development process, that process was inconsistently followed, slow, and costly, and had produced few winners. The team launched a strategic initiative to ensure that this process was appropriately designed, staffed, IT-enabled, funded, and followed.
- We guided the strategy of a large consumer products company whose top and bottom lines were being eroded by Asian imports that were equivalent in quality and lower in price. After evaluating and rejecting a number of alternative paths out of this thicket, the top team made two strategic decisions: to partner with a small set of Chinese manufacturers, and to establish order-fulfillment cycle time as a competitive advantage. The team commissioned initiatives to achieve each of these strategic intents.
Without successful initiatives, strategy implementation is impossible. Acquisitions can’t be made. New products can’t be created and commercialized. New markets can’t be entered. Competitive advantages can’t be forged and maintained. Brand equity can’t be established or enhanced. Costs can’t be driven out of a supply chain. Talent can’t be developed.
Do You Know Where You Stand?
As you deploy strategic initiatives, the odds are stacked against your success. Research on strategic initiatives involving the installation of new information technology has shown that only 28 percent meet their goals on time and within budget. Another 18 percent are canceled. The remaining 54 percent limp to the finish line with objectives compromised and/or significant overruns relative to time and budget projections. Earlier research indicates that the average initiative goes 89 percent over budget and takes 122 percent longer than planned.
Is your organization’s performance significantly better than these bleak numbers? If not, can you afford the luxury of this level of ineffectiveness? And potentially more disturbing: Do you know how much you are investing in strategic initiatives and what the return on that investment is?
If you are a typical senior executive—especially the CFO—you undoubtedly know the cost of ongoing operations. Chances are that you have headcount and productivity metrics that can easily be translated into dollars. And we would be surprised if these numbers were not reported regularly. But ask yourself this, “Is our performance against initiatives regularly monitored, reported, and used as the basis for our decision making?” If not, shouldn’t your progress toward the deployment of your strategy be prominently displayed on your radar screen?
Seven Killers of Strategy Implementation—and Their Antidotes
We are frequently asked to audit an organization’s strategy implementation. We have found that one of the hallmarks of best-in-class companies and agencies is the role played by their most senior executives. They are responsible for creating the infrastructure, climate, and processes in which initiatives produce change. One of their pivotal roles is to see that action is taken to avoid the seven booby traps that typically derail strategy implementation. Here are the potential killers of strategy implementation—and the antidotes that will work against them:
1. Failing to Launch the Right Initiatives
It’s easy to fall into this trap if you have a strategy that doesn’t fully answer the questions in our “what is strategy?” discussion. This failure may also be due to not knowing what needs to be done to execute some key element of the strategy: “We need to establish service after the sale as a competitive advantage. How do we do that?” In addition, resource-sapping, nonstrategic initiatives may be launched without executives being aware of them. You may set people off on the wrong path as a result of insufficiently specific communication. (“Are we entering the China market or merely evaluating its potential?” “Are we changing our brand or merely testing it in a new market?” “Are we setting out to transform the industry or merely to improve our performance in the industry as currently defined?”)
If you are clearly communicating the “what,” is the “why” clearly understood by decision makers down through the organization? If not, the questions—and confusion—may be endless. (“Why are we installing this customer relationship management system?” “Why are we reorganizing?” “Why are we pulling out of Latin America?” “Are we streamlining our order-fulfillment process to establish a competitive advantage, to eliminate a competitive disadvantage, and/or to reduce costs?”)
Antidote: Initiative Identification
Use the organization’s strategy as the basis for surfacing candidate initiatives, including those that would have to be launched (not necessarily now) and those already underway that would need continued support.
2. Failing to Tackle a Manageable Number of Initiatives
The most frequent trap into which organizations fall is initiative overload. A business, regardless of its nature, size, complexity, and infrastructure, has a finite project capacity. Money is limited, person-hours are limited, mindshare is limited, and the change-absorption bandwidth is limited. Unaware of their organization’s limitations, executives frequently launch more initiatives than can be effectively and efficiently implemented. The typical outcome? Twelve initiatives are adequately implemented and three end up as roadkill. A better result? The five most pivotal initiatives are spectacularly implemented.
Antidote: Initiative Priority Setting
Use the strategy as the basis for determining the impact of each proposed initiative. Determine your organization’s initiative capacity (in terms of time, money, and change absorption). Eliminate low-impact initiatives. Staff and schedule the initiatives that “make the strategic cut.”
