25/03/2014

By Jeroen De Flander, one of the world’s most influential thinkers on strategy execution and a highly regarded keynote speaker,

The Strategy Execution process is your highway to performance. To be more precise, you should picture your Strategy Execution process not as a single street but as a network of unique roads – smaller and larger ones –all interlinked together. And the roads carry names like ‘strategy review process’, ‘initiative management process’, ‘coaching process’, ‘individual objective setting process’ and so on. And all of these processes, and the interaction between them, are vital to your execution success.

To join the Strategy Execution elite – the best-in-class – organisations need to overcome the following 9 bottlenecks:

1. There is too much complexity. Most companies started off with a fairly straightforward, simple and pragmatic performance management process. But they somehow succeeded in complicating it over time.

2. Managers don’t understand the process. You can have the best Strategy Execution process in the world, but if your managers don’t get it, it’s worthless. Do you understand the Strategy Execution process in your organisation?

3. Clear ownership is lacking. Ownership of the Strategy Execution process is distributed among many different players. Partial owners in large organisations often include the finance department, human resources, the strategy coordination team, internal consultants, several programme management offices (PMOs) and, last but not least, the managers themselves. This fragmentation leads to lack of ownership for the global process. Most companies don’t coordinate the activities spread across all these players. They all work in separate silos.

4. The process and improvement actions are not visible on the executive radar. Another disadvantage of the silo approach – apart from the lack of ownership – is the lack of visibility for the global process. Separate, stand-alone, Strategy Execution topics such as budget discussions for new strategic initiatives, Key Performance Indicator (KPI) reviews or the selection of a new development programme, regularly make it to the boardroom table, but Strategy Execution as an activity doesn’t. A missed opportunity.

5. Managers fear proposing, and making, changes. ‘We have always done it this way’ or ‘This is what corporate wants’ are phrases I have heard all too often – and probably you have too. We all know that people don’t like change. But for some reason (and I’m still trying to work out why – if you have the answer please let me know), this is especially true when it comes to managing performance. I’ve seen companies change their complete distribution model, but then panic at the mere thought of altering the timing of their budgeting cycle.

6. The process isn’t adapted to the needs of the organisation. Not adapted to your needs. You don’t need a cannon to kill a mosquito, but it might be useful to have a good tranquilizer gun if you want to transport a tiger. Adapt your tools to your needs. All too often, companies forget this logic. A small business unit that is part of a big multinational does not always benefit from the fully-fledged corporate performance management process that works great for the other business units 10 times its size. Harmonising doesn’t mean copying without thinking.

7. The quality of the process isn’t measured. Most companies today measure and monitor almost everything. Every part of the business has its own indicator. But the Strategy Execution process itself remains a black box. Crucial questions such as ‘What percentage of our budget is allocated to strategic projects that have to secure our future?’, ‘What’s the percentage of individual objectives linked to our strategy?’ or ‘What’s the cost of our Strategy Execution process?’ remain unanswered.

8. One part of the process gets all of the attention, and others none. Most people prefer to spend their time on things they are already quite good at. You probably recognise this phenomenon. Companies operate the same. I see organisations invest in those Strategy Execution process steps that are already quite developed, but then neglect the weaker ones – creating a vast difference between the different Strategy Execution building blocks. Examples include a streamlined budgeting process but very poor strategy monitoring, solid objective setting but poor coaching skills, and interactive Balanced Scorecard discussions but poor initiative management. And you know the saying: a chain is only as strong as its weakest link.

9. It’s too expensive. Performance management can be a very expensive process. Most companies forget to optimise the following three cost categories:
_ The managers’ time investment. Most managers lose time, and therefore money, by doing things that are not really needed (but asked anyway), or are very inefficient at doing things a certain way.
_ The activities of the process owners. There is often double work between departments, the Strategy Execution process becomes a political minefield and needs extra time, or just the fact that there are too many people keeping their jobs alive by continuing the complexity or adding even more.
_ The impact of external consulting and training. It’s probably smart to get external advice and outsource certain training activities.
But watch out for the cost impact of these actions. The initial outlay might be very reasonable but the maintenance costs aren’t. You could end up with a very cheap consultant but a massive total cost of ownership.