Over the past years we have seen unprecedented changes in the world, which have transformed the business landscape in which organizations operate.
Besides the acceleration of consumers’ changing needs, CEOs, Boards, directors, executives, leaders and senior managers have to face: a) a never-ending financial crisis, b) languishing market recovery, and c) an increase of fierce new entrants in their industries, either as startups or businesses coming from other industries in desperate need of new revenue sources.
Unfortunately, most business management theories that we learned in the past (and are currently taught in top business schools such as Harvard, MIT, Wharton, Insead, IE and London Business School) don’t apply any longer. Many experts are trying to adapt or create new frameworks to help leaders succeed in this unusual scenario. One new area receiving lots of attention is strategy execution or implementation. As a researcher in this field, I have studied hundreds of companies to understand what makes the very few successful in strategy implementation.
In this post, I share six topics that are trending in the area of strategy implementation this year, and that every CEO should put on their priority list if they want to increase their chances for success.
1. The Project ECONOMY
We all have heard about the disruptions that are impacting our society and the business world: Robotics, Artificial Intelligence, Shared Economy, Blockchain, Big Data….
But there is one extreme disruption that media and academia have completely missed. For over 100 years, organizations have been run in a hierarchical manner in which power, budgets and resources are divided over departments (silos). Management focused on efficiency; projects were hardly ever a priority.
Today, this model is obsolete. The day-to-day running of a business will soon be done through automation and robots—and is already done so in many instances. Projects have become the essential part of any organization.
The impact of the Project Economy will be far-reaching. My prediction is that by 2025, senior leaders and managers will spend at least 60% of their time selecting, prioritizing and overseeing project execution.
Keep the organization focused, don’t run away from the tough choices, and follow them through.
Many scholars. business management gurus, and even Harvard Business Review articles highlight the importance of focus for individuals, leaders and organizations. Although it is easy to say “less is more,” executive teams often have great difficulty making the tough choices required.
One example of lack of focus is the comeback of a toy we all used to play with: Legos. Once a leading business, Lego almost disappeared in the late 90s due to a complete loss of focus. They entered a frenzy of launching new products, going from 109 in 1994 to 347 in 1998. The new CEO, a former McKinsey consultant and project manager, turned Lego around by recovering their initial focus.
I recommend that you decide with your executive team:
Complexity is one of the biggest hindrances to agility of response; it creates implementation paralysis.
After the financial crisis of 2007, organizations have tried to simplify their business structures to be more agile in the new, and unprecedented, business landscape. Both public and private sector organizations have launched many initiatives to become “leaner,” “fitter,” “nimbler,” etc., but these efforts have been short-term impulses. Without clear long-term goals, such efforts often backfire. They create the feeling that, despite never-ending change, the organization is going nowhere. A marketing manager in a large international bank recently told me, “I don’t know any more what I will be doing in six months. It is not clear if my department will still be there; we’ve been in firefighting mode for the past three years.”
Unnecessary complexity is also caused by too many committees. Behind this proliferation is the perception that the more committees you belong to, the higher your status is in the organization. Committee objectives often concern oversight, approval, validation, and monitoring processes; however, they actually reduce agility in responding to the competition and changing market needs.
One way to reduce complexity and increase agility is to assign corporate teams to lead transversally the strategic mid/long term objectives (innovation, strategic initiatives, etc.). At the same time, empower and extend flexibility to the business units to work on their local priorities and short-term objectives (sales, customer services, etc.)
Alignment has to start at the top and cascade throughout the organization.
A recent survey on strategy execution from PwC Strategy&, asked, “What one thing would make the most difference to closing the strategy-execution gap at your company?” More than 20% of respondents said alignment to strategy.
There is no doubt that alignment at the top is critical to successful strategy implementation. The executive team as a whole must be 100% committed to achieving the organization’s strategic objectives (even if some must give up their own plans to reach that alignment). Employees often just need to see a leader’s body language to recognize in 10 seconds if he/she really believes in what they say.
The aligned vision and its roadmap should be translated into a one-page document that every single employee can understand. An excellent template for this is the Strategy Map from the Balanced Scorecard concept from Harvard professors Kaplan and Norton. But you can develop your own strategic roadmap; what matters is the content and the key messages.
Establish a central Strategy Planning and Implementation Office reporting to the CEO, with a seat in the executive suite, to drive strategy execution.
The old-fashioned way to run strategy is to give multiple entities overlapping activities and responsibilities. Examples include:
This method escalates bureaucracy, generates too many (overlapping) reports, and increases frustration. This eventually leads to organizational paralysis and failure to monitor strategy execution.
In 2020, increasing numbers of organizations will consolidate their efforts into a Strategy Planning and Execution Office, which will formulate and drive strategy execution. Due to the importance and sensitivity of this new central, independent entity—which breaks lots of little empires, silos and old habits—it must be driven by the CEO. Interestingly, LinkedIn now posts jobs for Strategy Implementation Officers.
Yesterday’s organizations used an amalgam of departments, branches, divisions, etc. to manage various aspects of the business. Strategy implementation is a combination of running the business also changing it; such an undertaking requires digital tools (software applications) to do effectively.
Without such a tool, strategy implementation is extremely difficult to manage. There is almost any tools available for this purpose but a few interesting are rising and one is DecideAct, which is ahead of the pack.
Being confronted with this issue regularly led me to find a temporarily solution to the problem, which I believe will pave the way for the strategy execution tool of the future.
My suggestion is to build a strategy implementation system based on a dynamic, enriched data warehouse with simulation functionalities. The data warehouse connects to all the systems used to run and change the business, and extracts only the relevant data needed for management to build up and follow up on the strategy. The tool also establishes controls on data quality, monitoring the correctness of the information and ensuring that the data is corrected at the source.
Happy to hear if you agree or disagree? or if you see other trending topics in 2020?