Does your company do a good job executing strategy? If so, your company is probably an exception.
Executing strategy is hard. It is one of the top challenges facing CEOs and management teams. It requires direction, active communication, and lots of cross-functional coordination. Unfortunately, companies tend to make one or more of the mistakes that make the strategy execution process more difficult.
Being aware of these dangerous areas and avoiding these nine mistakes can make the strategy execution process easier and more successful.
Mistake #1: Faulty Strategy – Anyone who says, “strategy is easy; it’s the execution that’s hard,” doesn’t understand the importance of good strategy.
Execution without good, solid strategy is exceptionally hard. It forces organizations to revisit the strategy question while trying to execute constantly. They make progress in one direction, but then find that they need to go in another direction. It can feel like two steps forward and then three steps back, rinse, and repeat.
Faulty strategy is usually easy to identify as it has one or more of these characteristics:
- Strategies without clear meaning. Fluffy unclear statements that describe the strategy in a way that is hard to interpret and act upon, such as building world-class capabilities or creativity is our superpower. These types of statements provide little direction and leave it up to individuals to take their best guess as to what it means and what they should do as a result.
- Goals or objectives masquerading as strategy. All organizations have goals and objectives, but goals and objectives are not strategies. A strategy is about how you will accomplish these goals and objectives most effectively. If your key strategies are to grow by a certain percent, achieve a market share goal or some other goal, the decisions about how to accomplish these goals are left to individuals across the organization to figure out for themselves, and it’s unlikely they will act in any coherent way.
- Failure to choose between competing options. A good strategy makes choices for the organization. Do we go left or do we go right? We can’t do both, so what do we do. If important decisions about conflicting ideas about direction are not made by the strategy, the organization will struggle to make progress.
- Failure to focus and prioritize. If you have more than three strategic initiatives, you have too many. Moreover, if you fail to prioritize which of these three initiatives is the most important, the organization will be left to decide for itself, and that will create ongoing conflict.
- Failure to Decide What You’re Going to STOP Doing – Every organization is busy, and some of that work may not contribute to the strategy. This work won’t go away on its own. You must take active steps to eliminate it. If you don’t, it will divert time, talent and energy away from the important work of implementing your strategy.
Avoid the mistake of faulty strategy and hold yourself and your team accountable for building a better strategy.
Mistake #2: Overestimating Alignment – Even after building a good solid strategy, companies tend to overestimate alignment on the details vastly. Executive teams may strongly indicate that they understand and support the company’s strategy. However, when asked to list the top three strategic priorities, vast differences are uncovered. In one survey of 124 companies, only 51% of the top team members could list their company’s top three strategic priorities. The data gets even worse when you go deeper into the organization. Only 22% of executives who report to members of the top-leadership team can correctly list their company’s top three priorities.
Close communication bias is partly to blame. Close communications bias happens when we under communicate with people close to us because we think they know what we know.
The larger problem is that we confuse communication with understanding and fail to test whether our communication translates into understanding.
Avoid this mistake by being aware of the problem and making an effort to test whether the strategy is understood and consistent across the organization.
Mistake #3: Conflict Avoidance – One of the distinguishing factors of a good strategy is its power to drive change that improves the company’s performance and competitive position. Almost all change involves conflict between the requirements for running the business and changing the business.
We place a great value on harmony within any working group and conflict can disrupt harmony. As a result, we tend to avoid conflict for fear that it will damage harmony.
The problem is that conflict avoidance results in a false harmony. And this unresolved conflict inflicts great damage on the organization’s effectiveness. People within the organization are forced to take sides, usually along functional lines that cause more conflict and passive-aggressive behaviors.
The only solution is to deal with the conflict. One way to do that is to understand the nature of the conflict. Conflict can be about end goals or about how to achieve the end goals. If the conflict is about the end goal, find an end goal you can agree upon.
If the conflict is a disagreement about how to achieve the end goal, then examine the underlying assumptions that both parties have about how things work. The root of most conflicts is a difference in assumptions that we have about how things work. By taking this into account you can usually find a way to address the conflict by building a stronger set of common assumptions.
Mistake #4: Building Functional Plans to Implement a Cross-Functional Strategy – Executing strategy can feel complex, and our primary method of dealing with complexity is to break things down into parts and focus on the parts. That is why the normal next step in a strategic planning process is the pass the strategy baton to the functional organizations to develop their plans on how to execute the strategy.
The problem is that effective strategy execution almost always requires cross-functional plans that challenge established assumptions, resolve functional conflicts, and optimizes the entire value chain, not just the functional piece parts.
Building a cross-functional plan is harder than building functional plans. It requires executives to work together as a team to focus on group goals, identify and resolve functional conflicts, and a willingness to subordinate the functional priorities to the overall enterprise goals. While this can be hard and perhaps contentious work, it will be one of the best investments you can make in improving the likelihood of successful strategy execution.
Mistake #5: Ignoring the Laws of Organizational Physics – Overloading the organization with work is one of the most pervasive mistakes that companies make when it comes to strategy execution. Every organization can productively and quickly handle a certain amount of work. However, when the workload exceeds this level, organizational gridlock kicks in.
