we’ve been debating about how to execute a strategy. Execution is the cherry on the pie (or maybe the pie under the cherry). Whatever the quality of the strategy, if we do not implement it (with good results) it has no value.
Start to execute
Imagine that you have it all in place. You have a vision and a story to sell it with. You have a mission statement. You have defined the values you need to achieve your strategy. You defined you’re leadership style and your operational organisation. Now you only need to make it happen.
That is called strategy execution. All your work is worthless if you are not able to execute what you’ve committed to.
And strategy execution is about commitment and keeping your promises. There are a number of myths in strategy execution that make it difficult to get there.
One of those myths is that strategy execution is about alignment. Yes it is. But there is more to it. It’s also about coordination and about adaptation.
We know about alignment. In strictly run organisations alignment means that everyone knows what needs to be done. Targets are cascaded down from the top level to the lowest levels of the organisation. Targets are always derived from more general targets. And so they are nicely interconnected. usually these targets are smart (specific, measurable, attractive or assignable, realistic and time-related).
But there’s something what we sometimes forget. The “M” of Smart not only stands for measurable. It needs to stand for meaningful. How will you sell your story if the targets that are coming out of your strategy do not mean anything. Besides, not everything that gets measured is meaningful. And not everything that is meaningful gets measured. But of course, in the ideal world, we can measure progress on meaningful targets.
What’s more, alignment requires control. The effort one has to make to control, might be better used in attacking the markets, servicing the customer, improving your offer. Alignment in itself is OK but it can be suffocating new initiatives.
As an HR guy I am really a cool lover of performance management systems. Why? HR is very much about performance but these systems do not necessarily engage people. The people that are engaged do not need it. On the contrary, most systems demotivate them. The ones that are disengaged do not get engaged by performance management systems. So the question is who are they for?
They are usually for top management who loves strategy alignment. Strategy Alignment usually means that targets are cascaded downwards. But it’s not about that. It’s about being part of a bigger story. It’s about feeling that you contribute to something relevant that is much bigger than yourself. If that’s the case you do not need performance management. The performance will manage itself.
Let’s take an example. I’ve been to a Lush store. That’s a store that sells personalised, hand-made and fair-trade cosmetics. I’ve managed to talk to a member of the staff. That person was really convinced he did something meaningful. He was so engaged that he told me how he used the products he was selling to me. I am even not sure he was selling. He was just talking about how great the products and the company were. There was passion in his voice. Now would that person need a performance management system? I guess not.
But top management wants to be in control and wants to be fed with data. It wants its incentive plan to be based on smart targets. But if that’s all there is to it, don’t go there.
A comprehensive Framework for Strategy Execution
Rebecca Homkes of LBS talked about the levers for strategy execution: top leadership, distributed leadership, processes, shared context, resource allocation and culture.
Personally I believe that culture is the most important one. One often hears the phrase: culture eats strategy for breakfast. And that is true. If the culture is not right, strategy execution might fail. But culture is an intangible and quite stable aspect of the company. How to change it? This would be the topic of another blog. But let’s assume that you can change unsupportive habits.
I think the commitment issue is vital. Strategy is about the delivery on promises. No cascading system and no structure can compensate the (un)willingness to collaborate. Apparently internal colleagues and superiors are not always that reliable. If they’re not, the strategy will not get executed.
But we need to learn this:
- We need to be flexible about the plan. Adaptation will become more important than ever. Plans have a limited value. And instead of limiting people and making them blind for what is happening in the outside world, strategic planning should entail setting some boundaries and at the same time allowing for adaptation. It’s about finding a balance between providing enough structure and enough flexibility.
But if you’ d like to know how to balance that the answer is quite simple: you can’t and you don’t have to. There is no one-fits-all solution to strategic planning. It develops over time. And if you’re OK with todays focus on alignment, you might want to move on to coordination in the future.
- If you change something in the strategic equation you will need to go all the way. It’s only through consistency that you will create a winning strategy.
- The most important aspect is the creation of a shared context. This is not to be reduced to pure communication. Yes, communication is important but a shared context is more. It’s clarity about what matters, why it matters, how the various key pieces fit together and about what is and what is not working
- Keep it simple
- engage in discussions, not in lectures
- show people what success really means
- use the network to spread the word
- accept that you need to talk about what is not working.
- You do not necessarily need a performance culture. Focussing too much on performance entails risk. People might forget about the longer term consequences. There might be problems with personal integrity. Behaviour might shift in the wrong direction. People might refer to sandbagging: becoming very conservative in order not to fail. People might also avoid cooperation. All of these are detrimental to the long-term well-being of the organisation.
- There is a lot of talk about heroic leadership. Examples are Steve Jobs, Bill Gates, Richard Branson. But heroic leadership is a myth. Leaders have an important but yet limited role. They need to set a clear strategy, guide people and be exemplary, lead that adaptation, create a supportive culture and finally work on the leadership within the organisation. They create the context.
- Finally you need the right processes in place. Some companies have extreme incentive systems to drive performance. But really, you should be aware of the impact that those kinds of processes have on your culture. Extreme incentive systems create – like any other system – undesired effects. There are many examples how companies found their demise through inappropriate performance management and incentive systems. In my experience one should be very careful with performance management.
It’s probably not right to work on just one thing. You need to work it all out: culture, processes, leadership, … There is indeed a kind of value chain that you could imagine: leadership creates context, context creates behaviour, behaviour creates value. It’s as simple as that.
But if we don to accept the central role genuine and effective leadership has to play in any company, we might have other surprises. Many post-mortem audits of collapsed countries point out that the problem is often human. Systems have desired effects but also adverse effects. And that’s also true for incentive systems.
Here you can find a link to a film with dr Rebecca Homkes of LBS.