It appears that strategy formulation works well, yet still 70% of all strategies fail. The fault, dear Brutus, must be in strategy execution. Let’s look at some of the reasons:
Strategic Goals: Some key questions. What are the key goals that make up the strategy? How do the goals relate to each other? How do we know when the strategy is complete? What are the key performance indicators that define strategy success?
Management Fatigue: Once a strategy has been formulated, there is a long road ahead to get the strategy up and running. Perhaps senior management may get bored. Boredom is contagious and can quickly infect the strategy project.
Strategy accountability: One or more executives must be accountable for the strategy. Accountability is a public event, and must be monitored over time. Remember that for many people working on a strategy, this is not their day job. So accountability should also be accompanied by incentives.
Task Accountability: A strategy consists of numerous goals or initiatives. Initiatives require that projects be completed. These projects have tasks and milestones. Tasks and milestones are complete when there is a tangible deliverable that can be reviewed by management.
“Percent Complete” is perilous: Why is it that we are trying to transform major companies using primitive project management techniques? Real strategies require an Earned Value approach (where each task has an associated value which is earned when the task is complete, and a real deliverable produced) - which is simple to learn. Remember what they say about percent complete: “The first 90% of the project goes much faster than the last 90% of the project.” By the way, I think this blog is 90% compete.
So, when does the strategy really end?
Say one of your major goals is to build a new factory in China. Is the strategy over when the factory is up and live? Is the strategy over when the factory runs efficiently, using KPIs you have defined? Is the strategy over when the products produced by this new factory add materially to the Company’s bottom line?
No strategy is an island: It is important to recognize that many things tie to strategy and conversely. Those things include:
- The budget
- Cash plan
- Capital plan
- Human Resources Plan
- Operating Plan
- Sales Plan
Make sure that the nascent strategy is consistent with all major planning efforts in the company.
What to do: You will need strategy management software. Make sure that the software has the requisite components. Make sure that the customers of the strategy management software vendor have often completed successful strategies. Find out whether the software firm’s consultants or third party consultants were instrumental in the success of the strategy.
You don’t need a boutique consulting firm (unless you are having trouble with strategy formulation). This is all about blocking and tackling for strategy execution.
Make sure that all participants in the strategy have skin in the game. If you keep your eye on the ball, you can win!