The physics of strategy execution work are like the physics of traffic. When there’s not very much of it, it can travel fast. It continues to travel fast even as we add more into the system.
As the density or amount of work increases, queues and congestion slow down the work, which increases the overall amount of work in the system. If the speed of work getting completed stays higher than new work being added, the work continues to flow. At the point where the combination of speed and volume of work is just right, the organization reaches maximum flow and produces maximum results.
However, beyond that maximum flow point is a tipping point where the density of work keeps increasing, and forces work to slow down. When that happens a negative feedback loop kicks in, and that ultimately leads to a traffic jam. While this can be a slow building process, any sudden change can lead to what’s called a catastrophic collapse in the flow rate, where work suddenly slows dramatically, and everything comes to a crawl.
This tipping point between high flow and gridlock can happen at surprisingly low levels of capacity utilization, particularly in organizations that engage in lots of multitasking. In fact, it’s not unusual for this tipping point to occur somewhere around 50% of the total available capacity.
Unfortunately, most people and companies view 50% capacity utilization as being very inefficient and tend to set targets as close to 100% as possible.
The result is a very busy organization that takes a long time to get anything meaningful done — lots of action, but little progress.
Even the most effective organizations will struggle greatly to get much done when stuck in a traffic jam like this.
To avoid this organizational gridlock, several steps can be taken to keep work flowing with maximum results.
The first is to remove the clutter. Clutter is work that’s getting in the way strategy execution. Most organizations have lots of clutter. Work that doesn’t need to be done, work that wastes people’s time, work that should be delegated but isn’t are all forms of clutter. Take steps to identify the clutter and get rid of it.
Second, you can reorient your mental models about starting and finishing. Our standard mental model is that the sooner we start something, the sooner we will finish it. However, if there is already a lot of work underway, adding something new will just slow everything down. Before you start something new, finish something already underway. That will ensure that more results get delivered faster.
Third, build a culture where priorities come first, and it’s okay to push back when someone asks you to do something that is not consistent with the priorities. This can be hard for individuals to do if everyone does not support the priorities. When an individual is slow to respond to a request for help for something that is not a priority, they can get criticized for not being a team player. If you can build a priority first culture, good teamwork will include understanding that focusing on what’s important comes before being responsive to every request.
Mistake #6: Focusing Management Attention on the Noise, Not the Signal – Management attention is both critical and limited. The allocation of management attention will determine what the organization focuses on and what gets done.
Too often, management attention gets directed to the noise and not the signal. One of the primary drivers of this problem is false precision in standard management methods like budgeting and forecasting.
These tools are used as control mechanisms to help us cope with uncertainty. We build out detailed annual plans, budgets, and forecasts to try to reduce the uncertainty.
However, using a high level of detail does not change the underlying uncertainty, but it does consume management attention in building out the detail.
Moreover, it diverts further management attention to understanding and explaining variances between the overly detailed plans and the actual results.
This attention to unpredictable detail comes at the expense of focusing management attention on getting important work done.
Be careful to avoid false precision, it can consume enormous amounts of precious management attention.
Mistake #7: Spreading Your Talent Around –Talented people are more productive, especially when it comes to getting complicated things done. Surveys by leading consulting firms show that high performers can be over nine times more productive when engaged in complex activities, and strategy execution is almost always complex.
Many companies spread their talent around, hoping that will improve the organization’s overall effectiveness. Unfortunately, that doesn’t work very well.
What does work well is concentrating your best people on getting the most important things done. You get dual benefits from doing this. You will get important things done more quickly, and your most talented people will be more engaged and productive when they get to work closely with other talented people.
Mistake #8: Slow or No Tempo Decision Making – Implementation requires lots of decisions to be made. It is not unusual for projects to get reviewed every month or every six weeks. Lots of decisions can get stacked up while waiting for these review meetings. The time stuck in the decision-making queue slows down implementation.
Moreover, it’s common for the executive team to need more information before it can decide, slowing things down even more. On top of that, like drivers waiting at a traffic light, it takes time for the organization to react to the decisions. That leads to unnecessary stops and starts in the work and time spent on work that just doesn’t need to be done.
Avoid this mistake by using a short, high-frequency review cycle that clears issues more quickly, speeds up implementation, and produces better results.
Mistake #9: Not Managing for the Win – If you’re not managing for the win, it’s hard to get a winning outcome.
In competitive sports like baseball or football, it is clear what winning looks like. When it comes to strategy execution, the definition of winning can be more ambiguous. Does it mean growth, profitability, market share or some other metric of success? Many companies fail to establish clarity about what winning looks like and how you measure it, and if you don’t know what the definition of winning is, it can be very hard to manage for the win.
Companies that manage for the win establish clear goals and metrics that define winning for them. They then identify leading indicators that predict or lead directly to success. These leading indicators define what it means to win on a daily, weekly, or monthly basis. This gives managers the ability to monitor progress, take quick corrective action when needed, and improve their probability of achieving their overall goals.
Strategy and execution are two of the central responsibilities of management. And how well the team executes strategy is a direct indicator of management effectiveness. If you want to improve your company’s ability to execute strategy, share this article with the team, and take your own inventory. Which mistakes are you making and what are you going to do about it?