Failure to Implement Strategy

“The board and management team accept responsibility for the failure to successfully execute the global strategy” 

Mr Crawford, Chairman of Lend Lease explaining the loss of
$ 3.5 billion in shareholder value (SMH November 2003) 

Lend Lease is not alone in this regard, a 1999 Fortune cover story of prominent CEO’s failures concluded that the emphasis placed on strategy and vision created a mistaken belief that the right strategy was all that was needed to succeed. “In the majority of cases – we estimate 70 percent - the real problem isn’t bad strategy but bad execution” (Fortune 1999)

Kaplan & Norton in ‘The Strategy Focused Organisation’ reported: “The ability to execute strategy can be more important than the strategy itself. With failure rates reported in the 70 percent to 90 percent range, we can appreciate why sophisticated investors have come to realize that execution is more important than vision”

An emerging area of competitive advantage particularly in knowledge-based organisations is increasingly the ability to implement strategy. 

Strategy implementation requires attention. In many organisations there is as yet, no real understanding, ownership or commitment to an integrated and thought out strategy implementation mechanism. Fewer still use appropriate technology for their implementation of business plans. There is a huge opportunity here for those who are willing to put in the effort to realise additional shareholder value as well as giving their organisations a substantial competitive edge. 

Why is good implementation so illusive? What are the known pitfalls? How do you design an effective implementation mechanism to suit your organisation? 

Experienced CEO’s and CFO’s know all too well the consequences of poor implementation and apart from the career limiting elements, other consequences include:

• Corporate planning becomes just an annual exercise
• Failure to implement programs or strategy,
• Ineffective corrective action
• Poor performance management
• Waste of resources

The goal of implementation is to ensure that all the resources of an organisation are aligned with the strategic direction. The ideal is to have everyone in the organisation meaningfully engaged in contributing to the organisation’s direction. This means making decisions, setting priorities and taking actions in light of that direction. People are at the heart of this alignment. Therefore an implementation mechanism must, at its core, be a people alignment process.

“Eventually, strategy and the big picture must degenerate into work”Peter Drucker , “The Age of Discontinuity”

What is needed to make it happen? 

1. Ownership

It is quite common in organisations to find someone with the title Strategic Planner who is responsible for facilitating strategy development, a Finance Manager who oversees the financial operations, a Human Resource manager who looks after the people issues. However does your organisation have someone who has the role of Strategy Implementation Manager? 

And since implementation or execution of strategy is such a key determinant of value and success, is this not potentially a most critical role? 

Implementation is one of those things that is assumed to be everyone’s responsibility. The same can be said of finance. Everyone has a role to contribute to the dollars, yet you have a finance manager, many contribute to strategy yet you have a strategy manager. You can often tell how seriously the management team regards implementation by looking to see if anyone is actually in charge of implementation. By this we don’t mean someone who will take charge of a handful of corporate projects, we mean someone who will bring the most appropriate process, skills and technology so that everyone in the organisation is working purposefully and in a structured way towards the organisation’s strategy.

Forward-looking organisations such as Coles Myers Liquor Group have created the position of Strategy Implementation Manager. Victorian Work Cover Authority has a specific team in their finance division accountable for providing the mechanism and over viewing the implementation of their strategic plan providing greater focus, direct involvement and transparency. Ownership is key.

2. Important yet not urgent

The issue of strategy implementation can sometimes be treated as important but not urgent. As a consequence it is easily drowned by more urgent matters and is often left poorly attended till failure due to poor implementation of strategy occurs. At that point it can be too late to do anything about it. It takes a visionary proactive leader and leadership team to realise the importance of this area and to act on it.

“Okay, now that we have finished our planning exercise, we can get back to work”Sacher Associates “Performance Measures Applied”

3. Culture

A culture of accountability, responsibility, performance management and effective annual planning is required to make strategy implementation a competitive advantage. Many organisations assume that planning is an innate skill and that all their managers can do it without training or guidance and with an ill defined process.

From our experience we have found this to be far from the truth. The benefit of focusing on strategy implementation is that it is naturally part of a bigger agenda and can be the forerunner for influencing performance management, accountability, alignment and involvement. More astute leaders realise this and act upon it using strategy implementation as a lever to implement practical, focused culture change.

4. Use of enabling technology

Many managers are still attempting to implement their strategies predominantly using the MS office suite. Unfortunately this is totally inadequate for medium to large organisations and even with the most creative use of Excel you quickly hit limitations. Likewise an information management system is not a strategy implementation system; it may provide information essential for planning purposes however it is unlikely to assist in the development and reporting on the numerous activities that need to take place as part of strategy implementation.

The technology in the field of planning implementation has evolved greatly. The Balance Score Card concept has brought to the market software tools to enable that methodology and is excellent at producing stand alone plans. However if your organisation wants to adopt the more advanced cascaded implementation model so that both development and reporting are seamlessly linked to strategy then a leading application in this field is Corpalign.

Here are three useful questions to ask yourself if you want to test if your implementation of strategy is adequate;

• Do we have a strategy implementation process suited to the nature, size and maturity of our organisation?
• Do our managers have the necessary implementation knowledge, skills and competencies?
• Are we using the right technology to support our implementation process?

If your answer to these questions lacks certainty or precision then you could greatly benefit from a review of the strategy implementation practices of your organisation.

About the author - Alan Bassal is a Director of Corpalign Pty Ltd. For over 16 years he has successfully implemented strategy implementation processes in private and public sector organisations. Corpalign provides a web based application that has achieved advanced levels of functionality within a web browser environment. The Corpalign software was featured in the Australian Technology Showcase, and received a Certificate of Achievement from AusIndustry in 2003. You can learn more by visiting www.corpalign.com.