External as well as Internal Perspectives
By Liam Fahey, Hubert St Onge, James Creelman
The New Strategy Execution Agenda. Part Two: The Critical Role of Assessment. Part one of this series explained how research by the Leadership Forum Inc. had unearthed a startling, and increasingly significant omission in how organizations approach strategy execution.
Although most interviewees during this early 2016 research program (that set out to identify the main barriers to strategy execution) readily identified the internal barriers (such as poor leadership, lack of clarity on goals, etc.,) little was said on the external barriers (marketplace changes, competitors’ responses, etc.)
The emphasis, our subsequent analysis showed, was focused on internal alignment behind the formulated strategic plan and the overcoming of internal obstacles. It’s as though outside of strategy formulation, the leaders involved suspended any attention to the external environment. What happened outside of the organization was of little interest during the execution process. A quite stunning organizational state-of-mind in today’s turbulent, fast-moving digital age and a critical determinant of why strategies, however well-formulated, have such a high failure rate: and why, if this isn’t rectified we can expect that failure rates will more likely rise than fall.
Based on this and other research and field observations, The Leadership Forum identified three categories that together capture the primary causes of strategy execution failure. Focus Factors, Capability Factors and Coherence Factors. Each has well understood internal and, generally poorly understood, external causes (described in the previous post). To execute strategy organizational leaders must recognize, and find solutions for, both.
Strategy Execution Readiness Assessment But identifying solutions requires a comprehensive understanding of exactly where the strategy execution bottlenecks are (that must then be viewed holistically and dynamically and not as isolated, silo-based issues to address). From these insights, actionable organization-wide interventions can be applied.
Leveraging the latest in survey-based technologies, The Leadership Forum addresses these challenges through an online Strategy Execution Readiness Assessment tool that captures and analyses the insights of employees (at all levels) into focus, capability and coherence factors – and from this identify the key bottlenecks. Questions are posed through organization-facing (internal) and market-facing (external) lenses, so to both capture how employees view what is happening internally as well as their assessment of leadership and organizational understanding of, and responses to, what is going on in the external world.
Focus Factors By focus, we mean getting full agreement on how to translate a given strategy into an executable roadmap. And then, once this agreement has been reached, give appropriate attention at different levels of the organization to ensuring a successful execution.
Organization-Facing Focus A crucial determinant of success is how well the enterprise inculcates line-of-sight from high-level strategic goals and team-level execution activities (and is common in most conventional approaches to strategy execution). To elicit insights into readiness here, employees rate a short series of statements that probe several key focus areas, such the level of clarity the executive team has with regard strategic outcomes and how they will be achieved and how well the employee-based understands what they must do for successful execution, among others.
Therefore, answering the performance question: To what extent is strategic line-of-sight evident in execution?
Market-Facing Focus So we know what’s going on internally, but what about externally? To provides insight into how well the enterprise is maintaining a sharp eye on external changes and whether these shifts might require some reworking of the internally-focused execution plans, we consider focus areas such as how well the organization is appropriately monitoring shifts in customer behavior/market dynamics as well as whether those impacted by (internally and externally) are properly informed as to what has changed and what this means to them. Often the execution road-map is considered frozen until the execution is completed. Learning from market responses is excluded as a process because of the fear that the strategy is second-guessed by people who are somewhat resistant to change.
Answering the key performance question: to what extent are we keeping an eye on the external drivers of change?
But no matter how well-focused an organization is, this counts for little if it doesn’t have the capabilities to act on what it sees – the second factor area.
Capability Factors By capability, we mean having the right capabilities in place in order for execution to succeed. Internally-focused capabilities must work alongside marketplace-oriented capabilities for strategy execution to succeed.
Internal capability is about ensuring that execution teams have the right blend of expertise, are enabled to quickly act on changes in customer and market dynamics, are properly motivated and rewarded and are led by management teams that are passionate about execution. Direct statements here within Strategy Execution Readiness Assessment include – The resources of the organization are lined up effectively to realize our strategies. – The members of execution teams are passionately driven to execute the road map with a collective sense of purpose and discipline.
The key performance question: to what extent do we have the right people, in the right place, with the right resources to execute strategy?
Market-Facing Capabilities Acting on changes in customer/market dynamics requires the capability to, and on an ongoing basis capture and integrate within execution plans, these shift. We probe market-facing capabilities such as how well customer and market insights are brought forward and leveraged to enhance the effectiveness of the execution, ability to anticipate customer buying behaviors and how effectively the organization manages relationships with customers and suppliers during the execution phase.
The key performance question: To what extent do we, on an ongoing basis, capture and integrate customer/market changes in our execution plans?
But for capabilities to be deployed optimally requires coherence, the third of the focus areas.
Coherence Factors By coherence, we do not simply mean a coherent action plan. Coherence resides in the relationships and linkages among all the relevant stakeholders involved in executing the plan.
Organization-Facing Coherence Internal coherence is essentially about how well the enterprise is effectively keeping teams aligned, engaged and harmonious. So the assessment statements here considers areas such as how well functions are coordinated for strategy execution, how effectively activities are prioritized and the speed and efficacy of how leaders at different levels resolve conflicts within and between teams.
Key performance question: To what extent are we internally configured for effective strategy execution?
Market-Facing Coherence Adding in the external factor helps ensure the efforts of even the most well-configured internal execution teams remain relevant and meaningful given the external context. Insights are gained through probing areas such as whether the organization and the executive leadership team have a shared understanding of the market realities pertaining to strategy execution plan, the consistency of messaging and how well the assumptions embedded in the plan are tested as execution unfolds.
The key performance question: to what extent is our work in strategy execution aligned to market realities?
Execution Approach While the qualitative, and where appropriate qualitative responses into internal/external focus, capabilities and coherence factors provide comprehensive and actionable insights into strategy execution readiness, The Leadership Forum’s research and field observations uncover other dimensions that are required to significantly enhance the probability of success. We call this the Execution Approach. Assessment statements consider areas such as governance structures and processes, how learnings are captured and acted upon and whether execution is viewed as a legitimate discipline within the organization.
The key performance question: To what extent do we manage strategy execution as a critical management discipline?
The appropriate Execution Approach ensure the three focus factors are orchestrated for maximum impact.
Action Recommendations Through sophisticated algorithms and analytics, Strategy Execution Readiness Assessment enables organizational leaders to gain both a helicopter- and detailed-view of the strategy execution bottlenecks and their collective impact – and then what needs to be done. Based on correlative analysis across the three factors and execution approach the Strategy Execution Readiness Assessment report generates recommendations for action at the leadership organizational and team levels – therefore turning assessment into action.
Parting Words As much as anything, successful strategy execution today requires the removal of the purely internally-focused glasses that we generally don once strategies are formulated and signed-off. Space must be given to learning with an open mind as the execution unfolds. Simply put, as we progress further into the so-called digital age we require one eye looking at the internal and one looking at the external. But, as with humans, organizations require both of these eyes to be working in synch for optimal results. 20–20 strategy execution vision is the ultimate goal.