I’ve believed for many years that how a company executes its strategy is more important than how it develops the strategy.
I’m talking about the business strategy, the one that deals with all parts, departments or functions of a company.
My point could also apply to departmental or specific strategies; for example, sales or marketing strategies, since theoretically, these all flow from the business strategy and are integrated with it.
Previously, I’ve never had any evidence to support my belief since common sense, apparently, does not qualify as evidence.
Earlier this year, no less an authority than McKinsey & Company¹ gave me evidentiary support for my arguments.
They used their Implementation Capability Assessment to separate companies that are good at execution from those that aren’t. The survey then found that good implementers:
- Maintain twice the value from their prioritized opportunities after 2 years.
- Score their companies 30% higher on a series of financial performance indicators.
So there! Executing well pays off – literally.
How do you know if your company is a good implementer or a poor implementer?
McKinsey identified 7 key capabilities for executing well. Every company may have them to some extent. Yet businesses which are good at execution, are almost twice as good at them.
The 7 capabilities are:
- Ownership and commitment to execution at all levels of the company.
- Focus on a set of priorities.
- Clear accountability for specific actions.
- Effective management of execution using common tools.
- Planning for long-term commitment to execution.
- Continuous improvement during execution and rapid reaction to amend plans as required.
- Allocation of adequate resources and capabilities.
Finally, here’s the good news. Good implementers believe that execution is an individual discipline, which can be improved over time.
Does this confirm my belief that how a company executes its strategy is more important than how it develops the strategy?
Partially. More importantly, it does demonstrate that time spent improving a company’s ability to execute is time well invested.
As for the comparison to developing a strategy – I’ll just have to keep on looking.
¹ “Why Implementation Matters”, McKinsey & Company Insights, August 2014
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Jim Stewart is the founding Partner at ProfitPATH. He has been working with business owners for over 16 years to increase profits and improve the value of their companies. LinkedIn