3. Failing to Put the Right Structure in Place
Most executives reorganize more than is necessary. You’ll be happy to know that we are not necessarily proposing that you change your entire organization structure. However, you do want to ensure that your structure supports—or at least doesn’t impede—the deployment of strategic initiatives.
Antidote: Initiative Organization Structure
Determine the functional roles and reporting relationships that will best support initiative excellence. Evaluate the pros and cons of creating a centralized, focused “project office.”
4. Failing to Install a Supportive “Initiative Environment”
A high-priority initiative can be pulled (or dragged) through the organization in a way that leaves its contributors, other projects, and ongoing operations in need of life support. Attributes of a healthy culture include expectations, feedback, and reward systems that buttress initiative accomplishment without bludgeoning other activities.
Executives who tend to approach issues solely with a “systems and procedures” orientation unwittingly create a common cultural deficiency. As we argue in subsequent chapters, infrastructure, tools, and protocols are important to the success of initiatives; however, they are not enough. Initiative contributors at all levels are people who require the same care and feeding in the project environment as they need in their “day job.” Initiatives involve change. Most people resist change or, at the very least, find it disorienting and anxiety producing. As a result, the implementation of initiatives requires that management pay more attention than usual to human factors.
Antidote: Initiative Culture
Determine the aspects of the current culture (e.g., rewards, communication, trust, feedback) that support initiative excellence and those that do not. Develop a plan to address those that do not.
5. Failing to Involve the Right People in the Right Ways
Initiatives are only as effective as the people who populate them. Special projects should not be a refuge for people who are merely available or for those whose absence from ongoing operations is a blessing in disguise. A poorly positioned or unqualified sponsor, project manager, or set of team members can scuttle even the best-intentioned and best-designed project.
Antidote: Initiative Roles
Define and install the sponsor, team leader, team member, and facilitator roles that are necessary for initiative excellence.
6. Failing to Use a Common Language for Initiative Management
Most high-impact initiatives involve three or more people. The biggest involve dozens or even hundreds. If these people are to contribute effectively, they need to be able to communicate. To communicate effectively and efficiently, people from different departments and at different levels need the lingua franca of a shared process and lexicon.
Antidote: Initiative Management Process
Define and install a robust, practical process—a “common language”—for defining, planning, and implementing initiatives.
7. Failing to Install an Effective, Efficient Reporting and Monitoring System
A key executive responsibility is monitoring the performance of strategic initiatives and making midcourse corrections as needed. To carry out this responsibility, you need a reporting/oversight system that gives you the information you need without creating a draining bureaucracy.
Antidote: Initiative Reporting/Monitoring
Develop and deploy a framework and protocol for reporting initiative status and making mid-course corrections.
There’s one more potential killer of strategy implementation—and it may be the deadliest of all: failing to be patient. A wag once defined executives as “people with attention spans of 60 seconds or less.” Whether or not you are a poster child for Adult Attention Deficit Disorder, you need to recognize that strategy implementation requires patience. Even if your strategy doesn’t involve a major departure from the past, initiatives involving product development, market entry and exit, acquisitions, process improvement, curing a dysfunctional culture, or changing organization structure cannot be implemented overnight.
Recognizing the pitfalls you are likely to encounter, having an action plan in place to avoid each, and having the patience to nurture the projects and people critical to your strategy will get you started on the road to making your strategic vision a reality.
1 Ken Belson, “Idei Failed to Get Sony to Focus on His Vision,” International Herald Tribune, Mar. 9, 2005.
2 Michael Beer and Russell Eisenstat, “How to Have an Honest Conversation About Your Business Strategy,” ハーバード・ビジネス・レビュー, February 2004.
3 “Europe: Reinventing Lisbon,” The Economist, February 1, 2005.
4 Ram Charan and Geoffrey Colvin, “Why CEOs Fail,” Fortune, June 21, 1999.
5 The Standish Group, Chaos Study, 2004.
6 The Standish Group, Chaos Study, 1995.
This article has been adapted from Implementation: How to Transform Strategic Initiatives into Blockbuster Results (McGraw-Hill, 2005). Co-authors Alan P. Brache and Sam Bodley-Scott are thought leaders and strategy experts with the Princeton, NJ-based international consulting firm of Kepner-Tregoe, Inc. (www.kepner-tregoe.com). For the past 35 years, Kepner-Tregoe has been helping clients first formulate and then implement successful business strategies.