What are the key success factors for effective strategy implementation?
Even the best strategy will ultimately fail if it is not implemented effectively. In our latest Executive Horizons survey, respondents only gave strategy execution in their company an average rating of 5 out of 10. So what can you do to maximize your chances of success and turn your vision into a business reality?
SECURING ADEQUATE RESOURCES AND BUDGETS
This may sound incredibly obvious but, according to Kaplan & Norton, 60% of company budgets are not directly linked to strategy implementation and the necessary financial, structural, time and human resources are not always allocated at the outset. In many cases, the true costs are either underestimated or simply not identified. For Andrew Cravenho, CEO of CBAC Funding, it is essential to set realistic goals that are fully aligned with the economic reality of the organization and its available resources. Thinking long term and measuring performance will enable you to judge the effectiveness of the budget and use of resources.
Assigning adequate resources and budgets will also show just how serious the company leadership is about the strategy and will motivate employees to accomplish their assigned tasks.
A FLUID STRATEGY FOR A FLUID ENVIRONMENT
The only constant in our fast-moving world is change. It is therefore crucial to make sure that strategy implementation is flexible enough to adapt to changes in both the internal and external environments. Adopting a ‘proactively reactive’ approach will also ensure that you are more alert to new opportunities and unanticipated events.
“A company’s approach needs to evolve with the market. Strategic flexibility requires liquidity for fast response time, but more important is organizational structure – how various units work with each other, and the freedom they have to take decisions on their own initiative.”
- Tim Hindle, The Economist
Organizations that try to force a new strategy into an outdated structure will find it impossible to implement their strategy effectively.
ANTICIPATE POTENTIAL CHANGE MANAGEMENT ISSUES
A new strategy means new priorities and new activities across the organization. Strategy implementation therefore involves change and the natural human tendency is to resist it, no matter how enlightened or inspiring the business vision. It is therefore essential that all employees are aware of how they are expected to change and what they have to deliver. Each individual needs to understand their role within the overall strategy, the expected outcomes and how they will be measured.
Expanding skills through training, empowering employees across the board and having clear, open lines of communication, will ensure that change management issues are less likely to disrupt company strategy.
ENGAGE AND INCENTIVIZE EMPLOYEES AND STAKEHOLDERS
The main reason that strategy implementation fails is because staff and key stakeholders such as investors, customers and alliance partners do not get behind it. If people do not understand the strategy they will be unable to connect with it. Clearly communicating the strategic plan on a regular basis facilitates employee ‘buy-in” and a broader understanding of the organization’s strategic goals and objectives.
It is crucial to create an environment that connects employees with the strategy and that rewards success. This entails finding creative ways to motivate people to invest in the strategy and establishing positive and negative consequences for achieving or not achieving the strategic goals. Getting employees personally invested in the success of a business strategy can supercharge the effectiveness and success of the entire operation.
A strategy is like an iceberg – two thirds of it lies beneath the surface. To succeed it needs support, not only from the external environment, but also from everyone who has a stake in its implementation.